EXHIBIT 10.1
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
BY AND AMONG
VALUEVISION INTERNATIONAL, INC.,
NATIONAL MEDIA CORPORATION,
AND
X-X HOLDINGS CORP.
___________________________________
DATED AS OF JANUARY 5, 1998
____________________________________
TABLE OF CONTENTS
PAGE
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ARTICLE I. THE MERGERS 2
Section 1.1. Certificate of Incorporation and Bylaws of Parent. 2
Section 1.2. The ValueVision Merger. 2
Section 1.3. The National Media Merger. 2
Section 1.4. Effective Time of the Mergers. 2
Section 1.5. Closing. 3
Section 1.6. Effect of the Mergers. 3
Section 1.7. Articles or Certificate of Incorporation and Bylaws
of the Surviving Corporations. 4
Section 1.8. Directors and Officers of the Surviving Corporations. 4
ARTICLE II. CONVERSION OF SECURITIES 4
Section 2.1. Conversion of ValueVision Capital Stock. 4
Section 2.2. Conversion of National Media Capital Stock. 5
Section 2.3. Cancellation of Parent Common Stock. 7
Section 2.4. Exchange of Certificates. 7
Section 2.5. Dissenting Shares. 10
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF VALUEVISION 10
Section 3.1. Organization of ValueVision. 11
Section 3.2. ValueVision Capital Structure. 11
Section 3.3. Authority; No Conflict; Required Filings and Consents. 12
Section 3.4. SEC Filings; Financial Statements. 14
Section 3.5. No Undisclosed Liabilities. 15
Section 3.6. Absence of Certain Changes or Events. 15
Section 3.7. Taxes. 15
Section 3.8. Properties. 16
Section 3.9. Intellectual Property. 17
Section 3.10. Agreements, Contracts and Commitments. 17
Section 3.11. Litigation. 17
Section 3.12. Environmental Matters. 18
Section 3.13. Employee Benefit Plans. 18
Section 3.14. Compliance With Laws. 21
Section 3.15. Accounting and Tax Matters. 21
Section 3.16. Registration Statement; Joint Proxy Statement/Prospectus. 21
Section 3.17. Labor Matters. 22
Section 3.18. Insurance. 22
Section 3.19. Opinion of Financial Advisor. 22
Section 3.20. No Existing Discussions. 22
Section 3.21. Sections 302A.671 and 302A.673 of the MBCA Not Applicable. 22
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF NATIONAL MEDIA 23
Section 4.1. Organization of National Media. 23
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Section 4.2. National Media Capital Structure. 24
Section 4.3. Authority; No Conflict; Required Filings and Consents. 25
Section 4.4. SEC Filings; Financial Statements. 26
Section 4.5. No Undisclosed Liabilities. 27
Section 4.6. Absence of Certain Changes or Events. 27
Section 4.7. Taxes. 28
Section 4.8. Properties. 29
Section 4.9. Intellectual Property. 29
Section 4.10. Agreements, Contracts and Commitments. 29
Section 4.11. Litigation. 29
Section 4.12. Environmental Matters. 29
Section 4.13. Employee Benefit Plans. 30
Section 4.14. Compliance With Laws. 33
Section 4.15. Accounting and Tax Matters. 33
Section 4.16. Registration Statement; Joint Proxy Statement/Prospectus. 34
Section 4.17. Labor Matters. 34
Section 4.18. Insurance. 34
Section 4.19. Opinion of Financial Advisor. 35
Section 4.20. No Existing Discussions. 35
Section 4.21. Section 203 of the DGCL and Sections 2538, 2555, and
2564 of the Pennsylvania Business Corporation Law Not
Applicable. 35
Section 4.22. National Media Rights Plan. 35
ARTICLE V. COVENANTS 35
Section 5.1. Conduct of Business. 35
Section 5.2. Cooperation; Notice; Cure. 37
Section 5.3. No Solicitation. 38
Section 5.4. Joint Proxy Statement/Prospectus; Registration Statement. 39
Section 5.5. Nasdaq Quotation and NYSE Listing. 40
Section 5.6. Access to Information. 40
Section 5.7. Stockholders Meetings. 40
Section 5.8. Legal Conditions to Merger. 40
Section 5.9. Public Disclosure. 41
Section 5.10. Tax-Free Reorganization and Transfer. 42
Section 5.11. Affiliate Agreements. 42
Section 5.12. National Listing or Nasdaq Quotation. 42
Section 5.13. Stock Plans. 43
Section 5.14. Brokers or Finders. 44
Section 5.15. Indemnification. 44
Section 5.16. Letter of National Media's Accountants. 45
Section 5.17. Letter of ValueVision's Accountants. 45
Section 5.18. Stock Option Agreements. 45
Section 5.19. Post-Merger Parent Corporate Governance. 45
Section 5.20. Name of Parent. 47
Section 5.21. Parent Stockholder Rights Plan. 47
Section 5.22. The Warrants. 47
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Section 5.23. Conveyance Taxes. 48
Section 5.24. Stockholder Litigation. 48
Section 5.25. Annual Reports for Welfare Benefit Plans. 48
Section 5.26. Employment Agreements. 48
Section 5.27. Funding Advance for Redemption Agreement. 48
ARTICLE VI. CONDITIONS TO MERGER 49
Section 6.1. Conditions to Each Party's Obligation to Effect the Mergers. 49
Section 6.2. Additional Conditions to Obligations of ValueVision. 51
Section 6.3. Additional Conditions to Obligations of National Media. 52
ARTICLE VII. TERMINATION AND AMENDMENT 53
Section 7.1. Termination. 53
Section 7.2. Effect of Termination. 54
Section 7.3. Fees and Expenses. 55
Section 7.4. Amendment. 56
Section 7.5. Extension; Waiver. 57
ARTICLE VIII. MISCELLANEOUS 57
Section 8.1. Nonsurvival of Representations, Warranties and Agreements. 57
Section 8.2. Notices. 57
Section 8.3. Interpretation. 58
Section 8.4. Counterparts. 58
Section 8.5. Entire Agreement; No Third Party Beneficiaries. 59
Section 8.6. Governing Law. 59
Section 8.7. Assignment. 59
Section 8.8. References to "Stockholders". 59
EXHIBITS
Exhibit A ValueVision Stock Option Agreement
Exhibit B National Media Stock Option Agreement
Exhibit C Restated Certificate of Incorporation of Parent
Exhibit D Amended and Restated Bylaws of Parent
Exhibit E Certificate of Designations of Parent Series B
Convertible Preferred Stock
Exhibit F Form of Affiliate Agreement
Exhibit G Form of Demand Note
Exhibit H Form of Warrant Agreement
Exhibit I Form of Registration Rights Agreement
Exhibit J Form of Amendment to National Media Rights Plan
Exhibit K Form of Redemption Agreement
Exhibit L Form of Series B Consent Agreement
Exhibit M Form of CoreStates Consent Agreement
Exhibit N Form of Amendments to Hammer and Xxxxxxxx Employment
Agreements
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Exhibit O Form of Parent Stock Plan
Exhibit P Form of Parent Rights Plan
Exhibit Q Form of Subsidiary Guaranty
Exhibit R Form of ValueVision Guaranty
TABLE OF DEFINED TERMS
CROSS REFERENCE
TERMS IN AGREEMENT
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Acquisition Proposal Section 5.3.(a)
Affiliate Section 5.11.
