EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT is made as of September 28, 1996,
between Xxxxxxxxxx Xxxx & Co., Incorporated, an Illinois corporation
("MW") and ValueVision International, Inc., a Minnesota corporation
("VVI").
R E C I T A L S
A. MW and VVI entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement"), pursuant to which MW agreed to purchase
and VVI agreed to issue 1,280,000 shares of VVI common stock (the
"Shares"), and VVI also agreed to issue a total of 25,000,000
warrants, subject to adjustment (the "Original Warrants") to MW. .
B. The closing of the purchase of the Shares and issuance of
the Original Warrants took place on August 8, 1995, at which time the
Shares and the Original Warrants were issued, and MW and VVI entered
into (i) a Warrant Agreement with respect to the Original Warrants
(the "Original Warrant Agreement") and (ii) a Registration Rights
Agreement with respect to the Shares and the shares of stock
underlying the Original Warrants (the "Original Registration Rights
Agreement"). The Original Warrant Agreement and the Original
Registration Rights Agreement are referred to herein as the "Original
Securities Related Agreements".
C. On July 27, 1996, MW and VVI entered into a restructuring
agreement (the Restructuring Agreement ) which provided for, among
other matters, the exchange of the Series C through O Warrants,
inclusive for newly issues Series P Warrants and the execution of an
Amended and Restated Warrant Agreement (the Amended and Restated
Warrant Agreement ) which amends and restates the Original Warrant
Agreement and the execution of an Amended and Restated Registration
Rights Agreement (the Amended and Restated Warrant Agreement ) which
amends and restates the Original Registration Rights Agreement. In
connection with such Restructuring Agreement, Xxxxxxxxxx Xxxx Direct,
L.P., a Delaware limited partnership ("MWD")received certain Series P
Warrants ( MWD Warrants ) and subsequently transferred all of its
right title and interest in and to the MWD Warrants to MW. In
addition, MW transferred certain of its Series P Warrants to Merchant
Partners, Limited Partnership, a Delaware limited partnership
( MPLP ).
D. Original Warrants of Series A and B have vested ( Vested
Warrants ). MW and VVI now desire to exchange the Vested Warrants for
New Warrants, as provided, and to amend the Amended and Restated
Warrant Agreement and the Amended and Restated Registration Rights
Agreement according as set forth in Exhibits A and B respectively.
A G R E E M E N T S
NOW, THEREFORE, the parties agree as follows:
1. Amendment and Restatement of Agreements. On the Closing
Date:
(a) MW, MWD, MPLP and VVI shall amend and restate the
Amended and Restated Warrant Agreement by entering into a
Second Amended and Restated Warrant Agreement in the form
attached hereto as Exhibit A (the "Second Amended and Restated
Warrant Agreement"); and
(b) MW, MWD, MPLP and VVI shall amend and restate the
Amended and Restated Registration Rights Agreement by entering
into an Second Amended and Restated Registration Rights
Agreement in the form attached hereto as Exhibit B (the "Second
Amended and Restated Registration Rights Agreement").
The documents referred to in this paragraph 2 are referred to herein
collectively as the "Second Amended and Restated Documents".
2. Surrender of Warrants. On the Closing Date, MW shall
surrender to VVI all of the Vested Warrants for cancellation.
3. Issuance of New Warrants. In consideration of the
surrender of the Vested Warrants, VVI shall issue to MW a total of
2,200,000 New Warrants.
All New Warrants shall contain the terms and features set forth in
the Second Amended and Restated Warrant Agreement. Concurrently with
the issuance of New Warrants.
4. Time of Closing; Effectiveness of Closing. The closing of
the surrender and cancellation of the Vested Warrants, and the
issuance of the New Warrants (the "Closing"), shall all take place
concurrently, on the date which is not more than five (5) business
days after the date on which this Agreement is executed by all of the
parties hereto(the "Closing Date").
5. Notices. All notices, demands, requests or other
communications which may be or are required to be given pursuant to
this Agreement or any of the Related Agreements shall be in writing
and shall be personally delivered, mailed by first-class, registered
or certified mail, postage prepaid, or sent by electronic or
facsimile transmission, addressed as follows:
If to VVI:
ValueVision International, Inc.
0000 Xxxxx Xxx Xxxx
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Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
with a copy to:
Maslon, Edelman, Xxxxxx & Brand, a
professional limited liability partnership
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx
If to MW:
Xxxxxxxxxx Xxxx & Co., Incorporated
000 X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
with a copy to:
Altheimer & Xxxx
Suite 4000
00 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so
given, served or sent. Each notice, demand, request or communication
which shall be delivered, mailed or transmitted in the manner
described above shall be deemed sufficiently given, served, sent or
received for all purposes at such time as it is delivered to the
addressee or at such time as delivery is refused by the addressee
upon presentation.
6. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective
and valid under applicable law, but if one or more of the provisions
of any of such documents are subsequently declared invalid or
unenforceable, such invalidity or unenforceability shall not in any
way affect the validity or enforceability of the remaining provisions
of such documents, which shall be applied and construed so as to
reflect substantially the intent of the parties and achieve the same
economic effect as originally intended by the terms hereof, unless
those provisions which are invalidated or unenforceable are material
to the performance of either party's affirmative or negative
obligations under the relevant agreement, in which case the entire
such agreement shall be terminable, at the option of the party whose
rights thereunder have been adversely affected thereby, provided that
such party must exercise its option to terminate such agreement
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within ninety (90) days following the date on which such provision is
declared or determined to be invalid, voidable or unenforceable and
the other party must be given sixty (60) days in which to agree to a
valid modification of such agreement which would substantially
eliminate such adverse effects.
