EXHIBIT 7
AMENDED AND RESTATED WARRANT AGREEMENT
Warrant Agreement dated as of this 27th day of July, 1996, by and among
ValueVision International, Inc., a Minnesota corporation (the "Company"),
Xxxxxxxxxx Xxxx & Co., Incorporated, an Illinois corporation ("MW") and
Xxxxxxxxxx Xxxx Direct, L.P., a Delaware limited partnership ("MWD").
R E C I T A L S
A. Pursuant to a Securities Purchase Agreement dated as of March 13,
1995 by and between the Company and MW, the Company agreed to issue and sell,
and MW agreed to purchase, Existing Warrants (as herein defined) to purchase an
aggregate of 25,000,000 shares of the Common Stock of the Company, subject to
adjustment, under the terms and subject to the conditions set forth therein. The
Existing Warrants are governed by the terms of a certain Warrant Agreement,
dated August 8, 1995, between MW and VVI (the "Original Warrant Agreement").
B. Existing Warrants of Series A and Series B, both inclusive (the
"Series A-B Warrants"), have vested, and Existing Warrants of Series C through
Series O, all inclusive (the "Series C-O Warrants"), have not vested.
D. Pursuant to a certain Restructuring Agreement, dated as of even date
herewith, between the Company and MW (the "Restructuring Agreement"), the
Company and MW have agreed to exchange the Series C-O Warrants, to amend and
restate that certain Operating Agreement and that certain Servicemark License
Agreement, and to amend that certain Credit Card Receivables Sale and Purchase
Agreement, all dated as of March 13, 1995, and to amend and restate that certain
Registration Rights Agreement, dated August 8, 1995 and this Agreement, all in
consideration of the issuance by VVI of new Series P Warrants to purchase an
aggregate of 1,484,462 shares of Common Stock (the "Exchange Warrants").
E. MWD is a wholly owned subsidiary of MW. Pursuant to an Asset
Purchase Agreement, dated as of July 27, 1996, between the Company's subsidiary,
ValueVision Direct Marketing Company, Inc., and MWD (the "Asset Purchase
Agreement"), ValueVision Direct Marketing Company, Inc. has agreed to deliver to
MWD, as consideration for the sale of all of MWD's assets, Series P warrants to
purchase an aggregate of 1,484,993 shares of Common Stock (the "MWD Warrants").
F. MW, MWD and VVI desire to amend and restate the Original Warrant
Agreement to set forth the terms under which the New Warrants will be issued and
the Series A-B Warrants shall be exercised.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the premises set forth herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company, MW and MWD agree that the Original Warrant
Agreement shall be amended and restated to read as follows:
15. Definition of Terms. As used in this Warrant Agreement, the following
capitalized terms shall have the following respective meanings:
(a) Asset Purchase Agreement: "Asset Purchase Agreement" has
the meaning assigned thereto in the Recitals.
(b) Business Day: A day other than a Saturday, Sunday or other
day on which banks in the State of Minnesota are authorized by law to
remain closed.
(c) Common Stock: Common stock, $.01 par value per share, of
the Company.
(d) Common Stock Equivalents: Securities that are convertible
into or exercisable for Common Stock.
(e) Company: "Company" has the meaning assigned thereto in the
Preamble.
(f) Conversion Ratio: The number of Warrant Shares of Common
Stock issuable upon the exercise of a Warrant, which shall initially be
1, subject to adjustment from time to time pursuant to Section 6.1.
(g) Exchange Act: The Securities Exchange Act of 1934, as
amended.
(h) Exchange Warrants: "Exchange Warrants" has the meaning
assigned thereto in Recital D.
(i) Exercise Price Per Share: The "Exercise Price Per
Share" shall mean:
(i) in the case of New Warrants, the
exercise price payable for each Warrant Share upon
exercise of a New Warrant, which shall initially be
set at $.01 per share, subject to adjustment from
time to time pursuant to Section 6.1; and
(ii) in the case of Series A-B Warrants, the
exercise price payable for each Warrant Share upon
exercise of a Series A or Series B Warrant set forth
on the Vesting Schedule to the Original Warrant
Agreement, subject to adjustment from time to time
pursuant to Section 6.1.
(j) Existing Warrants: Warrants issued pursuant to the
Securities Purchase Agreement.
(k) Expiration Date: August 8, 2003, or if such day is not a
Business Day, the next succeeding day which is a Business Day.
(l) HSR Act: "HSR Act" has the meaning assigned thereto in
Section 5.9.