Affiliate Agreement Section 5.11.
Agreement Preamble
Alternative Transaction Section 7.3.(e)
Annual Report Section 5.25
Bankruptcy and Equity Exception Section 3.3.(a)
Benefit Arrangement Section 3.13.(a)
Certificate of Designations Section 4.2(b)
Certificates Section 2.4.(b)
Closing Section 1.5.
Closing Date Section 1.5.
Code Preamble
Communications Act Section 3.3.(c)
Confidentiality Agreement Section 5.3.(a)
CoreStates Consent Agreement Section 3.3(a)
Costs Section 5.15.(a)
Court Section 6.1(m)
Current Premium Section 5.15.(b)
DGCL Section 1.3.
Demand Note Section 3.3(a)
Dissenting Shares Section 2.5.
Effective Time Section 1.4.(c)
Employee Benefit Plan Section 3.13.(a)
Environmental Law Section 3.12.(b)
ERISA Section 3.13.(a)
ERISA Affiliate Section 3.13.(a)
Exchange Act Section 3.3.(c)
Exchange Agent Section 2.4.(a)
Exchange Fund Section 2.4.(a)
FCC Section 3.3.(c)
FCC Consent Application Section 5.8.(a)
Final Order Section 6.1.(c)
Governmental Entity Section 3.3.(c)
Hazardous Substance Section 3.12.(c)
HSR Act Section 3.3.(c)
Indemnified Parties Section 5.15.(a)
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CROSS REFERENCE
TERMS IN AGREEMENT
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IRS Section 3.7.(b)
Joint Proxy Statement/Prospectus Section 3.16.
Material Adverse Change Section 3.6.
MBCA Section 1.2.
Mergers Section 1.3.
Merger Sub 1 Section 1.2.
Merger Sub 2 Section 1.3.
National Media 10-K Section 4.6
National Media Balance Sheet Section 4.4.(b)
National Media Certificate of Merger Section 1.4.(b)
National Media Common Stock Section 1.3.
National Media Convertible Preferred Stock Section 4.2.(a)
National Media Director Section 5.19.(a)
National Media Disclosure Schedule ARTICLE IV.
National Media Employee Plans Section 4.13.(a)
National Media ERISA Affiliate Section 4.13.(a)
National Media Exchange Ratio Section 2.2.(c)
National Media Material Adverse Effect Section 4.1.
National Media Material Contracts Section 4.10.
National Media Merger Section 1.3.
National Media Parachute Agreements Section 4.13(e)
National Media Rights Plan Section 4.2.(b)
National Media SEC Reports Section 4.4.(a)
National Media Stock Option Section 2.2(e)
National Media Stock Option Agreement Preamble
National Media Stock Plans Section 4.2.(a)
National Media Stockholders' Meeting Section 3.16.
National Media Surviving Corporation Section 1.6.
National Media Warrants Section 4.2.(a)
NYSE Section 5.5.
Order Section 5.8.(b)
Outside Date Section 7.1.(b)
Parent Preamble
Parent Common Stock Section 1.2.
Parent Material Adverse Effect Section 6.1.(h)
Parent Series B Convertible Preferred Stock Section 2.2 (d)
Parent Stock Plan 5.13(f)
PBCL Section 4.21
PBGC Section 4.13.(c)
Pension Plan Section 4.13.(c)
Redemption Agreement Section 3.3(a)
Registration Rights Agreement Section 3.3(a)
Registration Statement Section 3.16.
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CROSS REFERENCE
TERMS IN AGREEMENT
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Rule 145 Section 5.11.
SEC Section 3.3.(c)
Securities Act Section 3.1(a)
Series B Convertible Preferred Stock Section 4.2(a)
Series B Consent Agreement Section 3.3(a)
Series C Convertible Preferred Stock Section 4.2(a)
Series C Note Section 3.3(a)
Settlement Agreement Section 6.1(m)
Stock Option Agreements Preamble
Subsidiary Section 3.1.
Surviving Corporations Section 1.6.
Tax Section 3.7.(a)
Taxes Section 3.7.(a)
Third Party Section 7.3.(e)
Transaction Documents Section 3.3(a)
ValueVision 10-K Section 3.6
ValueVision Articles of Merger Section 1.4.(a)
ValueVision Balance Sheet Section 3.4.(b)
ValueVision Common Stock Section 1.2.
ValueVision Director Section 5.19.(a)
ValueVision Disclosure Schedule ARTICLE III.
ValueVision Employee Plans Section 3.13.(a)
ValueVision ERISA Affiliate Section 3.13.(a)
ValueVision Exchange Ratio Section 2.1.(c)
ValueVision Guaranty Section 6.3(d)
ValueVision Material Adverse Effect Section 3.1.
ValueVision Material Contracts Section 3.10.
ValueVision Merger Section 1.2.
ValueVision Parachute Agreements Section 3.13(e)
ValueVision SEC Reports Section 3.4.(a)
ValueVision Stock Option Section 2.1(d)
ValueVision Stock Option Agreement Preamble
ValueVision Stock Plans Section 3.2.(a)
ValueVision Stockholders' Meeting Section 3.16.
ValueVision Surviving Corporation Section 1.6.
ValueVision Warrants Section 3.2.(a)
Warrants Section 4.2.(a)
Warrant Agreement Section 3.3(a)
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (the "Agreement"), dated
as of January 5, 1998, by and among VALUEVISION INTERNATIONAL, INC. a Minnesota
corporation ("ValueVision"), NATIONAL MEDIA CORPORATION, a Delaware corporation
("National Media"), and X-X HOLDINGS CORP., a newly-formed Delaware
corporation, one-half of the issued and outstanding capital stock of which is
owned by each of ValueVision and National Media ("Parent").
WHEREAS, the Boards of Directors of ValueVision and National Media deem it
advisable and in the best interests of each corporation and its respective
stockholders that ValueVision and National Media combine in a "merger of
equals" in order to advance the long-term business interests of ValueVision and
National Media;
WHEREAS, the combination of ValueVision and National Media shall be
effected by the terms of this Agreement through (i) a merger of a wholly-owned
subsidiary of Parent with and into ValueVision and (ii) a merger of another
wholly-owned subsidiary of Parent with and into National Media such that
ValueVision and National Media become wholly-owned subsidiaries of Parent and
the stockholders of ValueVision and National Media become stockholders of
Parent;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to each of ValueVision's and National Media's
willingness to enter into this Agreement, ValueVision and National Media have
entered into (i) a Stock Option Agreement dated as of the date of this
Agreement and attached hereto as Exhibit A (the "ValueVision Stock Option
Agreement"), pursuant to which National Media granted ValueVision an option to
purchase shares of common stock of National Media under certain circumstances,
and (ii) a Stock Option Agreement dated as of the date of this Agreement and
attached hereto as Exhibit B (the "National Media Stock Option Agreement" and,
together with the ValueVision Stock Option Agreement, the "Stock Option
Agreements"), pursuant to which ValueVision granted National Media an option to
purchase shares of common stock of ValueVision under certain circumstances;
WHEREAS, for Federal income tax purposes, it is intended that (i) the
ValueVision Merger (as defined in Section 1.2) shall qualify as a
reorganization described in Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code") and, taken together with the National Media
Merger (as defined in Section 1.3), as a transfer of property to Parent by
holders of ValueVision Common Stock (as defined in Section 1.2) described in
Section 351 of the Code, and (ii) the National Media Merger shall, taken
together with the ValueVision Merger, qualify as a transfer of property to
Parent by holders of National Media Common Stock (as defined in Section 1.3)
described in Section 351 of the Code; and
WHEREAS, the Boards of Directors of ValueVision and National Media have
approved this Agreement and each of the Transaction Documents to which its
company is a party (as defined in Section 3.3).