7. Waivers. Neither the waiver by any party hereto of a
breach of or a default under any of the provisions of this Agreement
, nor the failure of any party hereto, on one or more occasions, to
enforce any of the provisions of any of said documents or to exercise
any right, remedy or privilege hereunder shall thereafter be
construed as a waiver of any such provisions, rights, remedies or
privileges hereunder. Any of the terms, covenants, representations,
warranties, or conditions hereof and thereof may be waived only by a
written instrument executed by the party waiving compliance.
8. Exercise of Rights. No failure or delay on the part of
any party hereto in exercising any right, power or privilege under
this Agreement, and no course of dealing between the parties hereto
shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under any of such documents
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
9. Binding Effect. Subject to the provisions hereof
restricting assignment, this Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective
successors and permitted assigns.
10. Entire Agreement. This Agreement, including the Exhibits
hereto, contains the entire agreement between the parties hereto with
respect to the matters contained herein and therein, and supersede
all prior oral or written agreements, commitments or understandings
with respect to the matters provided for herein.
11. Pronouns. All pronouns and any variations thereof used
in this Agreement shall be deemed to refer to the masculine,
feminine, neuter, singular or plural, as the identity of the Person
or the context may require.
12. Headings. Section headings contained in this Agreement
and the Related Agreements are inserted for convenience of reference
only, shall not be deemed to be a part of such Agreement for any
purpose, and shall not in any way define or affect the meaning,
construction or scope of any of the provisions hereof.
13. Governing Law. This Agreement, the rights and
obligations of the parties hereto and thereto, and any claim or
disputes relating to any thereof, shall be governed by and construed
in accordance with the internal laws of the State of Illinois,
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without giving effect to the principles of conflicts of laws thereof.
14. Execution in Counterparts. To facilitate execution, this
Agreement may each be executed in as many counterparts as may be
required, and it shall not be necessary that the signatures of, or on
behalf of, each party, or that the signatures of all Persons required
to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or
that the signatures of the Persons required to bind any party, appear
on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be
necessary in making proof of this Agreement to produce or account for
more than the number of counterparts containing the respective
signatures of, or on behalf of, all of the parties hereto.
15. Assignment. Neither party may assign its rights under
this Agreement without the consent of the other party, which consent
may be granted or withheld in the sole discretion of such other
party, except that either party may assign all of its rights
hereunder in connection with a sale or other transfer of
substantially all of its assets, provided that the assignee assumes
all of the liabilities of the assignor hereunder. No permitted
assignment shall relieve the assignor of its obligations (which shall
be primary and which may be discharged in whole or in part by the
assignee) under this Agreement. Any unauthorized assignment and any
assignment made in contravention of this Section 18 shall be null and
void.
16. Amendments and Modification. This Agreement may only be
amended or modified by a subsequent written agreement by the parties
hereto.
17. Construction. This Agreement shall not be construed more
strictly against one party than against the other merely by virtue of
the fact that such document may have been prepared primarily by
counsel for one of the parties, it being recognized that both parties
have contributed substantially and materially to the preparation of
such documents.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective on the date first set forth above.
XXXXXXXXXX XXXX & CO., INCORPORATED VALUEVISION INTERNATIONAL, INC.
BY: /s/ XXXX X. XXXXXXX BY: /s/ XXXXXX X. XXXXXXXX
TITLE: Executive Vice President TITLE: Chief Executive Officer
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Exhibit A
SECOND AMENDED AND RESTATED WARRANT AGREEMENT
Warrant Agreement dated as of this 28th day of September, 1996,
by and among ValueVision International, Inc., a Minnesota corporation
(the "Company"), Xxxxxxxxxx Xxxx & Co., Incorporated, an Illinois
corporation ("MW"), Xxxxxxxxxx Xxxx Direct, L.P., a Delaware limited
partnership ("MWD")and Merchant Partners, Limited Partnership, a
Delaware limited partnership ( MPLP ).
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. Pursuant to a certain Restructuring Agreement, dated July
27, 1996, between the Company and MW (the "Restructuring Agreement"),
the Company and MW 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").
D. 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. delivered 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"). MWD subsequently transferred all of its right title
and interest in and to the MWD Warrants to MW. In addition, MW
transferred certain of its Series P Warrants to MPLP.
E. Pursuant to an Exchange Agreement dated September ___,
1996, (the Exchange Agreement )VVI and MW have agreed to exchange
the Vested Warrants for additional Series P Warrants to purchase an
aggregate of 2,200,000 shares of Common Stock (the Replacement
Warrants )and to amend this Agreement and the Amended and Restated
Registration Rights.
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F. MPLP desires to become a party to this Agreement and MW,
MWD, MPLP and VVI desire to amend and restate the Amended and
Restated Warrant Agreement to set forth the terms under which the New
Warrants may 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 MPLP
and MWD agree that the Original Warrant Agreement shall be amended
and restated to read as follows:
A. 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 Agreement: "Exchange Agreement" has the
meaning assigned thereto in the Recitals.
(i) Exchange Warrants: "Exchange Warrants" has the
meaning assigned thereto in Recital B.