(m) Market Price: The Market Price per share of Common Stock
at any date shall be deemed to be the average of the daily closing
prices for the 20 consecutive trading days ending on such date. The
closing price for each day shall be the last sale price of the Common
Stock, or in case no such reported sales take place on such day, the
average of the last reported bid and asked prices of the Common Stock,
in either case on the principal national securities exchange on which
the Common Stock is admitted to trading or listed, or if not listed or
admitted to trading on any such exchange, as reported by NASDAQ, or
other similar organization if NASDAQ is no longer reporting such
information, or if not so available, the fair market price of the
Common Stock as determined in good faith by the Board of Directors.
(n) MPLP: "MPLP" has the meaning assigned thereto in Section
13.
(o) MW: "MW" has the meaning assigned thereto in the Preamble.
(p) MWD: "MWD" has the meaning assigned thereto in the
Preamble.
(q) MWD Warrants: "MWD Warrants has the meaning assigned
thereto in Recital E.
(r)
(s) MW Group: "MW Group" has the meaning assigned thereto in
that certain Amended and Restated Operating Agreement by and between MW
and the Company of even date herewith.
(t) NASD: National Association of Securities Dealers, Inc. and
NASDAQ: NASD Automatic Quotation System.
(u) New Warrants: Warrants in the form attached hereto as
Exhibit A to be issued on the date hereof pursuant to the Restructuring
Agreement and the Asset Purchase Agreement, and all other warrants that
may be issued in their place (together evidencing the right to purchase
an aggregate of 2,969,455 shares of Common Stock), subject to
adjustment pursuant to Section 6 hereof. The New Warrants include the
Exchange Warrants and the MWD Warrants.
(v) Original Warrant Agreement: That certain Warrant
Agreement, dated August 8, 1995, between the Company and MW.
(w) Restructuring Agreement: "Restructuring Agreement" has the
meaning assigned thereto in the Recitals.
(x) Series A-B Warrants: "Series A-B Warrants" has the meaning
assigned thereto in the Recitals.
(y) Series C-O Warrants: "Series C-O Warrants" has the meaning
assigned thereto in the Recitals.
(z) SEC: The Securities and Exchange Commission.
(aa) Securities Purchase Agreement: "Securities Purchase
Agreement" has the meaning assigned thereto in the Recitals.
(bb) Term: "Term" has the meaning assigned thereto in Section
15.
(cc) Warrants: New Warrants and Series A-B Warrants.
(dd) Warrant Shares: "Warrant Shares" has the meaning assigned
thereto in Section 2.
16. Warrant Shares. Each New Warrant and each Series A-B Warrant will
initially be exercisable for one share of Common Stock (a "Warrant Share"),
subject to adjustment pursuant to Section 6 hereof.
17. Vesting. All Series A-B Warrants are fully vested. All New Warrants
shall be fully vested when issued.
18. Expiration of Warrants. All Warrants shall expire at 5:00 pm
Minneapolis, Minnesota time, on the Expiration Date. All Warrants that are not
exercised on or prior to the Expiration Date shall become void on the Expiration
Date, and all rights hereunder and under such Warrants shall thereupon cease.
19. Exercise of Warrants.
19.1 Exercise Period. Any or all Warrants may be exercised by the
holder thereof at any time and from time to time after 9:00 am, Minneapolis,
Minnesota time, on the date hereof, and before 5:00 pm, Minneapolis, Minnesota
time, on the Expiration Date.
19.2 Exercise Procedure. The Warrant holder may exercise Warrants
during any time that such Warrants are exercisable in whole or in part, by
presentation and surrender of the Warrant Certificate to the Company at its
principal executive offices, with the Subscription Form annexed thereto duly
executed and accompanied by payment of the full Exercise Price Per Share for
each Warrant Share to be purchased in immediately available funds by wire
transfer to a bank designated by the Company from time to time.
19.3 Issuance of Warrant Shares. Subject to Section 5.9, upon receipt
of the Warrant Certificate with Subscription Form duly executed and accompanied
by payment of the aggregate Exercise Price Per Share for the Warrant Shares for
which the Warrant is then being exercised, and provided that the holder has made
any government filings, and has obtained any governmental actions, consents,
approvals, or waiver, required on the holder's part in order to exercise the
Warrants, the Company shall cause to be issued certificates for the total number
of whole shares of Common Stock for which the Warrant is being exercised
(adjusted to reflect the effect of the provisions contained in Section 6 hereof,
if any), in such denominations as are requested for delivery to the holder, and
the Company shall thereupon deliver such certificates to the holder. The holder
shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Common Stock shall not then be actually delivered to the holder. If at the
time a Warrant is exercised, a Registration Statement is not in effect to
register under the Securities Act the Warrant Shares issuable upon exercise of
such Warrant, the Company may require the holder to make such representations,
and may place such legends on certificates representing the Warrant Shares, as
are customary and may be reasonably required in the opinion of counsel to the
Company to permit the Warrant Shares to be issued without such registration.
