1
Shareholder Agreement
FORM OF
SHAREHOLDER AGREEMENT
dated as of ____, 1999
among
Valuation International, Inc.
and
G.E. Capital Equity Investments, Inc.
2
Shareholder Agreement
FORM OF
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of ________, 1999, among ValueVision
International, Inc., a Minnesota corporation (together with its successors, the
"Company"), and G.E. Capital Equity Investments, Inc., a Delaware corporation
(together with its successors, "GE Capital Equity Investments").
W I T N E S S E T H :
WHEREAS, the parties hereto have entered into an Investment
Agreement dated as of March ___, 1999 (the "Investment Agreement"), pursuant to
which the Investor (as defined below) has agreed to purchase shares of Series A
Redeemable Convertible Preferred Stock (the "Preferred Stock") and a warrant to
purchase Common Stock of the Company (the "Purchase Warrant");
WHEREAS; the Company and NBC, an Affiliate of the Investor as of the
date hereof, have entered into the Distribution Agreement (as defined below),
pursuant to which the Company has agreed to issue to NBC or its designee (i)
warrants to purchase 1,450,000 shares of Common Stock of the Company (the
"Initial Distributor Warrants") and (ii) at agreed upon times and subject to the
satisfaction of certain conditions contained therein, additional warrants to
purchase Common Stock of the Company (the "Bonus Distributor Warrants"); and
WHEREAS, the parties hereto deem it in their best interests and in
the best interests of the Company to provide for certain matters with respect to
the governance of the Company and desire to enter into this Agreement in order
to effectuate that purpose.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the parties hereto hereby agree as follows:
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Shareholder Agreement
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Adjusted Outstanding Common Stock" shall mean, at any time, the
total number of shares of outstanding Common Stock at such time; provided
that for purposes of such calculation (a) all shares of Common Stock
issuable upon conversion of the then outstanding Preferred Stock shall be
considered outstanding, (b) all shares of Common Stock issuable upon
exercise of the outstanding Initial Distributor Warrants (whether such
Initial Distributor Warrants are vested or unvested) shall be considered
outstanding, (c) to the extent that Bonus Distributor Warrants have been
issued and are outstanding (and only to such extent), all shares of Common
Stock issuable upon the exercise of such issued and outstanding Bonus
Distributor Warrants (whether such Bonus Distributor Warrants are vested
or unvested) shall be considered outstanding and (d) if Shareholder
Approval has been obtained(and only in such case) the maximum number of
shares of Common Stock then issuable upon exercise of the Purchase Warrant
shall be considered outstanding.
"Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly controls, is controlled by, or is under common
control with, such Person. As used in this definition, "control"
(including its correlative meanings, "controlled by" and "under common
control with") shall mean the possession, directly or indirectly, of power
to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership
interests, by contract or otherwise).
"Agreement" shall mean this Agreement as in effect on the date
hereof and as hereafter from time to time amended, modified or
supplemented in accordance with the terms hereof.
"Beneficially Own" shall have the meaning set forth in Rule 13d-3
under the Exchange Act, except that a Person shall be deemed to
"Beneficially Own" all securities that such Person has a right to acquire,
whether such right is exercisable immediately or only after the passage of
time (and without any additional condition), provided that a Person shall
not be deemed to "Beneficially Own" any shares of Common Stock which are
issuable upon exercise of any
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Bonus Distributor Warrants unless and until such Bonus Distributor
Warrants are actually issued and outstanding (at which time such Person
shall be deemed to Beneficially Own all shares of Common Stock which are
issuable upon exercise of such Bonus Distributor Warrants, whether or not
they are vested or unvested)and, provided further, except as expressly
provided in this Agreement no Person shall be deemed to "Beneficially Own"
any securities issuable upon exercise of the Purchase Warrant unless and
until the Shareholder Approval is obtained. In the event that the
Shareholder Approval is obtained, when calculating Beneficial Ownership on
any particular date after receipt of such Shareholder Approval, the
Purchase Warrant will be deemed to represent Beneficial Ownership of the
maximum number of shares of Common Stock that could be acquired upon
exercise of the Purchase Warrant on such date.
"Board of Directors" shall mean the Board of Directors of the
Company as from time to time hereafter constituted.
"Business Day" shall mean any day, other than a Saturday, Sunday or
a day on which commercial banks in New York, New York are authorized or
obligated by law or executive order to close.
"Certificate of Designation" shall mean the Certificate of
Designation of the Preferred Stock, filed with the Secretary of State of
the State of Minnesota on or prior to the date hereof.
"Change in Control of the Company" shall mean any of the following:
(i) a merger, consolidation or other business combination or transaction
to which the Company is a party if the shareholders of the Company
immediately prior to the effective date of such merger, consolidation or
other business combination or transaction, as a result of such merger,
consolidation or other business combination or transaction, do not have
Beneficial Ownership of voting securities representing 50% or more of the
Total Current Voting Power of the surviving corporation following such
merger, consolidation or other business combination or transaction; (ii)
an acquisition by any Person (other than the Restricted Parties and their
Affiliates or any 13D Group to which any of them is a member) of
Beneficial Ownership of Voting Stock of the Company representing 25% or
more of the Total Current Voting Power of the Company, (iii) a sale of all
or substantially all the consolidated assets of the Company to any Person
or Persons (other than Restricted Parties and their Affiliates or any 13D
Group to which any of them is a member); or (iv) a liquidation or
dissolution of the Company.
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"Common Stock" shall mean the common stock, par value $0.01 per
share, of the Company and any securities of the Company into which such
Common Stock may be reclassified, exchanged or converted.
"Company" shall have the meaning set forth in the preamble hereto.
"Designee" shall have the meaning set forth in Section 2.1(d).
"Disinterested Shareholders" shall mean any shareholder of the
Company who is not a Restricted Party or an Affiliate of a Restricted
Party or a member of a 13D Group in which a Restricted Party or an
Affiliate of a Restricted Party is also a member.
"Distribution Agreement" shall mean the Distribution and Marketing
Agreement dated March 8, 1999 between the Company and NBC pursuant to
which NBC has agreed to distribute certain programing of the Company, as
such agreement may be amended from time to time.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"GE Capital" shall mean General Electric Capital Corporation, a New
York corporation, together with its successors by operation of law.
"Independent Expert" shall mean an investment banking firm mutually
acceptable to the Company and the Investor.
"Investor" shall mean G.E. Capital Equity Investments, a
wholly-owned Subsidiary of GE Capital as of the date hereof and an
Affiliate of NBC as of the date hereof, together with its permitted
assigns pursuant to Section 5.6.
"Investment Agreement" shall have the meaning set forth in the
recitals hereto, as such agreement may be amended from time to time.
"Investor Tender Offer" shall mean a bona fide public tender offer
subject to the provisions of Regulation 14d under the Exchange Act, by a
Restricted Party (or any 13D
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Group that includes a Restricted Party) to purchase or exchange for cash
or other consideration any Voting Stock and which consists of an offer to
acquire 100% of the Total Current Voting Power of the Company then in
effect (other than Voting Stock owned by Restricted Parties or any
Affiliate of a Restricted Party) and is conditioned (which condition may
not be waived) on a majority of the shares of Voting Stock held by
Disinterested Shareholders being tendered and not withdrawn with respect
to such offer.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or security agreement of any kind
or nature whatsoever (including, without limitation, any conditional sale
or other title retention agreement or any financing lease having
substantially the same effect as any of the foregoing).