(j) Exercise Price Per Share: The "Exercise Price Per
Share" shall mean in the case of New Warrants, the exercise
price payable for each Warrant Share upon exercise of a New
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Warrant, which shall initially be set at $.01 per share,
subject to adjustment from time to time pursuant to Section
6.1.
(k) Existing Warrants: Warrants issued pursuant to the
Securities Purchase Agreement and the Warrant Agreement.
(l) Expiration Date: August 8, 2003, or if such day is
not a Business Day, the next succeeding day which is a Business
Day.
(m) HSR Act: "HSR Act" has the meaning assigned
thereto in Section 5.9.
(n) 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.
(o) MPLP: "MPLP" has the meaning assigned thereto in
Section 13.
(p) MW: "MW" has the meaning assigned thereto in the
Preamble.
(q) MWD: "MWD" has the meaning assigned thereto in the
Preamble.
(r) MWD Warrants: "MWD Warrants has the meaning
assigned thereto in Recital E.
(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
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Exchange Agreement, the Restructuring Agreement and the Asset
Purchase Agreement in exchange for all of the Existing Warrants
including but not limited to the Series A-B Warrants, and all
other warrants that may be issued in their place (together
evidencing the right to purchase an aggregate of 5,169,455
shares of Common Stock), subject to adjustment pursuant to
Section 6 hereof. The New Warrants include the Exchange
Warrants, the Replacement Warrants and the MWD Warrants.
(v) Original Warrant Agreement: That certain Warrant
Agreement, dated August 8, 1995, between the Company and MW.
(w) Replacement Warrants: Warrants in the form
attached hereto as Exhibit A to be issued on the date hereof
pursuant to the Exchange Agreement in exchange for all of the
Vested Warrants, and all other warrants that may be issued in
their place, to purchase an aggregate of 2,200,000 shares of
Common Stock subject to adjustment pursuant to Section 6
hereof.
(x) Exchange Agreement: "Exchange Agreement" has the
meaning assigned thereto in the Recitals.
(y) Series A-B Warrants: "Series A-B Warrants" has the
meaning assigned thereto in the Recitals.
(z) Series C-O Warrants: "Series C-O Warrants" has the
meaning assigned thereto in the Recitals.
(aa) SEC: The Securities and Exchange Commission.
(ab) Securities Purchase Agreement: "Securities
Purchase Agreement" has the meaning assigned thereto in the
Recitals.
(ac) Term: "Term" has the meaning assigned thereto in
Section 15.
(ad) Warrants: The New Warrants.
(ae) Warrant Shares: "Warrant Shares" has the meaning
assigned thereto in Section 2.
B. Warrant Shares. Each New Warrant will initially be
exercisable for one share of Common Stock (a "Warrant Share"),
subject to adjustment pursuant to Section 6 hereof.
C. Vesting. All New Warrants shall be fully vested when
issued.
D. Expiration of Warrants. All Warrants shall expire at
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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.
E. Exercise of Warrants.
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.
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.
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.
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
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Warrant Shares and deliver such Warrant to the holder.
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.
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.
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.
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.
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
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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.
F. 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.
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
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aggregate number and kind of shares, subject to Section 6.4.
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.
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.
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G. 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.
- 9 -
H. 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.
I. 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.
J. 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.
K. 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.
L. 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.
M. 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
- 10 -
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 MPLP, or (iii) by
MPLP to its partners, and the partners or stockholders (direct or
remote) of such partners.
N. 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").
O. 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.
17. Cancellation and Return of Existing Warrants. Effective as
at the date hereof, all Existing Warrants including but not limited
to all of the Series A-B Warrants and the Series C-O Warrants issued
pursuant to the Original Warrant Agreement and the Securities
Purchase Agreement are deemed to have expired unexercised and are
hereby terminated. All Existing 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:
Xxxxxx X. Xxxxxxxx
Its Chief Executive Officer
Attest:_______________________
Secretary
XXXXXXXXXX XXXX & CO., INCORPORATED
By:
______ President
Attest:_______________________
Secretary
XXXXXXXXXX XXXX DIRECT, L.P.
By: MW Direct General, Inc., the
general partner
By:
Its:
Attest:_______________________
Secretary
MERCHANT PARTNERS, LIMITED
PARTNERSHIP
By: MERCHANT PARTNERS, LIMITED
PARTNERSHIP, the general partner
By: Merchant Development Corp.,
the general partner
By:
Its:
Attest:_______________________
Secretary
- 12 -
Exhibit B
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
Amended and Restated Registration Rights Agreement dated as of
September 28, 1996, by and among ValueVision International, Inc., a
Minnesota corporation (the "Company"), Xxxxxxxxxx Xxxx Direct, L.P.,
a Delaware limited partnership ("MWD"), Xxxxxxxxxx Xxxx & Co.,
Incorporated, an Illinois corporation ("MW")and Merchant Partners,
Limited Partnership, a Delaware limited partnership ( MPLP ).
R E C I T A L S
A. Pursuant to a Securities Purchase Agreement, dated as of
March 13, 1995, by and between the Company and MW (the "Securities
Purchase Agreement"), the Company agreed to issue and sell, and MW
agreed to purchase, 1,280,000 shares (the "Shares") of Common Stock
of the Company, under the terms and subject to the conditions set
forth therein.