19.4 Residual Warrants. In case the Warrant holder shall exercise a
Warrant with respect to less than all of the Warrant Shares that may be
purchased under such Warrant, the Company shall execute a Warrant in the form of
such Warrant for the balance of such Warrant Shares and deliver such Warrant to
the holder.
19.5 Transfer Taxes. The Company shall pay any and all stock transfer
and similar taxes which may be payable in respect of the issue of the Warrant or
in respect of the issue of any Warrant Shares.
19.6 Reservation of Shares. The Company hereby agrees that at all times
while any Warrants are outstanding there shall be reserved for issuance and
delivery upon exercise of the Warrants such number of shares of Common Stock or
other shares of capital stock of the Company from time to time issuable upon
exercise of the Warrants. All such shares shall be duly authorized, and when
issued upon such exercise, shall be validly issued, fully paid and
nonassessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale and free and clear of all preemptive
rights.
19.7 Fractional Shares. The Company shall not be required to issue any
fraction of a share of its capital stock in connection with the exercise of a
Warrant. The holder of Warrants will be required to exercise such number of
Warrants so that a whole number of shares of Common Stock will be issued, or, at
the Company's sole option, the Company may (i) pay such holder an amount in cash
equal to such fraction of a share multiplied by the Market Price of one share of
Common Stock on the exercise date, or (ii) may issue the larger number of whole
shares purchasable upon exercise of the Warrant, and may require such holder to
pay an additional amount equal to the exercise price multiplied by the balance
of the share.
19.8 Listing. Prior to the issuance of shares of Common Stock upon
exercise of a Warrant, the Company shall use its reasonable best efforts to
secure the listing of such shares of Common Stock upon each national securities
exchange or automated quotation system, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance upon exercise of
the Warrant) and shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all shares of Common Stock from time to time
issuable upon the exercise of the Warrant; and the Company shall so list on each
national securities exchange or automated quotation system, and shall maintain
such listing of, any other shares of capital stock of the Company issuable upon
the exercise of the Warrant if and so long as any shares of the same class shall
be listed on such national securities exchange or automated quotation system.
19.9 Approvals of Regulatory Authorities. In the event any filings with
or approvals by any federal or state regulatory agency would be required by
virtue of the exercise of any of the Warrants (including, without limitation,
the U.S. Departments of Justice and Commerce under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act ("HSR Act") or the Federal Communications Commission
under the Federal Communications Act), such exercise of such Warrant shall be
conditional upon (x) expiration or termination of the waiting period under the
HSR Act, and (y) receipt of any other required regulatory approvals, but shall
otherwise be unconditional. If this Section 5.9 is applicable, (x) the parties
will cooperate with each other and make such respective filings and take such
other respective actions as may be necessary or desirable in order that the
exercise of any such Warrant shall be in accordance with applicable laws, and
(y) the Term of this agreement shall be extended, if required, during the period
in which applications for regulatory approvals are pending before regulatory
authorities.
20. Exercise Price Per Share and Conversion Ratio Adjustments. The
Exercise Price Per Share and the Conversion Ratio, and the kind of Warrant
Shares shall be subject to adjustment from time to time upon the occurrence of
certain events and at the times as provided for in this Section 6.
20.1 Mechanical Adjustments. If at any time prior to the exercise of
any Warrant, the Company shall (i) declare a dividend or make a distribution on
the Common Stock payable in shares of its capital stock (whether shares of
Common Stock or of capital stock of any other class); (ii) subdivide, reclassify
or recapitalize outstanding Common Stock into a greater number of shares; (iii)
combine, reclassify or recapitalize its outstanding Common Stock into a smaller
number of shares, or (iv) issue any shares of its capital stock by
reclassification of its Common Stock (including any such reclassification in
connection with a consolidation or a merger in which the Company is the
continuing corporation), excluding, however, any dividend, distribution,
reclassification or recapitalization that requires the payment of more than
nominal additional consideration by security holders, the Conversion Ratio in
effect at the time of the record date of such dividend, distribution,
subdivision, combination, reclassification or recapitalization shall be
immediately adjusted so that upon exercise of a Warrant the holder thereof shall
be entitled to receive the aggregate number and kind of shares which, if the
Warrants had been exercised in full immediately prior to such event, the holder
thereof would have owned upon such exercise and been entitled to receive by
virtue of such dividend, distribution, subdivision, combination,
reclassification or recapitalization, for the same aggregate consideration. The
Exercise Price Per Share payable upon exercise of each Warrant shall
simultaneously be adjusted by multiplying the initial Exercise Price Per Share
in effect for such Warrant by the Conversion Ratio in effect immediately prior
to such adjustment and dividing the products so obtained by the Conversion
Ratio, as adjusted. Any adjustments required by this Section 6.1 shall be made
successively immediately after the record date, in the case of a dividend or
distribution, or the effective date, in the case of a subdivision, combination,
reclassification or recapitalization, to allow the purchase of such aggregate
number and kind of shares, subject to Section 6.4.