"Market Capitalization" shall mean the aggregate Market Price of the
outstanding capital stock of the Company.
"Market Price" shall mean, with respect to a share of capital stock
on any day, except as set forth below in the case that the shares of such
capital stock are not publicly held or listed, the average of the "quoted
prices" of such capital stock for 30 consecutive Trading Days commencing
45 Trading Days before the date in question. The term "quoted prices" of
capital stock shall mean the last reported sale price on that day or, in
case no such reported sale takes place on such day, the average of the
last reported bid and asked prices, regular way, on that day, in either
case, as reported in the consolidated transaction reporting system with
respect to securities quoted on Nasdaq or, if shares of such capital stock
are not quoted on Nasdaq, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which shares of such capital
stock are listed or admitted to trading or, if shares of such capital
stock are not quoted on Nasdaq and not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices on such other
nationally recognized quotation system then in use, or, if on any such day
shares of such capital stock are not quoted on any such quotation system,
the average of the closing bid and asked prices as furnished by a
professional market maker selected by the Board of Directors making a
market in the shares of such capital stock. Notwithstanding the foregoing,
if shares of such capital stock are not publicly held or so listed, quoted
or publicly traded, the "Market Price" shall mean the fair market value of
a share of such capital stock,
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Shareholder Agreement
as determined in good faith by the Board of Directors; provided, however,
that if the Investor shall dispute the fair market value as determined by
the Board of Directors, the Investor and the Company shall retain an
Independent Expert. The determination of fair market value by the
Independent Expert shall be final, binding and conclusive on the Company
and the Investor. All costs and expenses of the Independent Expert shall
be borne by the Investor unless the determination of fair market value is
more favorable to such Investor by 5% or more, in which case, all such
costs and expenses shall be borne by the Company.
"Material Agreement" shall mean any contract, lease, restriction,
agreement, instrument or commitment to which the Company or any Subsidiary
of the Company is a party or by which its properties are bound (i) which
provides a benefit to the Company or any of its Subsidiaries of, or
commits the Company or any Subsidiary of the Company to expend, $500,000
or more (or, in the case of any agreement with any customer of the Company
or any Company Subsidiary of the Company, $50,000 or more), (ii) which if
breached by any party thereto would result in liability or loss to the
Company and its Subsidiaries of $500,000 or more (or in the case of any
agreement with any customer of the Company or any Subsidiary of the
Company, $50,000 or more) or(iii) which provides for the distribution of
programming of the Company to more than 250,000 full-time equivalent homes
by any multichannel video programming distributor, including without
limitation, by a cable television system, MATV and SMATV systems, MMDS,
TVRO and other wireline, wireless or direct broadcast satellite delivery
methods.
"Material Subsidiaries" shall mean those Subsidiaries of the Company
that constitute "significant subsidiaries" as defined in Rule 1-02 of
Regulation S-X under the Securities Act.
"Material Transaction" shall mean (i) the direct or indirect
acquisition or purchase of 5% or more of the assets (based on the fair
market value thereof) of the Company and its Subsidiaries, taken as a
whole, or of 5% or more of any class of equity securities of the Company
or any of its Subsidiaries or any tender offer or exchange offer
(including by the Company or its Subsidiaries) that if consummated would
result in any person beneficially owning 5% or more of any class of equity
securities of the Company or any of its Subsidiaries, or (ii) any merger,
consolidation, business combination, sale of all or substantially all
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or
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Shareholder Agreement
any of its Subsidiaries other than the transactions contemplated by the
Investment Agreement or this Agreement.
"NBC" shall mean National Broadcasting Company, Inc., a Delaware
corporation and Affiliate of the Investor as of the date hereof and a
wholly-owned Subsidiary of General Electric Company as of the date hereof,
together with its successors by operation of law
"NBC Restricted Person" shall mean each of the Persons listed on
Annex A hereto together with their respective Affiliates.
"Options" shall mean stock options to purchase Common Stock.
"Permitted Liens" shall mean (i) mechanics', carriers', repairmen's
or other like Liens arising or incurred in the ordinary course of
business, (ii) Liens arising under original purchase price conditioned
sales contracts and equipment leases with third parties entered into in
the ordinary course of business consistent with past practice, (iii)
statutory Liens for Taxes not yet due and payable and (iv) other
encumbrances or restrictions or imperfections of title which do not
materially impair the continued use and operation of the assets to which
they relate.
"Person" shall mean an individual, corporation, unincorporated
association, partnership, group (as defined in Section 13(d)(3) of the
Exchange Act), trust, joint stock company, joint venture, business trust
or unincorporated organization, limited liability company, any
governmental entity or any other entity of whatever nature.
"Preferred Stock" shall mean the Series A Redeemable Convertible
Preferred Stock, par value $0.01 per share, of the Company.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated as of the date hereof between the Company and the
Investor, as it may be amended from time to time.
"Representatives" shall mean, with respect to any Person, such
Person's directors, officers, employees, agents and other representatives
acting in such capacity.
"Restricted Parties" shall mean each of (i) NBC, its Ultimate Parent
Entity (if any), each Subsidiary of NBC and each Subsidiary of its
Ultimate Parent Entity, (ii) GE
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Capital, its Ultimate Parent Entity (if any), each Subsidiary of GE
Capital and each Subsidiary of its Ultimate Parent Entity and (iii) any
Affiliate of any Person that is a Restricted Party if (and only if) such
Restricted Party has the right or power (acting alone or solely with other
Restricted Parties) to either cause such Affiliate to comply with or
prevent such Affiliate from not complying with all of the terms of this
Agreement that are applicable to Restricted Parties.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Shareholder Approval" shall mean the approval at the Shareholder
Meeting by the Company's shareholders of the Purchase Warrant.
"Shareholders Meeting" shall mean the meeting of shareholders of
Company, which meeting the Company shall hold and convene promptly after
the date hereof in order to vote on certain matters including, but not
limited to, the Purchase Warrant.
"Shareholders Vote" shall mean the vote of the shareholders of the
Company taken at the Shareholders Meeting.
"Standstill Limit" means Beneficial Ownership of 39.9% of the
Adjusted Outstanding Common Stock.
"Standstill Period" shall mean the period beginning on the date
hereof and ending on the occurrence of a Standstill Termination Event,
provided that the Standstill Period shall recommence immediately upon the
occurrence of a Standstill Reinstatement Event.