B. Pursuant to the Securities Purchase Agreement, the Company
also agreed to issue and sell, and MW agreed to purchase, Existing
Warrants (as herein defined) to purchase an aggregate of 25,000,000
shares of the Common Stock of the Company, subject to adjustment,
under the terms and subject to the conditions set forth therein.
Existing Warrants of Series A and Series B, both inclusive (the
"Series A-B Warrants"), have vested, and Existing Warrants of Series
C through Series O, all inclusive (the "Series C-O Warrants") have
not vested.
C. Pursuant to the Securities Purchase Agreement, the Company
agreed to xxxxx XX certain registration rights with respect to the
Shares and the shares issued upon exercise of the Existing Warrants
and executed that certain Registration Rights Agreement, dated as of
August 8, 1995 (the Original Registration Rights Agreement ).
D. Pursuant to a certain Exchange Agreement, dated as of even
date herewith, between the Company and MW (the "Exchange Agreement"),
the Company and MW have agreed to exchange the Series C-O Warrants,
to amend and restate that certain Operating Agreement and that
certain Servicemark License Agreement, and to amend that certain
Credit Card Receivables Sale and Purchase Agreement, all dated as of
March 13, 1995, and to amend and restate that certain Warrant
Agreement, dated August 8, 1995 and this Agreement, all in
consideration of the issuance by VVI of new Series P Warrants ( New
Warrants ) to purchase an aggregate of 1,484,462 shares of Common
Stock.
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E. MWD is a wholly owned subsidiary of MW. Pursuant to an
Asset Purchase Agreement, dated as of August 1, 1996, between the
Company s subsidiary, ValueVision Direct Marketing Company, Inc.,
and MWD (the "Asset Purchase Agreement"), ValueVision Direct
Marketing Company, Inc. has agreed to deliver to MWD, as
consideration for the sale of all of MWD's assets, New Warrants to
purchase an aggregate of 1,484,993 shares of Common Stock ( MWD
Warrants ). MWD subsequently transferred all of its right title and
interest in and to the MWD Warrants to MW. In addition, MW
transferred certain of its Series P Warrants to MPLP. MWD no longer
desires to be a party to this Agreement but MPLP desires to be a
party to this Agreement.
F. Pursuant to the Exchange Agreement, dated as of September
28, 1996, between the Company and MW (the "Exchange Agreement"), VVI
and MW have agreed to exchange all of the Series A-B Warrants for
Series P Warrants to purchase 2,200,000 shares of Common Stock (the
Exchange Warrants ).
G. In connection with the cancellation of the Series C-O Warrants
and the issuance of the New Warrants, the parties agreed to amend and
restate the Original Registration Rights Agreement as set forth
herein.
H. In connection with the cancellation of the Series A-B Warrants
and the issuance of the Replacement Warrants, the parties desire to
amend and restate the Amended and Restated Registration Rights
Agreement as set forth herein.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the premises set forth herein
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, MWD and MW
agree that the Original Registration Rights Agreement is amended and
restated in its entirety to read as follows:
1. Definition of Terms. As used in this Registration Rights
Agreement, the following capitalized terms shall have the following
respective meanings:
(a) Asset Purchase Agreement: See Recital E.
(b) Business Day: A day other than a Saturday, Sunday or
other day on which banks in the State of Minnesota are authorized by
law to remain closed.
(c) Closing Date: August 8, 1995.
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(d) Common Stock: Common Stock, $.01 par value per share,
of the Company.
(e) Company: See the Preamble.
(f) Demand Notice: See Section 3(a).
(g) Demand Registration: See Section 3(a).
(h) Demand Registration Rights: See Section 3(a).
(i) Exchange Act: The Securities Exchange Act of 1934, as
amended.
(j) Exercise Price: The exercise price of a New Warrant
as indicated in, and as may be adjusted by, the Warrant Agreement.
(k) Expiration Date: 5:00 P.M., Minneapolis, Minnesota
time, on August 7, 2003, or if such day is not a Business Day, the
next succeeding day which is a Business Day.
(l) Inspectors: See Section 5(g).
(m) MW: See the Preamble.
(n) MWD: See the Preamble.
(o) NASD: National Association of Securities Dealers,
Inc. and NASDAQ: NASD Automated Quotation System.
(p) New Warrants: Series P warrants issued pursuant to
the Amended and Restated Exchange Agreement and the Asset Purchase
Agreement.
(q) Outstanding Registration Rights Agreement: The
Representative's Warrant Agreement dated as of November 15, 1993 by
and between the Company and Xxxxxx Xxxxxx Xxxxxxxx & Co., Inc.
(r) Person: An individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any
department or agency thereof.
(s) Piggyback Notice: See Section 2(a).
(t) Piggyback Registration: See Section 2(a).
(u) Piggyback Registration Rights: See Section 2(a).
(v) Prospectus: Any prospectus included in any
Registration Statement, as amended or supplemented by any prospectus
- 3 -
supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement
and all other amendments and supplements to the Prospectus, including
post-effective amendments and all material incorporated by reference
in such Prospectus.
(w) Public Offering: A public offering of any of the
Company's equity or debt securities pursuant to a registration
statement under the Securities Act.
(x) Records: See Section 5(g).