20.2 Subsequent Adjustments. In the event that at any time, as a result
of any adjustment made pursuant to Section 6, the holder of a Warrant thereafter
shall become entitled to receive any shares of the Company other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Section 6, subject to Section 6.6.
20.3 No Adjustment for Cash Dividends. No adjustment in respect of any
cash dividends not constituting Special Dividends shall be made during the term
of the Warrants or upon the exercise of any Warrant.
6.4 Notice of Adjustment. No adjustment in the Conversion Ratio shall
be required unless such adjustment would increase or decrease the Conversion
Ratio by at least .001; provided, however, that any adjustments which by reason
of this Section 6.6 are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 6 shall be made to the nearest one-hundredth of a share or the nearest
tenth of a cent, as the case may be. The adjusted Conversion Ratio may be
rounded off to the nearest one millionth (six places to the right of the decimal
point). Whenever the Conversion Ratio or the Exercise Price Per Share is
adjusted as herein provided, the Company shall prepare and deliver forthwith to
all holders of Warrants a certificate signed by its Chief Financial Officer,
setting forth the adjusted Conversion Ratio, the adjusted number of shares
purchasable upon the exercise of Warrants and the Exercise Price Per Share of
such shares after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which such
adjustment was made. The failure to give such notice or any defect therein shall
not affect the validity or effectiveness of any such adjustment.
6.5 Form of Warrant After Adjustments. The form of Warrants need not be
changed because of any adjustments in the Exercise Price Per Share or the number
or kind of the Warrant Shares, and Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of shares as are stated
in an adjusted Warrant, as initially issued.
21. No Rights as Shareholders; Notice to Holders. Nothing contained in
this Agreement or in the Warrants shall be construed as conferring upon a holder
of Warrants by virtue of its status as a Warrant holder the right to vote or to
receive dividends or to consent or to receive notice as a shareholder in respect
of any meeting of shareholders for the election of directors of the Company or
of any other matter, or any rights whatsoever as shareholders of the Company.
The Company shall give notice to all holders of Warrants if at any time prior to
the expiration or exercise in full of the Warrants, any of the following events
shall occur:
(a) the Company shall authorize the payment of any dividend
payable in any securities upon shares of Common Stock or authorize the
making of any distribution (other than a regular cash dividend or
distribution paid out of net profits legally available therefor) to all
holders of Common Stock;
(b) the Company shall authorize the issuance to all holders of
Common Stock of any additional shares of Common Stock or Common Stock
Equivalents or of rights, options or warrants to subscribe for or
purchase Common Stock or Common Stock Equivalents or of any other
subscription rights, options or warrants;
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger, or sale or
conveyance of the property of the Company as an entirety or
substantially as an entirety); or
(d) a capital reorganization or reclassification of the Common
Stock (other than a change in the par value of the Common Stock) or any
consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification
or change of Common Stock outstanding) or in the case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety.
Such giving of notice shall be initiated (i) at least 5 Business Days prior to
the date fixed as a record date or effective date or (ii) the date of closing of
the Company's stock transfer books for the determination of the shareholders
entitled to such dividend, distribution or subscription rights, or for the
determination of the shareholders entitled to vote on such proposed merger,
consolidation, sale, conveyance, dissolution, liquidation or winding up. Such
notice shall specify such record date or the date of closing the stock transfer
books, as the case may be. Failure to provide such notice shall not affect the
validity of any action taken in connection with such dividend, distribution or
subscription rights, or proposed merger, consolidation, sale, conveyance,
dissolution, liquidation or winding up.
22. Lost, Stolen, Mutilated or Destroyed Warrants. If a Warrant is
lost, stolen, mutilated or destroyed, the Company may, on such terms as to
indemnity or otherwise as it may in its discretion impose (which shall, in the
case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
of like denomination and tenor as, and in substitution for the Warrant.