"Standstill Reinstatement Event" shall mean the occurrence of any of
the following (a) the Standstill Period has terminated pursuant to clause
(iii) of the definition of "Standstill Termination Event" and such Third
Party Tender Offer is withdrawn or terminated (without having been
consummated) at any time during which an Investor Tender Offer is not then
pending (unless the party that commenced such Investor Tender Offer
determines to terminate such Investor Tender Offer in accordance with
Section 4.1(f), in which event a Standstill Reinstatement Event shall
occur at the time of such termination), or (b) the Standstill Period
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has terminated pursuant to clause (iv) of the definition of "Standstill
Termination Event" due to a Change of Control identified in clause (ii) of
the definition thereof and, within twelve months after the occurrence of
such Change in Control, the Person whose Beneficial Ownership of Voting
Stock triggered such Change of Control no longer Beneficially Owns 25% or
more of the Total Current Voting Power of the Company or (c) the
Standstill Period has terminated pursuant to clause (ii) of the definition
of "Standstill Termination Event," the relevant agreement that would have
otherwise resulted in a Change of Control has been terminated without a
Change of Control having occurred and subsequent to the occurrence of such
Standstill Termination Event but prior to the termination of such
agreement (x) the Restricted Parties have not acquired actual ownership of
Voting Stock representing in the aggregate a majority of the Total Current
Voting Power of the Company, (y) no Restricted Party has made any proposal
or offer to the Company regarding a Takeover Proposal (other than any such
proposal or offer that has been withdrawn by the party making such
proposal or offer or is no longer being pursued) and (z) no Restricted
Party has commenced any tender or exchange offer that is pending when such
agreement is terminated and that, if completed, would result in the
Restricted Parties having actual ownership of Voting Stock representing in
the aggregate a majority of the Total Current Voting Power of the Company.
Notwithstanding the foregoing, a Standstill Reinstatement Event will not
occur if prior to the occurrence of the event specified in clause (a), (b)
or (c) above that would otherwise result in a Standstill Reinstatement
Event, another Standstill Termination Event occurs for which there has not
been a related Standstill Reinstatement Event.
"Standstill Revised Limit" shall mean the percentage of the Adjusted
Outstanding Common Stock Beneficially Owned by the Restricted Parties as
of the occurrence of a Standstill Reinstatement Event.
"Standstill Termination Event" shall mean the earliest to occur of
the following: (i) the tenth anniversary of the date of this Agreement,
(ii) the date the Company enters into an agreement relating to a
transaction that if consummated will result in a Change in Control of the
Company, (iii) a Third Party Tender Offer, (iv) any Change in Control of
the Company occurs, or (v) the six month anniversary of the date on which
the Investor is no longer entitled to designate any nominees to the Board
of Directors pursuant to Section 2.1; provided, that the Standstill Period
will be immediately reinstated upon the occurrence of a Standstill
Reinstatement Event; provided further that,
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upon a Standstill Reinstatement Event, if the Standstill Revised Limit is
greater than the Standstill Limit, then the Standstill Revised Limit and
not the Standstill Limit shall thereafter be deemed the Standstill Limit
for all purposes hereunder.
"Subsidiary" shall mean, as to any Person, a corporation,
partnership, limited liability company, joint venture or other entity of
which shares of stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, directly or indirectly
through one or more intermediaries (including, without limitation, other
Subsidiaries), or both, by such Person.
"Takeover Transaction" shall mean (A) any of the matters set forth
in clause (i) of the definition of Material Transaction but replacing "5%"
with "50%" each place "5%" is used in such definition, (B) a sale of all
or substantially all of the assets of the Company and its Subsidiaries or
(C) a merger or consolidation of the Company.
"Third Party Tender Offer" shall mean a bona fide public offer
subject to the provisions of Regulation 14D under the Exchange Act, by a
Person (which is not made by and does not include any of the Company, a
Restricted Party or any Affiliate of any of them or any 13D Group that
includes the Company, a Restricted Party or any Affiliate of them) to
purchase or exchange for cash or other consideration any Voting Stock and
which consists of an offer to acquire 25% or more of the then Total
Current Voting Power of the Company.
"13D Group" means any "group" (within the meaning of Section 13(d)
of the Exchange Act) formed for the purpose of acquiring, holding, voting
or disposing of Voting Stock.
"Total Current Voting Power" shall mean, with respect to any
corporation the total number of votes which may be cast in the election of
members of the Board of Directors of the corporation if all securities
entitled to vote in the election of such directors (excluding shares of
preferred stock that are entitled to elect directors only upon the
occurrence of customary events of default) are present and voted (it being
understood that the Preferred Stock will be included on an as converted
basis in the calculation of Total Current Voting Power of the Company).
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"Transfer" shall have the meaning set forth in Section 4.2.
"Ultimate Parent Entity" shall mean, with respect to any Person (the
"Subject Person"), the Person (if any) that (i) owns, directly or
indirectly through one or more intermediaries, or both, shares of stock or
other ownership interests having ordinary voting power (other than stock
or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors
or other managers of the Subject Person and (ii) is not itself a
Subsidiary of any other Person or is a natural person.
"Voting Stock" shall mean shares of the Common Stock and Preferred
Stock and any other securities of the Company having the ordinary power to
vote in the election of members of the Board of Directors of the Company.
"Warrants" shall mean the Purchase Warrant, the Initial Distributor
Warrants and the Bonus Distributor Warrants.
ARTICLE II
CORPORATE GOVERNANCE
Section 2.1 Board of Directors.
(a) The Company shall immediately expand the size of the Board of
Directors to seven directors and, pursuant to the terms of the Certificate of
Designation, appoint to the Board of Directors two individuals designated by the
Investor as the holder of a majority of the outstanding shares of Preferred
Stock. The directors designated by the Investor shall be subject to the
reasonable approval of a majority of the members of the Board of Directors and
shall continue to serve as directors until the next election of directors.
(b) If the Shareholder Approval is obtained, (i) as long as the
Restricted Parties continue to Beneficially Own an aggregate number of shares of
Common Stock equal to or greater than 50% of the number of shares of Common
Stock which the Restricted Parties Beneficially Own on the date hereof (making
equitable adjustments for any conversions, reclassifications, reorganizations,
stock dividends, stock splits, reverse splits and similar events which occur
with respect to the Common Stock), the Investor shall be entitled to designate
two individuals to be nominated to the Board of Directors or (ii) if the
condition in clause (i) of this paragraph (b) is not satisfied, then as long as
the Restricted Parties shall continue to Beneficially Own at
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least 10% of the Adjusted Outstanding Common Stock, the Investor shall be
entitled to designate one individual to be nominated to the Board of Directors.
For purpose of clause (i) above, the Preferred Stock and the Purchase Warrant
will be treated as outstanding and exercisable as of the date hereof.
(c) If the Shareholder Approval is not obtained, (i) as long as the
Restricted Parties continue to Beneficially Own an aggregate number of shares of
Common Stock equal to or greater than 75% of the number of shares of Common
Stock which the Restricted Parties Beneficially Own on the date hereof (making
equitable adjustments for any conversions, reclassifications, reorganizations,
stock dividends, stock splits, reverse splits and similar events which occur
with respect to the Common Stock), the Investor shall be entitled to designate
two individuals to be nominated to the Board of Directors or (ii) if the
condition in clause (i) of this paragraph (c) is not satisfied, then as long as
the Restricted Parties shall continue to Beneficially Own an aggregate number of
shares of Common Stock equal to or greater than 50% of the number of shares of
Common Stock which the Restricted Parties Beneficially Own on the date hereof
(making equitable adjustments for any conversions, reclassifications,
reorganizations, stock dividends, stock splits, reverse splits and similar
events which occur with the respect to Common Stock), the Investor shall be
entitled to designate one individual to be nominated to the Board of Directors.