(y) Registration Expenses: Any and all expenses incurred
in connection with any registration or action incident to performance
of or compliance by the Company with this Agreement, including,
without limitation, (i) all SEC, national securities exchange and
NASD registration and filing fees; all listing fees and all transfer
agent fees; (ii) all fees and expenses of complying with state
securities or blue sky laws; (iii) all printing, mailing, messenger
and delivery expenses and (iv) all fees and disbursements of counsel
for the Company and of its accountants, including the expenses of any
special audits and/or "cold comfort" letters required by or incident
to such performance and compliance, but excluding underwriting
discounts and commissions, brokerage fees and transfer taxes, if any,
and fees of counsel or accountants retained by MW.
(z) Registration Notice: See Section 2(a).
(aa) Registration Period: The period of time from the
second anniversary of the Closing Date to the Expiration Date except
as provided in Sections 3(a), 3(b) and 5.
(ab) Registrable Securities: Any Shares or Warrant Shares
issued to MW or MPLP, including those which may thereafter be issued
by the Company in respect of any such securities by means of any
stock splits, stock dividends, recapitalizations, reclassifications
or the like, and as adjusted pursuant to the Amended and Restated
Warrant Agreement.
(ac) Registration Statement: Any registration statement of
the Company filed or to be filed with the SEC which covers any of the
Registrable Securities pursuant to the provisions of this Agreement,
including all amendments (including post-effective amendments) and
supplements thereto, all exhibits thereto and all material
incorporated therein by reference.
(ad) SEC: The Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or
the Exchange Act.
(ae) Securities Act: The Securities Act of 1933, as
- 4 -
amended.
(af) Securities Purchase Agreement: See Recital A.
(ag) Series A-B Warrants: See Recital B.
(ah) Series C-O Warrants: See Recital B.
(ai) Series P Warrants: See Recital B.
(aj) Shares: See Recital A.
(ak) Warrant Agreement: That certain Second Amended and
Restated Warrant Agreement, dated as of July 27, 1996, among the
Company, MW, MPLP and MWD.
(al) Warrant Shares: All shares of Common Stock issued or
issuable upon exercise of any or all of the New Warrants.
2. Piggyback Registration.
(a) Right to Include Registrable Securities. If at any
time during the Registration Period, the Company proposes to register
any of its securities under the Securities Act on any form for the
registration of securities under such Act, whether or not for its own
account (other than by a registration statement on Form X-0, X-0 or
other successor form), it shall as expeditiously as possible give
written notice (a "Registration Notice") to the holders of
Registrable Securities of its intention to do so. Upon the written
request of any such holder (a "Piggyback Notice", which notice shall
specify the Registrable Securities intended to be registered) made
within 20 days after receipt of a Registration Notice, the Company
shall include in the Registration Statement the Registrable
Securities (a "Piggyback Registration") which the Company has been so
requested by such holder to register, subject to the limitations
provided in the Existing Registration Rights Agreements. Such
holder's rights to register shares hereunder are referred to
hereinafter as "Piggyback Registration Rights."
(b) Withdrawal of Piggyback Registration by Company. If,
at any time after giving a Registration Notice but prior to the
effective date of the related Registration Statement, the Company
shall determine for any reason not to register such securities, the
Company shall give written notice of such determination to the
holders of the Registrable Securities sought to be registered and,
thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such Piggyback
Registration. All best efforts obligations of the Company shall
cease if the Company determines to terminate prior to such effective
date any registration where Registrable Securities are being
registered pursuant to this Section 2.
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(c) Piggyback Registration of Underwritten Public
Offerings. If a Piggyback Registration involves an offering by or
through underwriters, then, (i) the holders of the Registrable
Securities sought to be registered must agree to sell their
Registrable Securities included in the Company's Registration
Statement to the underwriters selected by the Company on the same
terms and conditions as apply to other selling shareholders and (ii)
such holders may elect in writing, not later than five Business Days
prior to the effectiveness of the Registration Statement filed in
connection with such registration, not to have their Registrable
Securities so included in connection with such registration.
(d) Payment of Registration Expenses for Piggyback
Registration. The Company shall pay all Registration Expenses in
connection with each registration of Registrable Securities requested
pursuant to a Piggyback Registration Right contained in this Section
2.
3. Demand Registration.
(a) Request for Registration. Upon the written request (a
"Demand Notice") of a holder of Registrable Securities at any time
during the Registration Period, and subject to the limitations
provided in the Existing Registration Rights Agreements, the Company
shall, as soon as practicable, use its best efforts to file a
Registration Statement (a "Demand Registration") with respect to all
Registrable Securities that such holder requested be registered in
the Demand Notice. Prior to the filing of such Demand Registration,
the Company shall give written notice to all other holders of
Registrable Securities of the Demand Registration. Upon the written
request of any such holder made within 20 days after receipt of such
notice, the Company shall include in the Demand Registration the
Registrable Securities that such holder requested be registered,
subject to the limitations provided in the Existing Registration
Rights Agreements. The rights of holders of Registrable Securities
to register shares hereunder are referred to hereinafter as "Demand
Registration Rights." The holders of Registrable Securities may in
the aggregate exercise up to two Demand Registration Rights during
the Registration Period. The Company shall use its best efforts to
obtain the effectiveness of the Registration Statement and to take
all other action necessary under any Federal or state law or
regulation to permit such Registered Securities to be sold or
otherwise disposed of, and the Company shall maintain such compliance
with each such Federal and state law and regulation for the period
necessary for the holder of Registrable Securities to effect the
proposed sale or other disposition (but in no event for more than 120
days). The Company shall be entitled to have the Demand Registration
prepared, filed and caused to become effective pursuant to Form S-3
or any successor form promulgated by the SEC ("Form S-3") pursuant to
this Section 3(a), so long as it is eligible to register its
- 6 -
securities pursuant to Form S-3 and Form S-3 is available for the
distribution contemplated by the holder of Registrable Securities.