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NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I.
THE MERGERS
Section 1.1. Certificate of Incorporation and Bylaws of Parent. The
Certificate of Incorporation and Bylaws of Parent shall be amended prior to the
Effective Time (as defined in Section 1.4) to be substantially in the form of
Exhibit C and Exhibit D attached hereto, respectively. From the date hereof
until the Effective Time, ValueVision and National Media shall consult with
each other prior to causing or permitting Parent to take any action and neither
shall cause or permit Parent to take any action inconsistent with the
provisions of this Agreement without the written consent of the other.
Section 1.2. The ValueVision Merger. ValueVision and National Media shall
cause Parent to form a wholly-owned subsidiary named ValueVision Acquisition
Corp. ("Merger Sub 1") under the laws of the State of Minnesota. ValueVision
and National Media shall cause Parent to cause Merger Sub 1 to execute and
deliver this Agreement. Upon the terms and subject to the provisions of this
Agreement, and in accordance with the Minnesota Business Corporation Act (the
"MBCA"), Merger Sub 1 will merge with and into ValueVision (the "ValueVision
Merger") at the Effective Time, and each outstanding share of Common Stock, par
value $.01 per share, of ValueVision ("ValueVision Common Stock") shall be
converted into 1.19 shares of common stock, par value $.01 per share, of Parent
(the "Parent Common Stock") (as described in Section 2.1(c)). Merger Sub 1
will be formed solely to facilitate the ValueVision Merger and will conduct no
business or activity other than in connection with the ValueVision Merger.
Section 1.3. The National Media Merger. ValueVision and National Media
shall cause Parent to form a wholly-owned subsidiary named National Media
Acquisition Corp. ("Merger Sub 2") under the laws of the State of Delaware.
ValueVision and National Media shall cause Parent to cause Merger Sub 2 to
execute and deliver this Agreement. Upon the terms and subject to the provisions
of this Agreement, and in accordance with the Delaware General Corporation Code
(the "DGCL"), Merger Sub 2 shall merge with and into National Media (the
"National Media Merger" and together with the ValueVision Merger, the "Mergers")
at the Effective Time, and each outstanding share of Common Stock, par value
$.01 per share, of National Media ("National Media Common Stock") shall be
converted into 1.00 share of Parent Common Stock (as described in Section
2.2(c)). Merger Sub 2 will be formed solely to facilitate the National Media
Merger and will conduct no business or activity other than in connection with
the National Media Merger.
Section 1.4. Effective Time of the Mergers.
(a) The ValueVision Merger. Subject to, and consistent with, the
provisions of this Agreement, articles of merger with respect to the
ValueVision Merger in such form as is required by the relevant provisions of
the MBCA (the "ValueVision Articles of Merger") shall be
2
duly prepared, executed and acknowledged and thereafter delivered to the
Secretary of State of the State of Minnesota for filing, as provided in the
MBCA as early as practicable on the Closing Date (as defined in Section 1.5).
The ValueVision Merger shall become effective upon the filing of the
ValueVision Articles of Merger with the Secretary of State of the State of
Minnesota
(b) The National Media Merger. Subject to, and consistent with, the
provisions of this Agreement, a certificate of merger (the "National Media
Certificate of Merger") with respect to the National Media Merger in such form
as is required by the relevant provisions of the DGCL shall be duly prepared,
executed and acknowledged and thereafter delivered to the Secretary of State of
the State of Delaware for filing, as provided in the DGCL as early as
practicable on the Closing Date. The National Media Merger shall become
effective upon the filing of the National Media Certificate of Merger with the
Secretary of State of the State of Delaware.
(c) The Effective Time. The time at which both Mergers have become fully
effective is hereinafter referred to as the "Effective Time."
Section 1.5. Closing. The closing of the Mergers (the "Closing") will
take place at 11:00 a.m., Eastern Standard Time, on a date to be specified by
National Media and ValueVision, which shall be no later than the third business
day after satisfaction or, if permissible, waiver of the conditions set forth in
Article VI (the "Closing Date"), at the offices of Xxxxxx & Xxxxxxx, 000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000-0000, unless another date, place or
time is agreed to in writing by National Media and ValueVision.
Section 1.6. Effect of the Mergers. As a result of the ValueVision
Merger, the separate corporate existence of Merger Sub 1 shall cease and
ValueVision shall continue as the surviving corporation (the "ValueVision
Surviving Corporation"). As a result of the National Media Merger, the separate
corporate existence of Merger Sub 2 shall cease and National Media shall
continue as the surviving corporation (the "National Media Surviving
Corporation" and together with ValueVision Surviving Corporation, the "Surviving
Corporations"). Upon becoming effective, the Mergers shall have the effects set
forth in the MBCA and the DGCL, as the case may be. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, (i) all
properties, rights, privileges, powers and franchises of ValueVision and Merger
Sub 1 shall vest in ValueVision Surviving Corporation, and all debts,
liabilities and duties of ValueVision and Merger Sub 1 shall become the debts,
liabilities and duties of the ValueVision Surviving Corporation and (ii) all
properties, rights, privileges, powers and franchises of National Media and
Merger Sub 2 shall vest in National Media Surviving Corporation, and all debts,
liabilities and duties of National Media and Merger Sub 2 shall become the
debts, liabilities and duties of National Media Surviving Corporation.
Section 1.7. Articles or Certificate of Incorporation and Bylaws of the
Surviving Corporations. At the Effective Time, (i) the Articles of
Incorporation and Bylaws of ValueVision Surviving Corporation shall be the
Articles of Incorporation and Bylaws, respectively, of ValueVision, as in
effect immediately prior to the Effective Time, in each case until duly amended
in accordance with applicable law, and (ii) the Certificate of Incorporation
and Bylaws of National Media Surviving Corporation shall be the Certificate of
Incorporation and Bylaws, respectively, of National Media, as in effect
immediately prior to the Effective Time, in each case until duly amended in
accordance with applicable law.
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Section 1.8. Directors and Officers of the Surviving Corporations.
(a) ValueVision Surviving Corporation. The officers and directors of
ValueVision immediately prior to the Effective Time shall be the initial
officers and directors of ValueVision Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and Bylaws of
ValueVision Surviving Corporation.
(b) National Media Surviving Corporation. The officers and directors of
National Media immediately prior to the Effective Time shall be the initial
officers and directors of National Media Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of
National Media Surviving Corporation.
ARTICLE II.