For purposes of this paragraph (c), the Purchase Warrant will not be deemed to
be outstanding on the date hereof.
(d) Any individual so designated by the Investor pursuant to
paragraphs (b) or (c) of this Section 2.1 (each a "Designee") that has not
previously served as a member of the Board of Directors shall be subject to the
reasonable approval of a majority of the members of the Board of Directors.
(e) As long as a majority of the outstanding shares of Preferred
Stock are owned by the Restricted Parties and the Investor is otherwise entitled
to designate nominee(s) for election as director(s) pursuant to Section 2.1, the
Designee(s) will be elected to the Board of Directors by the holders of the
Preferred Stock voting separately as a class, as provided in the Certificate of
Designation. If the Restricted Parties no longer own a majority of the
outstanding shares of Preferred Stock (or no shares of Preferred Stock are
outstanding) but the Investor is otherwise entitled to designate nominee(s) for
election as director(s) pursuant to Section 2.1, the Company shall nominate each
such Designee for election as a director as part of the management slate that is
included in the proxy statement (or consent solicitation or similar document) of
the Company relating to the election of directors, and shall provide the same
support for the election of each such Designee as it provides to other
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persons standing for election as directors of the Company as part of the
Company's management slate.
(f) Subject to applicable law, in the event that any Designee on the
Board of Directors shall cease to serve as a director for any reason (other than
the failure of the shareholders of the Company to elect such person as
director), the vacancy resulting therefrom shall be filled by another Designee.
(g) For the avoidance of doubt, nothing in this Section 2.1 or
elsewhere in this Agreement is intended to prohibit the Restricted Parties from
nominating and electing a majority of the members of the Board of Directors if
the Restricted Parties have actual ownership of Voting Stock representing in the
aggregate a majority of the Total Current Voting Power and the Standstill Period
is no longer in effect.
(h) For as long as the Investor can designate nominee(s) for
election as director(s) pursuant to Section 2.1 and the Investor's Designee(s)
have been included in the Company's management slate for election as directors
in accordance with Section 2.1 in each vote (or written consent in lieu of) for
election of directors, the Restricted Parties will vote (or execute a written
consent in lieu of) in each shareholder vote (or written consent in lieu of) for
the election of directors of the Company all of their Voting Stock (other than
shares of Preferred Stock that vote for directors as a separate class from the
Common Stock) (i) if there is no bona fide proxy contest for the election of
directors, in favor of the management slate that is included in the proxy
statement (or consent solicitation or similar document) of the Company relating
to the election of directors or (ii) if there is a bona fide proxy contest for
the election of directors, at the election of each Restricted Party either (x)
in favor of the management slate that is included in the proxy statement (or
consent solicitation or other similar document) of the Company relating to the
election of directors or (y) in the same proportion as all votes cast by
Disinterested Shareholders. The Restricted Parties' obligations hereunder will
terminate on the earlier to occur of (A) the termination of the Standstill
Period, or (B) the five year anniversary of the date hereof.
(i) As long as the Investor is entitled to designate two persons for
nomination as directors, the then current Investor may assign pursuant to
Section 5.6 the right to designate pursuant to the terms and conditions hereof
one of such nominees to any other Restricted Party (such that two Restricted
Parties each have the right to designate one nominee; it being understood that
in such a case for all purposes of this Agreement where rights or obligations of
the Investor or the Restricted
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Parties are determined by the number of nominees the Investor is entitled to
designate, the Investor will be deemed to have the right to designate two
nominees).
Section 2.2 Board Committees. As long as the Investor has the right
to designate at least one nominee to the Board of Directors, unless otherwise
agreed to by the Investor, (a) each of the Audit Committee and the Compensation
Committee of the Board of Directors shall contain at least one Designee and (b)
each other committee of the Board of Directors shall contain a number of
Designees (to the extent available), rounded upward to the nearest whole number,
equal to the total number of directors on such committee multiplied by the
percentage of the entire Board of Directors who are Designees.
Section 2.3 Reimbursement of Expenses; Attendance at Board Meetings;
Indemnification. The Company will reimburse each Designee that serves as a
director for all reasonable costs and expenses (including travel expenses)
incurred in connection with such director's attendance at meetings of the Board
or any committee of the Board upon which such director serves. The Company will
not pay such director annual fees and fees for attending Board or committee
meetings. The Company shall indemnify each such director to the same extent it
indemnifies its other directors pursuant to its organizational documents and
applicable law.
Section 2.4 Consultation and Other Rights. As long as the Investor
has the right to designate at least one nominee to the Board of Directors, it
shall have: (i) the right to examine the books and records of the Company and
(ii) the right to have its representative consult with the Company's executive
officers regarding business strategies, operating priorities and other major
corporate issues.
ARTICLE III
CERTAIN AGREEMENTS
Section 3.1 Financial Statements and Other Reports. As long as the
Investor has the right to designate at least one person to be nominated for
election to the Board of Directors pursuant to Section 2.1, the Company will
deliver, or cause to be delivered to the Investor:
(a) between 30 days prior to and 60 days after the end of each
fiscal year, a budget (on a monthly basis) for the Company and its
Subsidiaries for the following fiscal year (including consolidating and
consolidated statements of operations);
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(b) as soon as available and in any event within 45 days after the
end of each month, consolidating and consolidated statements of operations
of the Company and its Subsidiaries for such month and for the period from
the beginning of the current fiscal year to the end of such month and a
consolidated balance sheet of the Company and its Subsidiaries as at the
end of such period and setting forth, in each case, in comparative form,
figures for the corresponding month and period in the preceding fiscal
year and the budget for such month and for the period from the beginning
of the current fiscal year to the end of such month, all in reasonable
detail and certified by an authorized financial officer of the Company as
fairly presenting in all material respects the financial condition and
results of operations of the Company and its Subsidiaries on a
consolidated basis in accordance with GAAP;
(c) as soon as practicable and in any event within 45 days after the
end of each fiscal quarter of the Company, consolidating and consolidated
statements of operations and cash flow of the Company and its Subsidiaries
for such quarter and for the period from the beginning of the current
fiscal year to the end of such quarter and a consolidated balance sheet of
the Company and its Subsidiaries as at the end of such quarter, setting
forth, in each case, in comparative form, figures for the corresponding
quarter in the preceding fiscal year and the budget for such quarter, all
in reasonable detail, and certified by an authorized financial officer of
the Company as fairly presenting in all material respects the financial
condition and results of operations of the Company and its Subsidiaries on
a consolidated basis in accordance with GAAP;
(d) as soon as available and in any event within 120 days after the
end of each fiscal year, consolidating and consolidated statements of
operations, shareholders' equity and cash flow of the Company and its
Subsidiaries for such fiscal year, and the related consolidating and
consolidated balance sheets of the Company and its Subsidiaries as at the
end of such fiscal year, setting forth, in each case, in comparative form,
corresponding consolidated and consolidating figures from the preceding
fiscal year, all in reasonable detail and accompanied (i) in the case of
such consolidated statements and balance sheet of the Company, by an
opinion thereon of independent certified public accountants of recognized
national standing (which shall be generally recognized as one of the "Big
Five" independent public accounting firms), which opinion shall state that
such consolidated financial statements fairly present the consolidated
financial condition and results of operations
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of the Company and its Subsidiaries as at the end of, and for, such fiscal
year in accordance with GAAP, and (ii) in the case of such consolidating
statements and balance sheets, by a certificate of an authorized financial
officer of the Company, which certificate shall state that such
consolidating financial statements fairly present, in all material
respects, the respective individual unconsolidated financial condition and
results of operations of the Company and of each of its Subsidiaries, in
each case in accordance with GAAP, consistently applied, as at the end of,
and for, such fiscal year;
(e) promptly upon transmission thereof to the shareholders of the
Company generally or to any other security holder of the Company,
including, without limitation, any holder of debt, copies of all financial
statements, notices, certificates, annual reports and proxy statements so
transmitted;
(f) promptly upon receipt thereof, a copy of each other report
submitted to the Company or any of its Subsidiaries by independent
accountants in connection with any annual, interim or special audit of the
books of the Company or any of its Subsidiaries made by such accountants,
or any management letters or similar document submitted to the Company or
any of its Subsidiaries by such accountants;
(g) promptly upon any material revision to the budgets referred to
in paragraph (a) above, such monthly budgets, as revised;
(h) promptly upon any officer of the Company obtaining knowledge
thereof, notice of any event of default under any credit agreement, loan
agreement or indenture that the Company is party to; and
(i) with reasonable promptness, such other information and data with
respect to the Company or any of its Subsidiaries as the Investor may
reasonably request.