23. Restrictions on Transfer of Warrants and Warrant Shares. The
Warrants and the Warrant Shares may not be transferred, disposed of or
encumbered (any such action, a "Transfer"), except in accordance with and
subject to the provisions of the Securities Act and the rules and regulations
promulgated thereunder. If at the time of a Transfer, a Registration Statement
is not in effect to register the Warrant Shares, the Company may require the
holder thereof to make such representations, and to provide the Company with an
opinion of counsel reasonably acceptable to the Company that such Transfer would
not result in violation of any federal or state law regarding the offering or
sale of securities and the Company may place such legends on certificates
representing the Warrant Shares, as are customary and may be reasonably required
in the opinion of counsel to the Company to permit a Transfer without such
registration. Subject to the foregoing and to Section 13, all Warrants and
Warrant Shares shall be freely transferable.
24. Warrant Register. All Warrants shall be in registered form. The
Company shall maintain a register of the Warrants (the "Warrant Register"). All
Transfers of Warrants shall be recorded in the Warrant Register.
25. Registration Under the Securities Act of 1933. The Warrant Shares
shall be entitled to certain registration rights provided in that Registration
Rights Agreement by and among the Company, MW and MWD of even date herewith.
26. Certain Filings. The parties will cooperate with each other in
determining whether action by or in respect of, or filing with, any governmental
body, agency or official, or authority is required, or any actions, consents,
approvals or waivers are required to be obtained in connection with the
transactions and adjustments contemplated by this Agreement, and provide each
other with reasonable assistance in seeking any such actions, consents,
approvals, or waivers or making any such filings, furnishing information
required in connection therewith, and seeking timely to obtain any such actions,
consents, approvals or waivers.
27. Right of First Offer. No holder of a Warrant or Common Stock
(including Warrant Shares) will transfer, sell, or in any manner convey any
interest in any Warrants or Common Stock (including Warrant Shares), except
through an offering to the public that is registered under the Securities Act,
or pursuant to the provisions of Rule 144 under the Securities Act (excluding
paragraph (k) of Rule 144), unless such holder first offers such Warrants or
Common Stock (including Warrant Shares) to the Company. The holder shall provide
the Company with a written offer specifying the amount of securities being
offered, the purchase price and other terms of such offer. The Company shall
have fifteen (15) days from and after the date of receipt by the Company of such
written offer within which to accept such offer, or to make a written
counteroffer with respect to all or any part of the securities offered. If the
Company does not accept the holder's offer, or the holder does not accept the
Company's counteroffer, by written notice given within such 15-day period, the
holder may offer and sell such securities to any party within 180 days
thereafter on terms that are not less favorable to the holder than the terms of
the later to be made of the holder's last offer to the Company or the Company's
last counteroffer to the holder, if any, provided that the terms of a sale to a
third party shall not be deemed to be less favorable to the holder solely based
on a lower purchase price paid by the third party if such lower purchase price
is at least 90% of the highest price offered by or to the Company. This Section
13 shall not apply to any transfer of Warrants or Common Stock (including
Warrant Shares) (i) by any member of the MW Group to any other member of the MW
Group, (ii) by MW to Merchant Partners, Limited Partnership, a Delaware limited
partnership ("MPLP"), or (iii) by MPLP to its partners, and the partners or
stockholders (direct or remote) of such partners.
28. Term. Subject to Section 5.9, the term of this Agreement shall
begin on the date hereof and expire on August 8, 2003 (the "Term").
29. Additional Actions and Documents. Each of the parties hereto agrees
to take or cause to be taken such further actions, to execute, acknowledge,
deliver and file or cause to be executed, acknowledged, delivered and filed such
further documents and instruments, and to use all reasonable efforts to obtain
such consents, as may be necessary or as may be reasonably requested in order to
fully effectuate the purposes, terms and conditions of this Agreement.
16. Cancellation and Return of Series C-O Warrants. Effective as at the
date hereof, the Series C-O Warrants issued pursuant to the Original Warrant
Agreement are deemed to have expired unexercised and are hereby terminated. All
Series C-O Warrants shall be surrendered to the Company within 30 days of the
date hereof.
IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by
the Company under its corporate seal as of the date first above written.
VALUEVISION INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx
Its Chief Executive Officer
Attest: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Secretary
XXXXXXXXXX XXXX & CO., INCORPORATED
By: /s/ Xxxx Xxxxxxx
---------------------------------
Executive Vice President
Attest: /s/ Xxxxxxx X. Xxxxx
----------------------------
Secretary
XXXXXXXXXX XXXX DIRECT, L.P.
By: MW Direct General, Inc., the
general partner
By: /s/ Xxxx Xxxxxxx
------------------------------
Its: Treasurer
Attest: /s/ Xxxxxx X. Xxxx
----------------------------
Secretary