CONVERSION OF SECURITIES
Section 2.1. Conversion of ValueVision Capital Stock. At the Effective
Time, by virtue of the ValueVision Merger and without any action on the part of
any of the parties hereto or the holders of any shares of ValueVision Common
Stock or capital stock of Merger Sub 1:
(a) Capital Stock of Merger Sub 1. Each issued and outstanding share of
the capital stock of Merger Sub 1 shall be converted into and become one fully
paid and nonassessable share of Common Stock, par value $.01 per share, of
ValueVision Surviving Corporation.
(b) Cancellation of Treasury Stock and National Media-Owned Stock. All
shares of ValueVision Common Stock that are owned by ValueVision or any
Subsidiary (as defined in Section 3.1) of ValueVision and any shares of
ValueVision Common Stock (including any options, warrants or other securities
convertible into or exchangeable for such shares) owned by National Media,
Merger Sub 2 or any other Subsidiary of National Media shall be canceled and
retired and shall cease to exist and no stock of Parent or other consideration
shall be delivered in exchange therefor.
(c) Exchange Ratio for ValueVision Common Stock. Subject to Section
2.4(e), each issued and outstanding share of ValueVision Common Stock (other
than shares to be canceled in accordance with Section 2.1(b) and Dissenting
Shares (as defined in Section 2.5)) shall be converted into the right to receive
1.19 shares (the "ValueVision Exchange Ratio") of Parent Common Stock. All such
shares of ValueVision Common Stock, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall cease
to have any rights with respect thereto, except the right to receive the shares
of Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock to be issued or paid in consideration therefor and an amount equal to
certain dividends and distributions described in Section 2.4(c), in each case,
upon the surrender of such certificate in accordance with Section 2.4 and
without interest.
(d) ValueVision Stock Options. At the Effective Time, each outstanding
option to purchase shares of ValueVision Common Stock (a "ValueVision Stock
Option") under the
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ValueVision Stock Plans (as defined in Section 3.2(a)), whether vested or
unvested, shall be deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such ValueVision Stock Option the same
number of shares of Parent Common Stock as the holder of such ValueVision Stock
Option would have been entitled to receive pursuant to the ValueVision Merger
had such holder exercised such option in full immediately prior to the
Effective Time (rounded downward to the nearest whole number), at a price per
share (rounded downward to the nearest whole cent) equal to (y) the aggregate
exercise price for the shares of ValueVision Common Stock purchasable pursuant
to such ValueVision Stock Option immediately prior to the Effective Time
divided by (z) the number of full shares of Parent Common Stock deemed
purchasable pursuant to such ValueVision Stock Option in accordance with the
foregoing.
(e) ValueVision Warrants. At the Effective Time, each ValueVision Warrant
(as defined in Section 3.2(a)) shall thereafter solely represent the right to
acquire, on the terms and conditions as are currently applicable under the
ValueVision Warrants, the same number of shares of Parent Common Stock as a
holder of the ValueVision Warrants would have been entitled to receive pursuant
to the ValueVision Merger had such holder exercised such ValueVision Warrants
in full immediately prior to the Effective Time (rounded downward to the
nearest whole number), at the price per share (rounded downward to the nearest
whole cent) equal to (y) the aggregate exercise price for the shares of
ValueVision Common Stock purchasable pursuant to the ValueVision Warrants
immediately prior to the Effective Time divided by (z) the number of full
shares of Parent Common Stock deemed purchasable pursuant to the ValueVision
Warrants in accordance with the foregoing.
Section 2.2. Conversion of National Media Capital Stock. At the Effective
Time, by virtue of the National Media Merger and without any action on the part
of any of the parties hereto or the holders of any shares of National Media
Common Stock or capital stock of Merger Sub 2:
(a) Capital Stock of Merger Sub 2. Each issued and outstanding share of
the capital stock of Merger Sub 2 shall be converted into and become one fully
paid and nonassessable share of Common Stock, par value $.01 per share, of
National Media Surviving Corporation.
(b) Cancellation of Treasury Stock and ValueVision-Owned Stock. All
shares of National Media Common Stock that are owned by National Media or any
Subsidiary of National Media (including treasury stock) and any shares of
National Media Common Stock (including any options, warrants or other securities
convertible into or exchangeable for such shares) owned by ValueVision, Merger
Sub 1 or any other Subsidiary of ValueVision shall be canceled and retired and
shall cease to exist and no stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) Exchange Ratio for National Media Common Stock. Subject to Section
2.4(e), each issued and outstanding share of National Media Common Stock
(including the rights associated with the Series A Junior Participating
Preferred Stock issued pursuant to the National Media Rights Plan (as defined
in Section 4.2(b)) (other than shares to be canceled in accordance with Section
2.2(b)) shall be converted into the right to receive 1.00 share (the "National
Media
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Exchange Ratio") of Parent Common Stock. All such shares of National Media
Common Stock, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent Common Stock to
be issued or paid in consideration therefor and an amount equal to certain
dividends and distributions described in Section 2.4(c), in each case, upon the
surrender of such certificate in accordance with Section 2.4 and without
interest.
(d) Exchange Ratio for Series B Convertible Stock. Each issued and
outstanding share of Series B Convertible Preferred Stock (as defined in
Section 4.2(a)) shall be converted into the right to receive 1.00 share of
Parent Series B Convertible Preferred Stock, par value $.01 per share (the
"Parent Series B Convertible Preferred Stock"), with the designations,
preferences and rights set forth in the Certificate of Designations of the
Parent Series B Convertible Preferred Stock in the form attached hereto as
Exhibit E. All such shares of Series B Convertible Preferred Stock, when so
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the shares of Parent Series B Convertible
Preferred Stock upon the surrender of such certificate in accordance with
procedures to be established by Parent and without interest.
(e) National Media Stock Options. At the Effective Time, each outstanding
option to purchase shares of National Media Common Stock (a "National Media
Stock Option") under the National Media Stock Plans (as defined in Section
4.2(a)), whether vested or unvested, shall be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable under such
National Media Stock Option the same number of shares of Parent Common Stock as
the holder of such National Media Stock Option would have been entitled to
receive pursuant to the National Media Merger had such holder exercised such
option in full immediately prior to the Effective Time (rounded downward to the
nearest whole number), at a price per share (rounded downward to the nearest
whole cent) equal to (y) the aggregate exercise price for the shares of
National Media Common Stock purchasable pursuant to such National Media Stock
Option immediately prior to the Effective Time divided by (z) the number of
full shares of Parent Common Stock deemed purchasable pursuant to such National
Media Stock Option in accordance with the foregoing.
(f) National Media Warrants. At the Effective Time, each National Media
Warrant (as defined in Section 4.2(a)) shall thereafter solely represent the
right to acquire, on the terms and conditions as are currently applicable under
the National Media Warrants, the same number of shares of Parent Common Stock
as a holder of the National Media Warrants would have been entitled to receive
pursuant to the National Media Merger had such holder exercised such National
Media Warrants in full immediately prior to the Effective Time (rounded
downward to the nearest whole number), at the price per share (rounded downward
to the nearest whole cent) equal to (y) the aggregate exercise price for the
shares of National Media Common Stock purchasable pursuant to the National
Media Warrants immediately prior to the Effective Time divided by (z) the
number of full shares of Parent Common Stock deemed purchasable pursuant to the
National Media Warrants in accordance with the foregoing.