Section 3.2 Certain Transactions with NBC Restricted Persons. (a)
The Company agrees for the benefit of the Restricted Parties that except with
the prior written consent of the Investor and except as may be expressly
permitted by this Agreement, the Company and its Subsidiaries shall not,
directly or indirectly:
(i) issue or sell to any NBC Restricted Person, or authorize or
propose the issuance or sale to any NBC Restricted Person of, any capital
stock, partnership or limited liability company interests or other equity
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securities of the Company or any Subsidiary of the Company or any options,
warrants or other rights (including, without limitation, any convertible
or exchangeable securities) to acquire, any such capital stock,
partnership or limited liability interests or other equity securities;
(ii) form, enter into or join any partnership or joint venture with,
sell or dispose of any business or any assets (other than inventory and
any other assets disposed of in the ordinary course consistent with past
practice of such business) to, or make any investment in any NBC
Restricted Person;
(iii) enter into any transaction involving the incurrence of
indebtedness (other than in the ordinary course of business consistent
with past practice) involving any NBC Restricted Person;
(iv) authorize, enter into or approve any Material Transaction with
any NBC Restricted Person or enter into any discussions or negotiations
relating to any inquiry, proposal or offer relating thereto;
(v) enter into any joint marketing or co-branding arrangement with
any NBC Restricted Person, license or otherwise grant to any NBC
Restricted Person the right to utilize any trademark, tradename or brand
of the Company or any Subsidiary of the Company or grant to any NBC
Restricted Person any rights to have a branded presence on any media of
the Company or its Subsidiaries or rights to cross-promote home shopping
transactions; or
(vi) authorize or commit or agree to take any of the foregoing
actions.
(b) The provisions of this Section 3.2 shall terminate and be of no
further force or effect at such time as the Investor is no longer entitled to
designate at least one person to be nominated for election to the Board of
Directors pursuant to Section 2.1. In addition, the provisions of this Section
3.2 shall terminate and be of no further force or effect with respect to those
NBC Restricted Persons (and their Affiliates) set forth on Annex B hereto
(collectively, the "Annex B Entities") in the event that (i) NBC or any of its
Subsidiaries or Affiliates enters into a significant transaction with any Annex
B Entity (the "Relevant Entity") that precludes NBC and its Subsidiaries from
entering into a significant transaction with any one of the other Annex B
Entities and (ii) during the period ending six months after the occurrence of an
event specified in clause (i), neither the Company nor any of its Subsidiaries
has entered into
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an agreement providing for a significant transaction with the Relevant Entity or
its Affiliate.
Section 3.3 Certain Other Transactions.
For as long as the Investor is entitled to designate two persons to
be nominated for election to the Board of Directors pursuant to Section 2.1, the
Company agrees that except with the prior written consent of the Investor, the
Company and its Subsidiaries shall not, directly or indirectly:
(a) issue or sell, or authorize or propose the issuance or sale, of
any capital stock of the Company, or any options, warrants or other rights
(including, without limitation, any convertible or exchangeable
securities) to acquire capital stock of the Company other than (i)
pursuant to Options outstanding on the date hereof or issued pursuant to
clause (ii) below, (ii) Options to be issued to officers, directors,
employees or consultants of the Company pursuant to any plan or
arrangement approved by the Company's shareholders, (iii) upon conversion
of the Preferred Stock outstanding on the date hereof or pursuant to the
Warrants, (iv) the issuance of Common Stock and other Voting Stock in an
aggregate amount not to exceed (x) during any twelve month period 15% of
the Total Voting Power of the Company as of the first day of such twelve
month period and (y) during any twenty-four month period 25% of the Total
Voting Power of the Company as of the first day of such twenty-four month
period, provided that no issuance will be made to any Person pursuant to
this clause (iv) who, together with its Affiliates, to the knowledge of
the Company after reasonable inquiry, would Beneficially Own securities
representing 10% or more of the Total Voting Power of the Company
following such issuance and (v) issuances of non-voting capital stock that
does not violate the terms of the Preferred Stock;
(b) declare or pay any dividends or distributions to holders of
Common Stock in any fiscal quarter exceeding in the aggregate 5% of the
Market Capitalization of the Company as of the first day of such fiscal
quarter or repurchase or redeem any Common Stock except (i) repurchases
and redemption of Common Stock from officers, directors, employees or
consultants of the Company and its Subsidiaries and (ii) repurchases and
redemptions of Common Stock in any fiscal quarter that, when aggregated
with all distributions and dividends on the Common Stock in such fiscal
quarter, do not exceed 5% of the Market Capitalization of the Company as
of the first day of such fiscal quarter;
(c) enter into or effect any single or related series of
acquisitions of businesses or assets or investments
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therein (including, without limitation, forming, entering into or joining
any joint venture), other than money market instruments and trade
receivables, pursuant to which the fair market value of the aggregate
purchase price paid, or investment made, by the Company and its
Subsidiaries will exceed the greater of (x) $35 million or (y) 10% of the
Market Capitalization of the Company at the time the Company or its
Subsidiaries enter into an agreement to effect such acquisition or
investment;
(d) enter into or effect any single or related series of sales,
leases or other dispositions of assets having a Fair Market Value in
excess of the greater of (x) $35 million or (y) 10% of the Market
Capitalization of the Company at the time the Company or its Subsidiaries
enter into an agreement to effect such sale, lease or other disposition;
(e) incur indebtedness for borrowed money that would cause the
Company's consolidated indebtedness to exceed the greater of (x) $40
million and (y) an amount equal to 30% of the Company's total
capitalization; for purposes of this clause (e) "total capitalization"
means the sum of consolidated shareholders equity and consolidated
indebtedness;
(f) issue any series or class of capital stock having (i) voting
rights that are disproportionate relating to its economic interest or (ii)
a separate class vote on any Takeover Transaction;
(g) enter into any business, either directly or indirectly, except
for those businesses in which the Company and/or its Subsidiaries and/or
its Affiliates are engaged in on the date hereof and those businesses
which are ancillary, complementary or reasonably related thereto;
(h) amend the Articles of Incorporation so as to adversely affect
the Restricted Parties (it being understood that increases in the
authorized capital stock of the Company and/or creation of a staggered
Board of Directors will not be deemed to adversely affect the Restricted
Parties); or
(i) authorize or commit or agree to take any of the foregoing
actions.