(b) Deferment of Demand Registration by Company. The
Company shall be entitled to defer a Demand Registration for a period
of up to 120 days if and to the extent that its Board of Directors
shall determine in good faith that such registration would interfere
with a pending material corporate transaction which has been approved
by the Board of Directors of the Company. In such event, the
Registration Period shall be extended by the amount of such delay and
the related Demand Registration Right would be deemed not to be
exercised.
(c) Payment of Registration Expenses for Demand
Registration. Except as provided below, holders of Registrable
Securities sought to be registered shall pay the first $75,000 or
Registration Expenses, plus 50% of all remaining Registration
Expenses of a Demand Registration and the Company shall pay the
balance of such Registration Expenses; and holders of such
Registrable Securities and the Company shall pay the fees and
expenses of each of their respective legal counsel. A registration
will not count as a Demand Registration until it has become
effective, unless the holders demanding such registration withdraw
the Registrable Securities, in which case such demand will count as a
Demand Registration unless the holders of such Registrable Securities
agree to pay all Registration Expenses.
(d) Registration of Additional Securities. Except to the
extent required by the Outstanding Registration Rights Agreements,
neither the Company nor any other party may include in any
Registration Statement filed pursuant to a Demand Registration any
additional shares of Common Stock for registration for sale by the
Company or any other holder of securities. The Company shall not
grant any rights inconsistent with this Section 3(d).
(e) Priority in Demand Registration. If a Demand
Registration involves an offering by or through an underwriter or
underwriters, and the managing underwriter or underwriters of such
offering advise the Company and the holders of Registrable Securities
sought to be registered pursuant to such Demand Registration in
writing that in their opinion the size of the offering which such
holders and all other persons including the Company intend to make is
such that the success of the offering would be materially and
adversely affected by the inclusion of the Registrable Securities
requested to be included, then the amount of securities to be offered
for the account of holders of Registrable Securities shall be reduced
pro rata (according to the Registrable Securities proposed for
registration) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended
by such managing underwriter or underwriters; provided that if
securities are being offered for the account of other persons or
- 7 -
entities as well as the Company, then with respect to the Registrable
Securities intended to be offered by holders of Registrable
Securities, the proportion by which the amount of such securities is
reduced shall not exceed the proportion by which the amount of such
class of securities intended to be offered by such other persons or
entities is reduced, except to the extent such other persons are
entitled to a lesser reduction under the Existing Registration Rights
Agreements.
4. Company Buy-out of Piggyback Registration or Demand
Registration. In lieu of carrying out its obligations to effect a
Piggyback Registration or Demand Registration of any Registrable
Securities pursuant to this Agreement, the Company may carry out such
obligation by offering to purchase and purchasing such Registrable
Securities requested to be registered (a) in the case of outstanding
shares of Common Stock, at the last sale price of the Common Stock on
the day immediately prior to the day the request for registration is
made and (b) in the case of shares not yet purchased under the New
Warrants or Series A-B Warrants at an amount in cash equal to the
difference between (i) the last sale price of the Common Stock on the
day immediately prior to the day the request for registration is made
and (b) the Exercise Price in effect on such day.
5. Registration Procedures. Whenever a holder of Registrable
Securities has requested that any Registrable Securities be
registered pursuant to either Section 2 or 3 hereof, the Company will
use its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection with
any such request, the Company will as expeditiously as possible:
(a) prepare and file with the Commission a Registration
Statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall
be available for the sale of the Registrable Securities to be
registered thereunder in accordance with the intended method of
distribution thereof, and use its best efforts to cause such filed
registration statement to become effective; provided that before
filing a Registration Statement or Prospectus or any amendments or
supplements thereto, the Company shall furnish to one counsel
selected by such holder copies of all such documents proposed to be
filed, which documents will be subject to the review of such counsel,
and that after the filing of the registration statement, the Company
will promptly notify all holders of Registrable Securities of any
stop order issued or threatened by the SEC and take all reasonable
actions required to prevent the entry of such stop order or to remove
it if entered;
(b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep such Registration
- 8 -
Statement effective for a period of not less than 120 days or such
shorter period which will terminate when all Registrable Securities
covered by such Registration Statement have been sold (but not before
the expiration of the requirement of underwriters and dealers to
deliver Prospectuses in connection with such distribution) and comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement
during such period in accordance with the intended methods of
disposition by the selling holders thereof set forth in such
Registration Statement;
(c) furnish to each selling holder of Registrable
Securities and to each underwriter, prior to filing the Registration
Statement or Prospectus or any amendment or supplement thereto, if
requested, copies of such Registration Statement as proposed to be
filed, and thereafter furnish to each selling holder of Registrable
Securities and such underwriter such number of copies of such
Registration Statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the Prospectus included in
such Registration Statement (including each Preliminary Prospectus)
and such other documents as each selling holder of Registrable
Securities or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by
each selling holder of Registrable Securities;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws
of such jurisdictions as any selling holder of Registrable Securities
or any managing underwriter reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable
to enable any selling holder of Registrable Securities or such
managing underwriter to consummate the disposition in such
jurisdictions of the Registrable Securities owned by any selling
holder of Registrable Securities; provided that the Company will not
be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this clause, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any
such jurisdiction;
(e) use its best efforts to cause the Registrable
Securities covered by such Registration Statement to be registered
with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the
Company or its subsidiaries to enable any selling holder of
Registrable Securities and any managing underwriters to consummate