6
Section 2.3. Cancellation of Parent Common Stock. At the Effective
Time, by virtue of the Mergers and without any action on the part of any holder
of any capital stock of ValueVision, National Media or Parent, each share of
Parent Common Stock issued and outstanding immediately prior to the Effective
Time shall be canceled, and no consideration shall be delivered in exchange
therefor.
Section 2.4. Exchange of Certificates. The procedures for exchanging
shares of ValueVision Common Stock and National Media Common Stock for Parent
Common Stock outstanding immediately prior to the Effective Time pursuant to the
Mergers are as follows:
(a) Exchange Agent. As of the Effective Time, Parent shall deposit with a
bank or trust company designated by National Media and ValueVision (the
"Exchange Agent"), for the benefit of the holders of shares of ValueVision
Common Stock outstanding immediately prior to the effective time and the holders
of shares of National Media Common Stock outstanding immediately prior to the
Effective Time, for exchange in accordance with this Section 2.4, through the
Exchange Agent, certificates representing the shares of Parent Common Stock
issuable pursuant to Sections 2.1 and 2.2 in exchange for outstanding shares of
ValueVision Common Stock and National Media Common Stock, respectively (such
shares of Parent Common Stock, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of ValueVision Common Stock or National Media
Common Stock (including the Series A Junior Participating Preferred Stock
associated with the National Media Common Stock and issued pursuant to the
National Media Rights Plan) (the "Certificates") whose shares were converted
pursuant to Section 2.1 or Section 2.2 into the right to receive shares of
Parent Common Stock (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as ValueVision and
National Media may reasonably specify), and (ii) instructions for effecting the
surrender of the Certificates in exchange for certificates representing shares
of Parent Common Stock (plus cash in lieu of fractional shares, if any, of
Parent Common Stock as provided below). Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of Parent
Common Stock which such holder has the right to receive pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
immediately be canceled. In the event of a transfer of ownership of
ValueVision Common Stock or National Media Common Stock prior to the Effective
Time which is not registered in the transfer records of ValueVision or National
Media, respectively, a certificate representing the proper number of shares of
Parent Common Stock may be issued to a transferee if the Certificate
representing such ValueVision Common Stock or National Media Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Immediately after the Effective Time, each
outstanding
7
Certificate which theretofore represented shares of ValueVision Common Stock or
National Media Common Stock shall represent only the right to receive the
shares of Parent Common Stock pursuant to the terms hereof and shall not be
deemed to evidence ownership of the number of shares of Parent Common Stock
into which such shares of ValueVision Common Stock or National Media Common
Stock would be or were, as the case may be, converted into the right to receive
until the Certificate therefor shall have been surrendered in accordance with
this Section 2.4.
(c) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock the holder thereof is entitled to receive in respect thereof and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to subsection (e) below until the holder of record of such Certificate
shall surrender such Certificate. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Parent Common Stock to which such holder is entitled pursuant to subsection (e)
below and the amount of dividends or other distributions with a record date
after the Effective Time previously paid with respect to such whole shares of
Parent Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in ValueVision Common Stock and National
Media Common Stock. All shares of Parent Common Stock issued upon the surrender
for exchange of Certificates in accordance with the terms hereof (including any
cash paid pursuant to subsection (c) or (e) of this Section 2.4) shall be deemed
to have been issued in full satisfaction of all rights pertaining to the shares
of ValueVision Common Stock or National Media Common Stock theretofore
represented by such Certificates, subject, however, to the applicable Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which may have been declared or
made by ValueVision on such shares of ValueVision Common Stock or by National
Media on such shares of National Media Common Stock, as the case may be, in
accordance with the terms of this Agreement (to the extent permitted under
Section 5.1) prior to the date hereof and which remain unpaid at the Effective
Time, and from and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the ValueVision
Surviving Corporation or the National Media Surviving Corporation, as the case
may be, of the shares of ValueVision Common Stock or National Media Common
Stock, respectively, which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to one of the
Surviving Corporations or Parent for any reason, such Certificates shall be
canceled and exchanged as provided in this Section 2.4.
(e) No Fractional Shares. No certificate or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange
of Certificates, and such
8
fractional share interests will not entitle the owner thereof to vote or to any
other rights of a stockholder of Parent. Notwithstanding any other provision
of this Agreement, each holder of shares of ValueVision Common Stock or shares
of National Media Common Stock outstanding immediately prior to the Effective
Time exchanged pursuant to the Mergers who would otherwise have been entitled
to receive a fraction of a share of Parent Common Stock (after taking into
account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to such fractional part of
a share of Parent Common Stock multiplied by the per share sales price of
Parent Common Stock (as reported by the national securities exchange or market
on which such Parent Common Stock is traded or quoted) on the first day of
trading of Parent Common Stock on such exchange or market after the Effective
Time.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the former stockholders of ValueVision or National
Media on the 180th day after the Effective Time shall be delivered to Parent
upon demand, and any former stockholder of ValueVision or National Media who
has not previously complied with this Section 2.4 shall thereafter look only to
Parent for payment of such stockholder's claim for Parent Common Stock, any
cash in lieu of fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock.
(g) No Liability. None of ValueVision, National Media or Parent shall be
liable to any holder of shares of ValueVision Common Stock or National Media
Common Stock, as the case may be, for any shares of Parent Common Stock (or
cash in lieu of fractional shares of Parent Common Stock or any dividends or
distributions with respect thereto) delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(h) Withholding Rights. Parent and each of the Surviving Corporations
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of ValueVision Common
Stock or National Media Common Stock such amounts as it is required to deduct
and withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or one of the Surviving Corporations, as the case may be,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of ValueVision Common Stock or
National Media Common Stock, as the case may be, in respect of which such
deduction and withholding was made.
(i) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent or
one of the Surviving Corporations, the posting by such person of a bond in such
reasonable amount as Parent or such Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate, the shares of Parent Common Stock, any cash in lieu of
fractional shares, and any unpaid dividends and distributions on shares of
Parent Common Stock deliverable in respect thereof pursuant to this Agreement.
9
(j) Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any Affiliate (as defined in Section
5.11) of ValueVision or National Media shall not be exchanged until Parent has
received an Affiliate Agreement (as defined in Section 5.11) substantially in
the form of Exhibit F attached hereto from such Affiliate.
Section 2.5. Dissenting Shares. Any ValueVision Common Stock held by a
holder who dissents from the ValueVision Merger and becomes entitled to obtain
payment for the value of such ValueVision Common Stock pursuant to the
applicable provisions of Minnesota law shall be herein called "Dissenting
Shares." Any Dissenting Share shall not, after the Effective Time, be entitled
to vote for any purpose or receive any dividends or other distributions and
shall not be converted into Parent Common Stock; provided, however, that
ValueVision Common Stock held by a dissenting shareholder who subsequently
withdraws a demand for payment, fails to comply fully with the requirements of
Minnesota law, or otherwise fails to establish the right of such shareholder to
be paid the value of such shareholder's shares under Minnesota law shall be
deemed to be have been converted into Parent Common Stock pursuant to the terms
and conditions referred to above.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF VALUEVISION
ValueVision represents and warrants to National Media that the statements
contained in this Article III are true and correct except as set forth herein
and in the disclosure schedules delivered by ValueVision to National Media on
or before the date of this Agreement (the "ValueVision Disclosure Schedule").