Section 3.4 Other Covenants. (a) The Company agrees that except with
the prior written consent of the Investor and except as otherwise expressly
permitted by this Agreement, it and its Subsidiaries shall not, directly or
indirectly:
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(i) adopt any shareholders rights plan, or amend any of its
organizational documents or enter into any Material Agreement with a third
party or issue any capital stock or other securities, the provisions of
which, upon the acquisition of all of the outstanding Common Stock or any
portion thereof by any Restricted Party would be violated or breached, or
which would require a consent, approval or notice thereunder, or which
would result in a default thereof (or an event which, with notice or lapse
of time or both, would constitute a default), or which would result in the
termination thereof or accelerate the performance required thereby, or
would result in a right of termination or acceleration thereunder, or
result in the creation of any Lien (except Permitted Liens) upon any of
the properties or assets of the Company or Material Subsidiaries
thereunder or disadvantage the Restricted Parties relative to other
shareholders on the basis of the size of their shareholdings or otherwise
restrict or impede the ability of the Restricted Parties to acquire
additional shares of Voting Stock or dispose of such Voting Stock in any
manner permitted by Section 4.2 to any Restricted Party or to any Person
that would Beneficially Own (together with such Person's Ultimate Parent
Entity, Subsidiaries and Affiliates) less than 10% of the Adjusted
Outstanding Common Stock;
(ii) Take any action that would cause any ownership interest in any
of the following to be attributable to any Restricted Party for purposes
of FCC regulations: (i) a U.S. broadcast radio or television station, (ii)
a U.S. cable television system, (iii) a U.S. "daily newspaper" (as such
term is defined in Section 73.3555 of the rules and regulations of the
Federal Communications Commission, as the same may be amended from time to
time), (iv) any U.S. communications facility operated pursuant to a
license granted by the Federal Communications Commission ("FCC") and
subject to the provisions of Section 310(b) of the Communications Act of
1934, as amended, or (v) any other business which is subject to FCC
regulations under which the ownership of a Person may be subject to
limitation or restriction as a result of the interest in such business
being attributed to such Person.
(b) The provisions of Section 3.4(a)(i) shall terminate and be of no
further force or effect at such time as the Investor is no longer entitled to
designate at least one person to be nominated for election to the Board of
Directors pursuant to Section 2.1.
Section 3.5 Houston Station. The Company and its Subsidiaries shall
use all commercially reasonable efforts to
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dispose of their interests in KVVV-TV Channel 00 Xxxxxxx, Xxxxx as soon as
practicable.
Section 3.6 No Reinstatement of Rights. Anything in this Agreement
to the contrary notwithstanding, to the extent the Restricted Parties fail to
satisfy any ownership threshold set forth herein so that any rights of the
Investor under this Agreement and/or obligations of the Company under this
Agreement terminate, such terminated rights and/or obligations will not be
reinstated if the Restricted Parties thereafter satisfy such ownership
threshold.
ARTICLE IV
STANDSTILL AGREEMENTS
Section 4.1 Standstill Agreement.
(a) During the Standstill Period (and during the Standstill Period
only), no Restricted Party will, directly or indirectly, nor will it authorize
or direct any of its Representatives to (and will take appropriate action
against such Representatives to discourage), in each case unless specifically
requested to do so in writing in advance by the Board of Directors:
(i) acquire or agree, offer, seek or propose to acquire, or cause to
be acquired, ownership of any assets or businesses of the Company or any
of its Subsidiaries having a fair market value in excess of 10% of the
fair market value of all of the Company's and its Subsidiaries' assets, or
any rights or options to acquire any such ownership (including from a
third party);
(ii) acquire or agree, offer, seek or propose to acquire, or cause
to be acquired, Beneficial Ownership of any Common Stock of the Company or
any of its Subsidiaries, or any options, warrants or other rights
(including, without limitation, any convertible or exchangeable
securities) to acquire any such Voting Stock, in any case other than the
Preferred Stock, the Warrants and any Voting Stock issuable upon
conversion or exercise of the Preferred Stock or Warrants; provided,
however, that after the Shareholder Meeting (or if earlier August 31,
1999) the Restricted Parties may acquire or agree, offer, seek or propose
to acquire, or cause to be acquired, shares of Voting Stock of the Company
(or any convertible or exchangeable securities) to acquire any such Voting
Stock if such acquisition would not increase the Restricted Parties'
aggregate Beneficial Ownership of shares of Common Stock to more than the
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Standstill Limit (other than due to the issuance of additional Bonus
Distributor Warrants; provided that if the issuance of additional Bonus
Distributor Warrants results in the Restricted Parties' aggregate
Beneficial Ownership of shares of Common Stock exceeding the Standstill
Limit, then at any time during the Standstill Period (and only during the
Standstill Period) when the Standstill Limit is so exceeded, the
Restricted Parties shall not exercise any Bonus Distributor Warrants
unless (A) such exercise occurs during the six months prior to the
expiration or termination of such Bonus Distributor Warrants or (B)
immediately upon such exercise, the Restricted Parties' aggregate actual
ownership of outstanding shares of Common Stock would not exceed 39.9% of
the total outstanding shares of Common Stock, treating as outstanding and
actually owned for such purpose shares of Common Stock issuable upon
conversion of the Preferred Stock or upon the exercise of the Initial
Distributor Warrants, but no shares of Common Stock issuable upon exchange
or conversion of any other rights, warrants, options or other securities).
Notwithstanding the foregoing, during the Standstill Period, the holder of
a Warrant will not disclaim Beneficial Ownership of such Warrant and for
as long as the Purchase Warrant is outstanding and exercisable, no
Restricted Party will acquire actual ownership of any shares of Common
Stock other than (x) through exercise of the Warrants or conversion of the
Preferred Stock and (y) other acquisitions of shares of Common Stock at a
price per share equal to or greater than the applicable price set forth in
Section 8(a)(ii) of the Purchase Warrant (during the period prior to the
second anniversary of the Issue Date under the Warrant) or Section
8(b)(ii) of the Purchase Warrant (during the period on and after the
second anniversary of such Issue Date and prior to the fifth anniversary
of such Issue Date).