the disposition of such Registrable Securities;
(f) immediately notify each selling holder of Registrable
Securities, at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act, of the happening
- 9 -
of any event as a result of which the Prospectus included in such
Registration Statement contains an untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading, and the
Company will promptly prepare a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading;
(g) make available for inspection by each selling holder
of Registrable Securities, any underwriter participating in any
disposition pursuant to such Registration Statement, and any
attorney, accountant or other agent retained by any selling holder of
Registrable Securities or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due
diligence responsibilities, and cause the Company's officers,
directors and employees to supply all information reasonably
requested by any such Inspector in connection with such Registration
Statement. Records which the Company determines, in good faith, to
be confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of
such Records is necessary in the opinion of the underwriter's
counsel, if any, or counsel to selling holders of Registrable
Securities to avoid or correct a material misstatement or omission in
the Registration Statement, or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or governmental agency, or (iii) the
information in such Records has been made generally available to the
public. Each selling holder of Registrable Securities agrees that it
will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction or by a governmental agency, give
notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of the
Records deemed confidential;
(h) for purposes of a Demand Registration only, furnish to
each selling holder of Registrable Securities and to each
underwriter, if any, (x) an opinion or opinions of counsel to the
Company and (y) a comfort letter or comfort letters from the
Company's independent public accountants, each in customary form and
covering such matters of the type customarily covered by opinions or
by comfort letters, as the case may be, as any selling holder of
Registrable Securities or the managing underwriter reasonably
requests;
(i) otherwise use its best efforts to comply with all
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applicable rules and regulations of the SEC, and make generally
available to its security holders, as soon as reasonably practicable,
an earnings statement covering a period of twelve months, beginning
within three months after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Act and Rule 158 thereunder;
(j) use its best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed; and
(k) cooperate with the selling holders of Registrable
Securities, the underwriter or underwriters (or broker/dealer
involved in the distribution), if any, and their respective counsel
in connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
If any Demand Registration is requested to be in the form of an
underwritten offering, the selection of the managing underwriter
shall be subject to the Company's consent, which consent shall not be
unreasonably withheld. If requested by the underwriters for any
underwritten offering, the Company shall enter into an underwriting
agreement in customary form with such underwriters for such offering,
but subject to the Company's reasonable approval. The selling
holders of the Registrable Securities shall be a party to such
underwriting agreement. All fees and expenses (other than
Registration Expenses otherwise required to be paid) of any managing
underwriter, any co-manager or any independent underwriter shall be
paid for by such underwriters or by such selling holders.
The Company may require the selling holders of Registrable
Securities to furnish to the Company such information regarding the
distribution of such Registrable Securities as the Company may from
time to time reasonably request and such other information as may be
legally required or reasonably requested in connection with such
registration.
Each selling holder of Registrable Securities agrees that, upon
receipt of any notice from the Company of the happening of any event
of the kind described in Section 5(f) hereof, such selling holder
will forthwith discontinue disposition of such Registrable Securities
pursuant to the Registration Statement covering such Registrable
Securities until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(f)
hereof, and, if so directed by the Company, such holder will deliver
to the Company (at the Company's expense) all copies, other than
permanent file copies then in such holder's possession, of the
Prospectus covering such Registrable Securities current at the time
of receipt of such notice. In the event the Company shall give any
such notice, the Company shall extend the period during which such
Registration Statement shall be maintained effective pursuant to this
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Agreement (including the period referred to in Section 5(b) hereof)
by the number of days during the period from and including the date
of the giving of such notice pursuant to Section 5(f) hereof to and
including the date when each seller of Registrable Securities covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 5(f)
hereof.
Except as otherwise provided in this Agreement, the Company shall
have sole control in connection with the preparation, filing,
withdrawal, amendment or supplementing of each Registration
Statement, the selection of underwriters, and the distribution of any
preliminary prospectus included in the Registration Statement, and
may include within the coverage thereof additional shares of Common
Stock or other securities for its own account or for the account of
one or more of its other security holders.
6. Indemnification.
(a) Indemnification by Company. In connection with each
Registration Statement relating to disposition of Registrable
Securities, the Company shall indemnify and hold harmless each
selling holder of Registrable Securities and each underwriter of
Registrable Securities and each Person, if any, who controls any
selling holder of Registrable Securities or underwriter (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable
investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of any action, suit or proceeding
or any claim asserted), to which they, or any of them, may become
subject under the Securities Act, the Exchange Act or other Federal
or state law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement, Prospectus or
preliminary prospectus or any amendment thereof or supplement
thereto, or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that such indemnity shall not inure to the benefit
of any selling holder of Registrable Securities or underwriter (or
any Person controlling any selling holder of Registrable Securities
or underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) on account of any losses, claims,
damages or liabilities arising from the sale of the Registrable
Securities if such untrue statement or omission or alleged untrue
statement or omission was made in such Registration Statement,
Prospectus or preliminary prospectus, or such amendment or
supplement, in reliance upon and in conformity with information
furnished in writing to the Company by such selling holder of
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Registrable Securities or underwriter specifically for use therein.