The ValueVision Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
III and the disclosure in any paragraph shall qualify other paragraphs in this
Article III only to the extent that it is reasonably apparent from a reading of
such disclosure that it also qualifies or applies to such other paragraphs.
Section 3.1. Organization of ValueVision. Each of ValueVision and
ValueVision's Material Subsidiaries (as defined below) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power to own,
lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the failure to be so qualified would have a material adverse effect on the
business, properties, financial condition or results of operations of
ValueVision and its Subsidiaries, taken as a whole (a "ValueVision Material
Adverse Effect"). Except as set forth in the ValueVision SEC Reports (as
defined in Section 3.4) filed prior to the date hereof or on the ValueVision
Disclosure Schedule, neither ValueVision nor any of its Subsidiaries directly
or indirectly owns (other than ownership interests in ValueVision or in one or
more of its Subsidiaries) any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture or other business association or entity, excluding
securities in any publicly traded company held for investment by ValueVision
and comprising less than five percent (5%) of the outstanding stock of such
10
company. A true, correct and complete copy of the Articles of Incorporation
and Bylaws of ValueVision and each of ValueVision's Material Subsidiaries (as
defined below) has been delivered to National Media. As used in this
Agreement, the word "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general partner
(excluding partnerships the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interest in such partnership) or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the Board of Directors or others performing similar functions with respect
to such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries. "ValueVision's Material
Subsidiaries" shall mean those Subsidiaries of ValueVision set forth on the
ValueVision Disclosure Schedule, which Subsidiaries constitute all of
ValueVision's "significant subsidiaries" as defined in Rule 1-02 of Regulation
S-X under the Securities Act of 1933, as amended (the "Securities Act").
Section 3.2. ValueVision Capital Structure.
(a) The authorized capital stock of ValueVision consists of 100,000,000
shares of undesignated capital stock. As of the date hereof, (i) 28,035,778
shares of ValueVision Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable and (ii) no shares of ValueVision
Common Stock were held in the treasury of ValueVision or by Subsidiaries of
ValueVision. The ValueVision Disclosure Schedule shows the number of shares of
ValueVision Common Stock reserved for future issuance pursuant to stock options
granted and outstanding as of the date hereof, the plans under which such
options were granted and award agreements pursuant to which "non-plan" options
were granted (collectively, the "ValueVision Stock Plans"), and the entities or
persons to whom such options were granted. The ValueVision Disclosure Schedule
also shows the agreements under which the warrants to purchase an aggregate of
4,242,143 shares of ValueVision Common Stock granted and outstanding as of the
date hereof (collectively, the "ValueVision Warrants") were issued and to whom
such warrants were issued. As of the date hereof, no other shares of capital
stock are issued and outstanding. All shares of ValueVision Common Stock
subject to issuance as specified above are duly authorized and, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, shall be validly issued, fully paid and nonassessable. Except as set
forth on the ValueVision Disclosure Schedule, there are no obligations,
contingent or otherwise, of ValueVision or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of ValueVision Common Stock
or the capital stock of any Subsidiary or to provide funds to or make any
material investment (in the form of a loan, capital contribution or otherwise)
in any such Subsidiary or any other entity other than guarantees of bank
obligations of Subsidiaries entered into in the ordinary course of business. All
of the outstanding shares of capital stock of each of ValueVision's Subsidiaries
are duly authorized, validly issued, fully paid and nonassessable and all such
shares (other than directors' qualifying shares in the case of foreign
Subsidiaries) are owned by ValueVision or another Subsidiary free and clear of
all security interests, liens, claims, pledges, agreements, limitations in
ValueVision's voting rights, charges or other encumbrances of any nature.
11
(b) Except as set forth in this Section 3.2 or as reserved for future
grants of options under the ValueVision Stock Plans or the National Media Stock
Option Agreement, (i) there are no equity securities of any class of ValueVision
or any of its Subsidiaries, or any security exchangeable into or exercisable for
such equity securities, issued, reserved for issuance or outstanding; (ii) there
are no options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which ValueVision or any of its Subsidiaries is a
party or by which it is bound obligating ValueVision or any of its Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of ValueVision or any of its Subsidiaries or obligating
ValueVision or any of its Subsidiaries to grant, extend, accelerate the vesting
of or enter into any such option, warrant, equity security, call, right,
commitment or agreement; and (iii) to the best knowledge of ValueVision, there
are no voting trusts, proxies or other voting agreements or understandings with
respect to the shares of capital stock of ValueVision.
Section 3.3. Authority; No Conflict; Required Filings and Consents.
(a) ValueVision has all requisite corporate power and authority to enter
into this Agreement and each of the Transaction Documents (as defined below) to
which it is a party and to consummate the transactions contemplated by this
Agreement and each of the Transaction Documents to which it is a party. The
execution and delivery of this Agreement and each of the Transaction Documents
to which it is a party and the consummation of the transactions contemplated by
this Agreement and each of the Transaction Documents to which it is a party by
ValueVision have been duly authorized by all necessary corporate action on the
part of ValueVision, subject only to the approval and adoption of this Agreement
by ValueVision's stockholders under the MBCA. This Agreement and each of the
Transaction Documents to which it is a party have been duly executed and
delivered by ValueVision and constitute the valid and binding obligations of
ValueVision, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equitable principles (the "Bankruptcy and Equity Exception"). "Transaction
Documents" means the Stock Option Agreements, the $10 million Promissory Demand
Note by National Media for the benefit of ValueVision in the form of Exhibit G
attached hereto (the "Demand Note"), the promissory demand note by National
Media for the benefit of ValueVision which will be substantially in the form of
the Demand Note and which will evidence the loan from ValueVision to National
Media to fund the redemption under the Redemption Agreement (as defined below)
(the "Series C Note"), the Warrant Agreement between National Media and
ValueVision in the form of Exhibit H attached hereto (the "Warrant Agreement"),
the Registration Rights Agreement between National Media and ValueVision in the
form of Exhibit I attached hereto (the "Registration Rights Agreement"), the
Amendment to the National Media Rights Plan (as defined in Section 4.2(b)) in
the form of Exhibit J attached hereto, the Redemption and Consent Agreement
between National Media and the holders of the Series C Convertible Preferred
Stock in the form of Exhibit K attached hereto (the "Redemption Agreement"), the
Series B Consent Agreement between National Media and holders of at least 60% of
the outstanding shares of the Series B Convertible Preferred Stock in the form
of Exhibit L attached hereto (the "Series B Consent Agreement"), the Consent,
Waiver and Amendment between CoreStates Bank, N.A. ("CoreStates") and National
Media and certain of its Subsidiaries in the form of Exhibit M
00
xxxxxxxx xxxxxx (xxx "Xxxxxxxxxx Consent Agreement") and the Amendments to the
Hammer and Xxxxxxxx Employment Agreements in the forms of Exhibit N attached
hereto, each dated as of the date hereof.