(iii) make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the SEC) with
respect to the voting of any securities of the Company or any of its
Subsidiaries, provided that the limitation contained in this clause (iii)
shall not apply to any Takeover Transaction to be voted on by the
Company's shareholders that is not instituted or proposed by any
Restricted Party or any Affiliate of a Restricted Party or any 13D Group
of which any Restricted Party or any Affiliate of a Restricted Party is a
member;
(iv) deposit any securities of the Company or any of its
Subsidiaries in a voting trust or subject any such securities to any
arrangement or agreement with any Person (other than one or more
Restricted Parties);
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(v) form, join, or in any way become a member of a 13D Group with
respect to any voting securities of the Company or any of its Subsidiaries
(other than a "group" consisting solely of Restricted Parties);
(vi) arrange any financing for, or provide any financing commitment
specifically for, the purchase of any voting securities or securities
convertible or exchangeable into or exercisable for any voting securities
or assets of the Company or any of its Subsidiaries, except for such
assets as are then being offered for sale by the Company or such
Subsidiary;
(vii) otherwise act, whether alone or in concert with others, to
seek to propose to the Company any tender or exchange offer, merger,
business combination, restructuring, liquidation, recapitalization or
similar transaction involving the Company or any of its Subsidiaries, or
nominate any person as a director of the Company who is not nominated by
the then incumbent directors, or propose any matter to be voted upon by
the shareholders of the Company; provided that the Restricted Entities may
nominate directors in accordance with Section 2.1 and, provided further,
the provisions of this clause (vii) will not prohibit or restrict any
Restricted Party from entering into any agreement, arrangement or
understanding relating to the Transfer of any securities in accordance
with Section 4.2 or engaging in an discussion or negotiations relating to
any potential Transfer of any securities in accordance with Section 4.2;
(viii) solicit, initiate, encourage or knowingly or intentionally
facilitate the taking of any action by any Affiliate of a Restricted Party
(that is not itself a Restricted Party) that would be prohibited by this
Section 4.1 if that Affiliate were a Restricted Party; or
(ix) publicly announce or disclose any intention, plan or
arrangement inconsistent with the foregoing.
(b) In addition, during the Standstill Period (and only during the
Standstill Period), no Restricted Party will, nor will they authorize or direct
any of their respective Representatives to, take any action that they reasonably
believe based on the advice of outside counsel would require the Company to make
a public announcement regarding any of the matters set forth in Section 4.1(a)
(other than in connection with the transactions contemplated by the Investment
Agreement).
(c) If, at any time during the Standstill Period, (i) any Person
other than a Restricted Party or any Affiliate thereof
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or any 13D Group of which any Restricted Party is a member has made any inquiry,
proposal or offer relating to a Takeover Transaction or Change in Control of the
Company which has not been rejected by the Board of Directors, (ii) the Board of
Directors has determined to pursue a Takeover Transaction or other Change in
Control of the Company and the Board of Directors has not resolved to stop
pursuing such Takeover Transaction or other Change in Control of the Company or
(iii) the Board of Directors or the Company has engaged in any discussions or
negotiations with, or provided any information to, any Person other than a
Restricted Party or any Affiliate thereof or any 13D Group of which any
Restricted Party is a member with respect to a potential Takeover Transaction or
other Change in Control of the Company or any potential inquiry, proposal or
offer relating thereto and the Board of Directors has not resolved to terminate
all such discussions, negotiations and provision of information, then, for so
long as such condition continues to apply, the limitation on the actions
described in clause (a)(vii) above shall not be applicable to the Restricted
Parties (but all other provisions of this Agreement will, subject to Section
4.1(d), continue to apply).
(d) Anything in this Section 4.1 to the contrary notwithstanding,
this Section 4.1 shall not prohibit or restrict any of the following: (x)
actions taken by the Investor's nominees on the Board of Directors in such
capacity, (y) the exercise by the Restricted Parties of their voting rights
(i.e., their right to vote their shares but not their right to make nominations,
to the extent prohibited by this Agreement, or take other related actions
otherwise prohibited by this Section 4.1) with respect to any shares of Voting
Stock they Beneficially Own and (z) any disclosure pursuant to Section 13(d) of
the Exchange Act which a Restricted Party reasonably believes, based on the
advice of outside counsel, is required in connection with any action taken by a
Restricted Party pursuant to Section 4.1(c).
(e) Following the expiration of the Standstill Period pursuant to
clause (i) of the definition of Standstill Termination Event and for two years
following the expiration of the Standstill Period pursuant to clause (v) of the
definition of Standstill Termination Event, no Restricted Party will purchase or
otherwise acquire any shares of Common Stock if such acquisition would increase
the Restricted Parties' aggregate Beneficial Ownership of shares of Common Stock
to more than 39.9% of the Adjusted Outstanding Common Stock except (x) increases
in Beneficial Ownership resulting from issuance of the Warrants or the exercise
of the Warrants or (y) pursuant to a Purchaser Tender Offer.
(f) If the Standstill Period terminates pursuant to clause (iii) of
the definition of "Standstill Termination Event"
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and the subject Third Party Tender Offer is terminated at any time during which
an Investor Tender Offer is then pending, unless otherwise agreed by the
Company, the Restricted Party that commenced such Investor Tender Offer (the
"Tendering Restricted Party") will not complete such Investor Tender Offer until
at least the sixth business day after the termination of such Third Party Tender
Offer. If, within two business days after termination of the subject Third Party
Tender Offer, the Company requests in writing that the Tendering Restricted
Party terminate its Investor Tender Offer and by the end of the second business
day after the receipt of such request the Tendering Restricted Party has not
terminated its Investor Tender Offer, then the provisions of Section 3.4(a)(i)
shall no longer prohibit the Company from amending its then existing
shareholders rights plan or adopting a shareholders rights plan that could be
triggered by the Restricted Parties if (and, only if) they subsequently acquired
Beneficial Ownership of additional Voting Securities that would increase the
Restricted Parties' aggregate Beneficial Ownership of shares of Common Stock to
more than the Standstill Limit (determined for these purposes as if a Standstill
Reinstatement Event had occurred on such date) other than as a result of the
acquisition of Beneficial Ownership of additional shares of Common Stock upon
the issuance or exercise of additional Bonus Distributer Warrants.