The Company shall also indemnify selling brokers, dealer managers and
similar securities industry professionals participating in the
distribution, their officers and directors and each Person who
controls such Persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same extent
as provided above with respect to the indemnification of the Holders
of Registrable Securities, if requested. The indemnification
obligation imposed on the Company under this Section 6(a) shall be in
addition to any liability which the Company may otherwise have.
(b) Indemnification by Holder of Registrable Securities.
In connection with each Registration Statement, each selling holder
of Registrable Securities shall indemnify, to the same extent as the
indemnification provided by the Company in Section 6(a), the Company,
its directors and each officer who signs the Registration Statement
and each Person who controls the Company (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act)
but only insofar as such losses, claims, damages and liabilities
arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which was made in the
Registration Statement, the Prospectus or preliminary prospectus or
any amendment thereof or supplement thereto, in reliance upon and in
conformity with information furnished in writing by such selling
holder of Registrable Securities to the Company specifically for use
therein. In no event shall the liability of any selling holder of
Registrable Securities hereunder be greater in amount than the dollar
amount of the net proceeds received by any selling holder of
Registrable Securities from the sale of the Registrable Securities
giving rise to such indemnification obligation. The Company shall be
entitled to receive indemnities from underwriters participating in
the distribution, in the underwriting agreement pursuant to which
such sales are made, with respect to information so furnished in
writing by such Persons specifically for inclusion in any Prospectus,
Registration Statement or preliminary prospectus or any amendment
thereof or supplement thereto.
(c) Conduct of Indemnification Procedure. Any party that
proposes to assert the right to be indemnified hereunder will,
promptly after receipt of notice of commencement of any action, suit
or proceeding against such party in respect of which a claim is to be
made against an indemnifying party or parties under this Section,
notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served.
No indemnification provided for in this Section shall be available to
any party who shall fail to give notice as provided in this Section 6
if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced
by the failure to give such notice but the omission so to notify such
indemnifying party of any such action, suit or proceeding shall not
relieve it from any liability that it may have to any indemnified
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party for contribution or otherwise than under this Section. In case
any such action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and the
approval by the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses,
except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall
have the right to employ its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has
been authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in
which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party)
or (iii) the indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without
its written consent, but if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party shall indemnify and hold harmless
such indemnified parties from and against any loss or liability (to
the extent stated above) by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that
are the subject matter of such proceeding.
(d) Contribution. If the indemnification provided for in
this Section 6 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party
shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities or
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expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in Section 6(c), any
legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding. The parties hereto
agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation
or by any other method of allocation which does not take account of
the equitable considerations referred to in this Section 6(d). No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(e) Priority of Indemnification. If indemnification is
available under this Section 6, the indemnifying parties shall
indemnify each indemnified party to the full extent provided in
subparagraphs (a) and (b) of this paragraph without regard to the
relative fault of said indemnifying party or indemnified party or any
other equitable consideration provided for in this Section 6.
7. Assignment. The Piggyback Rights, Demand Registration
Rights and any other rights of MW and MPLP pursuant to this Agreement
shall run in favor of any subsequent holder of Registrable
Securities.
8. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing
and shall be delivered, or mailed first-class postage prepaid,
registered or certified mail,
if to MW, addressed to:
XXXXXXXXXX XXXX & CO, INCORPORATED
Xxxxxxxxxx Xxxx Plaza
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
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if to MPLP, addressed to:
MERCHANT PARTNERS, LIMITED PARTNERSHIP
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Bank
in case of either (i) or (ii), with a copy to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
Telecopier: (000) 000-0000
if to the Company, addressed to:
VALUEVISION INTERNATIONAL, INC.
0000 Xxxxx Xxx Xxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Chief Executive Officer
with a copy to:
Maslon, Edelman, Xxxxxx & Brand, a professional
limited liability partnership
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx
and such notices and other communications shall for all purposes of
this Agreement be treated as being effective or having been given if
delivered personally, or, if sent by mail, when received.
9. Headings. The headings of the Sections and paragraphs of
this Agreement have been inserted for convenience of reference only
and do not constitute part of this Agreement.
10. Choice of Law. It is the intention of the parties that the
laws of Minnesota shall govern the validity of this Agreement, the
construction of its terms and the interpretation of the rights and
duties of the parties.
11. Counterparts. This Agreement may be executed concurrently
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
12. Invalid Provisions. If any provision of this Agreement is
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held to be illegal, invalid or unenforceable under present or future
law, such provision shall be fully severable, and this Agreement
shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement,
and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or its severance from this Agreement.
13. Termination of MWD s Interest. Upon execution of the this
Agreement by the parties hereto, MWD shall cease to be a party to
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
agreement as of the date first above written.
VALUEVISION INTERNATIONAL, INC.
By:
Xxxxxx X. Xxxxxxxx
Its Chief Executive Officer
XXXXXXXXXX XXXX & CO., INCORPORATED
By:
_____ President
XXXXXXXXXX XXXX DIRECT, L.P.
By: MW Direct General, Inc., the
general partner
By:
Its:
MERCHANT PARTNERS, LIMITED
PARTNERSHIP
By: MERCHANT PARTNERS, LIMITED
PARTNERSHIP, the general partner
By: Merchant Development Corp.,
the general partner
By:
Its:
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