(b) Except as set forth on the ValueVision Disclosure Schedule, the
execution and delivery of this Agreement and each of the Transaction Documents
to which it is a party by ValueVision does not, and the consummation of the
transactions contemplated by this Agreement and each of the Transaction
Documents to which it is a party will not, (i) conflict with, or result in any
violation or breach of, any provision of the Articles of Incorporation or Bylaws
of ValueVision or any of its Subsidiaries, (ii) result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which ValueVision or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound, or (iii)
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
ValueVision or any of its Subsidiaries or any of its or their properties or
assets, except in the case of (ii) and (iii) for any such conflicts, violations,
defaults, terminations, cancellations or accelerations which are not,
individually or in the aggregate, reasonably likely to have a ValueVision
Material Adverse Effect.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to ValueVision or any of its Subsidiaries in
connection with the execution and delivery of this Agreement and each of the
Transaction Documents to which it is a party or the consummation of the
transactions contemplated hereby or thereby, except for (i) the filing of the
pre-merger notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended ("HSR Act"), (ii) the filing of an
Articles of Merger with respect to the ValueVision Merger with the Minnesota
Secretary of State, (iii) the filing of the Joint Proxy Statement/Prospectus
(as defined in Section 3.16 below) with the Securities and Exchange Commission
(the "SEC") in accordance with the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (iv) applicable approvals of the Federal Communications
Commission (the "FCC") pursuant to the Communications Act of 1934, as amended,
and any regulations promulgated thereunder (the "Communications Act"), (v) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state or foreign securities laws,
and (vi) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not be reasonably likely to
have a ValueVision Material Adverse Effect.
Section 3.4. SEC Filings; Financial Statements.
(a) ValueVision has filed and made available to National Media all forms,
reports and documents filed or required to be filed by ValueVision with the SEC
since January 1, 1995 (collectively, the "ValueVision SEC Reports"). Except as
set forth on the ValueVision
13
Disclosure Schedule, the ValueVision SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such ValueVision SEC Reports or necessary in order to make the
statements in such ValueVision SEC Reports, in the light of the circumstances
under which they were made, not misleading. None of ValueVision's Subsidiaries
is required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) contained in the ValueVision SEC Reports complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, in conformity with
the requirements of Form 10-Q under the Exchange Act) and fairly presented in
all material respects the consolidated financial position of ValueVision and its
Subsidiaries as of the dates and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount. The
audited balance sheet of ValueVision as of January 31, 1997 is referred to
herein as the "ValueVision Balance Sheet."
Section 3.5. No Undisclosed Liabilities. Except as set forth on the
ValueVision Disclosure Schedule, and except as disclosed in the ValueVision SEC
Reports filed prior to the date hereof, and except for normal or recurring
liabilities incurred since January 31, 1997 in the ordinary course of business
consistent with past practices, ValueVision and its Subsidiaries do not have
any liabilities, either accrued, contingent or otherwise (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles), and whether due or to become due, which
individually or in the aggregate are reasonably likely to have a ValueVision
Material Adverse Effect.
Section 3.6. Absence of Certain Changes or Events. Except as disclosed
in the ValueVision SEC Reports filed prior to the date hereof or on the
ValueVision Disclosure Schedule, since the date of the ValueVision Balance
Sheet, ValueVision and its Subsidiaries have conducted their businesses only in
the ordinary course and in a manner consistent with past practice and, since
such date, there has not been (i) any material adverse change in the financial
condition, results of operations, business or properties (a "Material Adverse
Change") of ValueVision and its Subsidiaries, taken as a whole (other than
changes that are the effect or result of economic factors affecting the economy
as a whole or the industry (as described in the ValueVision 10-K for the fiscal
year ended January 31, 1997 (the "ValueVision 10-K") in which ValueVision
competes), or any development or combination of developments of which the
management of ValueVision is aware that, individually or in the aggregate, has
had, or is reasonably likely to have, a ValueVision Material Adverse Effect
(other than changes that are the effect or result of economic factors affecting
the economy as a whole or the industry (as described in the ValueVision 10-K) in
which ValueVision competes); (ii) any damage, destruction or loss (whether or
not covered by insurance) with respect to ValueVision or any of
14
its Subsidiaries having a ValueVision Material Adverse Effect; (iii) any
material change by ValueVision or its Subsidiaries in their respective
accounting methods, principles or practices to which National Media has not
previously consented in writing; (iv) any revaluation by ValueVision or its
Subsidiaries of any of their respective assets having a ValueVision Material
Adverse Effect; or (v) any other action or event that would have required the
consent of National Media pursuant to Section 5.1 of this Agreement had such
action or event occurred after the date of this Agreement and that,
individually or in the aggregate, has had or is reasonably likely to have a
ValueVision Material Adverse Effect.
Section 3.7. Taxes.
(a) For the purposes of this Agreement, a "Tax" or, collectively, "Taxes,"
means any and all federal, state, local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, recapture, employment, excise, unemployment insurance,
social security, business license, occupation, business organization, stamp,
environmental and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts. For purposes of this
Agreement, "Taxes" also includes any obligations under any agreements or
arrangements with any other person with respect to Taxes of such other person
(including pursuant to Treas. Reg. Section 1.1502-6 or comparable provisions
of state, local or foreign tax law) and including any liability for Taxes of
any predecessor entity.
(b) ValueVision and each of its Subsidiaries have (i) filed all federal,
state, local and foreign Tax returns and reports required to be filed by them
prior to the date of this Agreement (taking into account all applicable
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clauses (i), (ii) or (iii) for any such
filings, payments or accruals that are not reasonably likely, individually or
in the aggregate, to have a ValueVision Material Adverse Effect. There are no
audits known by ValueVision to be pending or contemplated with respect to
ValueVision's tax returns. Neither the Internal Revenue Service (the "IRS")
nor any other taxing authority has asserted any claim for Taxes, or to the
actual knowledge of the executive officers of ValueVision, is threatening to
assert any claims for Taxes, which claims, individually or in the aggregate,
are reasonably likely to have a ValueVision Material Adverse Effect.
ValueVision and each of its Subsidiaries have withheld or collected and paid
over to the appropriate governmental authorities (or are properly holding for
such payment) all Taxes required by law to be withheld or collected, except for
amounts that are not reasonably likely, individually or in the aggregate, to
have a ValueVision Material Adverse Effect. Neither ValueVision nor any of its
Subsidiaries has made an election under Section 341(f) of the Code, except for
any such elections that are not reasonably likely, individually or in the
aggregate, to have a ValueVision Material Adverse Effect. There are no liens
for Taxes upon the assets of ValueVision or any of its Subsidiaries (other than
liens for Taxes that are not yet due or that are being contested in good faith
by appropriate proceedings), except for liens that are not reasonably likely,
individually or in the aggregate, to have a ValueVision Material Adverse
Effect. No extension of a statute of limitations relating to any Taxes is in
effect with respect to ValueVision and its Subsidiaries.
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(c) Neither ValueVision nor any of its Subsidiaries has been a member of an
affiliated group of corporations filing a consolidated federal income tax
return (or a group of corporations filing a consolidated, combined or unitary
income tax return under comparable provisions of state, local or foreign tax
law) for any taxable period beginning on or after February 1, 1991, other than
a group the common parent of which was ValueVision or any Subsidiary of
ValueVision.
(d) Neither ValueVision nor any of its Subsidiaries has any obligation
under any agreement or arrangement with any other person with respect to Taxes
of such other person (including pursuant to Treas. Reg. Section 1.1502-6 or
comparable provisions of state, local or foreign tax law) and including any
liability for Taxes of any predecessor entity, except for obligations that are
not reasonably likely, individually or in the aggregate, to have a ValueVision
Material Adverse Effect.