Section 4.2 Transfer Restrictions. Unless the Restricted Parties
Beneficially Own in the aggregate less than 5% of the Adjusted Outstanding
Common Stock or until the Restricted Parties Beneficially Own in the aggregate
at least 90% of the Adjusted Outstanding Common Stock, the Restricted Parties
shall not, directly or indirectly, sell, transfer or otherwise dispose of
(collectively, "Transfer") any of the Preferred Stock, Warrants or shares of
Common Stock Beneficially Owned by such Persons, except for Transfers: (i) to
Restricted Parties or to Affiliates who agree to be Restricted Parties bound by
the provisions of this Agreement, (ii) which have been consented to by the
Company, (iii) pursuant to a Third Party Tender Offer, provided that the
Restricted Parties may not Transfer pursuant to this clause (iii) any shares of
Common Stock acquired upon exercise of the Purchase Warrant on or after the date
of commencement of such Third Party Tender Offer or the public announcement by
the offeror thereof or that such offeror intends to commence such Third Party
Tender Offer, (iv) pursuant to a merger, consolidation or reorganization to
which the Company is a party, (v) in a bona fide public distribution or bona
fide underwritten public offering, (vi) pursuant to Rule 144 of the Securities
Act or (vii) in a private sale or pursuant to Rule 144A of the Securities Act;
provided that, in the case of any Transfer pursuant to clause (v) or (vii), such
Transfer does not result in, to the knowledge of the Restricted Parties after
reasonable inquiry, any other Person acquiring, after giving
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effect to such Transfer, Beneficial Ownership, individually or in the aggregate
with such Person's Ultimate Parent Entity, Subsidiaries and Affiliates, of more
than 10% of the Adjusted Outstanding Common Stock.
Section 4.3 Certain Permitted Transactions and Communications.
Notwithstanding the foregoing, this Agreement shall not prohibit (i) the
acquisition or holding of securities or rights in the ordinary course of
business by any employee benefit plan whose trustees, investment managers or
similar advisors are not Affiliates of any Restricted Party, (ii) the
consummation of any transaction expressly provided for in the Investment
Agreement or the Operating Agreement including the acquisition and/or exercise
of the Warrants or any purchase of shares of Common Stock upon conversion of
Preferred Stock or (iii) officers and employees of the Restricted Parties from
communicating with officers of the Company or its Affiliates on matters related
to or governed by the Distribution Agreement, the Operating Agreement or other
operational matters, or the Restricted Parties from communicating with the Board
of Directors, the Chairman of the Board of Directors, the Chief Executive
Officer or the Chief Financial Officer of the Company, so long as such
communication is conveyed in confidence, does not require public disclosure by
the Restricted Parties or, in the reasonable belief (based on the advice of
outside counsel) of the Restricted Party making such communication, by the
Company, and is not intended to (A) elicit, and, in the reasonable belief (based
on the advice of outside counsel) of the Restricted Party making such
communication, does not require the issuance of, a public response by the
Company or (B) otherwise circumvent the provisions of Section 4.1.
ARTICLE V
Miscellaneous
Section 5.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given, if delivered
personally, by telecopier or sent by overnight courier as follows:
(a) If to the Investor, to:
G.E. Capital Equity Investments, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Fax: (000) 000-0000
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with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Fax: (000) 000-0000
(b) If to the Company, to:
ValueVision International, Inc.
0000 Xxxxx Xxx Xxxx
Xxxx Xxxxxxx, XX 00000-0000
Attention: General Counsel
Fax: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
Section 5.2 Entire Agreement; Amendment. This Agreement sets forth
the entire agreement between the parties hereto with respect to the transactions
contemplated by this Agreement. Any provision of this Agreement may be amended
or modified in whole or in part at any time by an agreement in writing between
the parties hereto executed in the same manner as this Agreement. No failure on
the part of any party to exercise, and no delay in exercising, any right shall
operate as a waiver thereof nor shall any single or partial exercise by any
party of any right preclude any other or future exercise thereof or the exercise
of any other right.
Section 5.3 Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
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Section 5.4 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to constitute an original, but
all of which together shall constitute one and the same document.
Section 5.5 Governing Law; Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed and construed in accordance with the laws of the
State of New York applicable to contracts executed and performed within such
state, and each party hereby submits to the jurisdiction of any state or U.S.
federal court sitting within the County of New York, New York or the County of
Hennepin, Minnesota. The parties hereto waive all right to trial by jury in any
action, suit or proceeding brought to enforce or defend any rights or remedies
under this Agreement.
Section 5.6 Successors and Assigns; Third Party Beneficiaries.
Subject to applicable law, GE Capital Equity Investments may assign its rights
under this Agreement in whole or in part only to a Restricted Party, but no such
assignment shall relieve GE Capital Equity Investments of its obligations
hereunder unless GE Capital Equity Investments' obligations hereunder are
assumed by NBC and/or GE Capital in a written agreement reasonably acceptable to
the Company delivered to the Company (in which case GE Capital Equity
Investments will be released from its obligations hereunder except for its
obligations as a Restricted Party to comply with the terms hereof). The Company
may not assign any of its rights or delegate any of its duties under this
Agreement without the prior written consent of the Investor. Any purported
assignment in violation of this Section shall be void. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any Person
other than the Restricted Parties (who shall be third party beneficiaries of
this Agreement entitled to the benefit of, and to enforce, its terms) and the
Company and their respective successors, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the Restricted Parties and the Company and
their respective successors, and for the benefit of no other Person. No
purchaser of Preferred Stock, Warrants or Common Stock from a Restricted Party
(other than another Restricted Party) shall be deemed to be a successor or
assignee by reason merely of such purchase.
Section 5.7 Arbitration. Any controversy, dispute or claim arising
out of, in connection with or in relation to the interpretation, performance or
breach of this Agreement, shall be determined, at the request of any party, by
arbitration in a city mutually agreeable to the parties to such controversy,
dispute or claim before and in accordance with the then-existing Rules for
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Shareholder Agreement
Commercial Arbitration of the American Arbitration Association, and any judgment
or award rendered by the arbitrator will be final, binding and unappealable and
judgment may be entered by any state or Federal court having jurisdiction
thereof. The pretrial discovery procedures of the Federal Rules of Civil
Procedure shall apply to any arbitration under this Section 5.7. Any controversy
concerning whether a dispute is an arbitrable dispute or as to the
interpretation or enforceability of this Section 5.7 shall be determined by the
arbitrator. The arbitrator shall be a retired or former United States District
Judge or other person acceptable to each of the parties, provided such
individual has substantial professional experience with regard to corporate or
partnership legal matters. The parties intend that this agreement to arbitrate
be valid, enforceable and irrevocable.
Section 5.8 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in
addition to any other remedy to which they are entitled at law or in equity.
Section 5.9 Headings, Captions and Table of Contents. The section
headings, captions and table of contents contained in this Agreement are for
reference purposes only, are not part of this Agreement and shall not affect the
meaning or interpretation of this Agreement.
Section 5.10 Confidentiality. The provisions of Sections 1, 2 and 8
of the confidentiality agreement dated June 24, 1998 between the Company and the
Investor (the "Investor Confidentiality Agreement") shall continue and be in
full force and effect and apply to each Restricted Party as if it were the
Investor until the later to occur of the termination of the Distribution
Agreement and termination of the Investor's rights to designate at least one
director for nomination to the Board of Directors of the Company pursuant to
Section 2.1. All other provisions of the Investor Confidentiality Agreement and
the confidentiality agreement dated January 28, 1999 (as amended on February 28,
1999) between the Company and NBC are hereby terminated.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto or by their respective duly authorized representatives, all as of
the date first above written.
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Shareholder Agreement
VALUEVISION INTERNATIONAL, INC.
By:________________________________
Name:
Title:
G.E. CAPITAL EQUITY INVESTMENTS,
INC.
By:________________________________
Name:
Title:
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