(e) Neither ValueVision nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
Section 3.8. Properties.
(a) Neither ValueVision nor any of its Subsidiaries is in default under
any of their respective leases for real property, except where the existence of
such defaults, individually or in the aggregate, is not reasonably likely to
have a ValueVision Material Adverse Effect.
(b) Except as set forth on the ValueVision Disclosure Schedule, with
respect to each item of real property that ValueVision or any of its
Subsidiaries owns, except for such matters that, individually or in the
aggregate, are not reasonably likely to have a ValueVision Material Adverse
Effect: (i) ValueVision or the identified Subsidiary has good and clear record
and marketable title to such property, insurable by a recognized national title
insurance company at standard rates, free and clear of any lien, encumbrance,
security interest, easement, covenant or other restriction, except for recorded
easements, covenants and other restrictions which do not materially impair the
current uses or occupancy of such property; and (ii) the improvements
constructed on such property are in good condition, and all mechanical and
utility systems servicing such improvements are in good condition, free in each
case of material defects.
Section 3.9. Intellectual Property. Each of ValueVision and its
Subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights to use, all trademarks, trade names, service marks, copyrights, and any
applications for such trademarks, trade names, service marks and copyrights,
know-how, computer software programs or applications and tangible or intangible
proprietary information or material that are necessary to conduct the business
of each of ValueVision and its Subsidiaries as currently conducted, subject to
such exceptions that would not be reasonably likely to have a ValueVision
Material Adverse Effect. Neither ValueVision nor any of its Subsidiaries has
any knowledge of any assertion or claim challenging the validity of any of such
intellectual property, except such assertions or claims that, individually or in
the aggregate, are not reasonably likely to have a ValueVision Material Adverse
Effect.
16
Section 3.10. Agreements, Contracts and Commitments. Neither ValueVision
nor any of its Subsidiaries has breached, or received in writing any claim or
notice that it has breached, any of the terms or conditions of any material
agreement, contract or commitment filed or required to be filed as an exhibit
to the ValueVision SEC Reports ("ValueVision Material Contracts") in such a
manner as, individually or in the aggregate, is reasonably likely to have a
ValueVision Material Adverse Effect. Each ValueVision Material Contract that
has not expired by its terms is in full force and effect.
Section 3.11. Litigation. Except as described in the ValueVision SEC
Reports filed prior to the date hereof or except as set forth on the
ValueVision Disclosure Schedule, there is no action, suit or proceeding, claim,
arbitration or investigation against ValueVision or any of its Subsidiaries
pending or as to which ValueVision or any of its Subsidiaries has received any
written notice of assertion, which, individually or in the aggregate, is
reasonably likely to have a ValueVision Material Adverse Effect or a material
adverse effect on the ability of ValueVision to consummate the transactions
contemplated by this Agreement.
Section 3.12. Environmental Matters.
(a) To the knowledge of ValueVision and its Subsidiaries, except as
disclosed in the ValueVision SEC Reports filed prior to the date hereof or on
the ValueVision Disclosure Schedule and except for such matters that,
individually or in the aggregate, are not reasonably likely to have a
ValueVision Material Adverse Effect: (i) ValueVision and its Subsidiaries are
in material compliance with all applicable Environmental Laws (as defined in
Section 3.12(b)); (ii) the properties currently owned or operated by
ValueVision and its Subsidiaries (including soils, groundwater, surface water,
buildings or other structures) are not contaminated with any Hazardous
Substances (as defined in Section 3.12(c)); (iii) the properties formerly owned
or operated by ValueVision or any of its Subsidiaries were not contaminated
with Hazardous Substances during the period of ownership or operation by
ValueVision or any of its Subsidiaries; (iv) neither ValueVision nor its
Subsidiaries are subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither ValueVision nor any of
its Subsidiaries has been associated with any release or threat of release of
any Hazardous Substance; (vi) neither ValueVision nor any of its Subsidiaries
has received any written notice, demand, letter, claim or request for
information alleging that ValueVision or any of its Subsidiaries may be in
violation of or liable under any Environmental Law; (vii) neither ValueVision
nor any of its Subsidiaries is subject to any orders, decrees, injunctions or
other arrangements with any Governmental Entity or is subject to any indemnity
or other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (viii) there are no
circumstances or conditions involving ValueVision or any of its Subsidiaries
that could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use or transfer of any
property of ValueVision pursuant to any Environmental Law.
(b) As used in this Agreement, the term "Environmental Law" means any
federal, state, local or foreign law, regulation, order, decree, permit,
authorization, common law or agency requirement relating to: (A) the
protection, investigation or restoration of the environment, health and safety,
or natural resources, (B) the handling, use, presence, disposal,
17
release or threatened release of any Hazardous Substance or (C) noise, odor,
wetlands, pollution, contamination or any injury or threat of injury to persons
or property.
(c) As used in this Agreement, the term "Hazardous Substance" means any
substance that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (C) any other substance which is the subject
of regulatory action by any Governmental Entity pursuant to any Environmental
Law.
Section 3.13. Employee Benefit Plans.
(a) ValueVision has listed on the ValueVision Disclosure Schedule all
employee benefit plans ("Employee Benefit Plans"), as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and all other material benefit arrangements that are not Employee Benefit
Plans, including, but not limited to any employment or consulting agreement,
any arrangement providing insurance benefits, any incentive bonus or deferred
bonus arrangement, any arrangement providing termination allowance, severance
or similar benefits, any equity compensation plan, any deferred compensation
plan, and any compensation policy or practice ("Benefit Arrangements"), (i)
which are maintained, contributed to or required to be contributed to by
ValueVision or any entity that, together with ValueVision as of the relevant
measuring date under ERISA, is or was required to be treated as a single
employer under Section 414 of the Code ("ValueVision ERISA Affiliate") or under
which ValueVision or any ValueVision ERISA Affiliate may incur any liability,
and (ii) which cover the employees, former employees, directors or former
directors of ValueVision or any ValueVision ERISA Affiliate ("ValueVision
Employee Plans").
(b) A true and complete copy of each written ValueVision Employee Plan that
covers employees or former employees of ValueVision or any Subsidiary of
ValueVision, including, if applicable, each amendment thereto and any trust
agreement, insurance contract, collective bargaining agreement, or other
funding or investment arrangements for the benefits under such ValueVision
Employee Plan, has been delivered to National Media. In addition, with respect
to each such ValueVision Employee Plan to the extent applicable, ValueVision
has delivered to National Media the most recently filed Federal Forms 5500, the
most recent summary plan description (including any summaries of material
modifications), the most recent IRS determination letter, if applicable, the
most recent actuarial report or valuation, if applicable, and all material
employee communications with respect to each such ValueVision Employee Plan.
(c) Except as set forth on the ValueVision Disclosure Schedule:
(i) neither ValueVision nor any ValueVision ERISA Affiliate sponsors
or has previously sponsored, maintained, contributed to or incurred an
obligation to contribute to any Employee Benefit Plan regulated under Title IV
of ERISA, including any "multiemployer plan," as defined in Sections 3(37) and
4001(a)(3) of ERISA;
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(ii) neither ValueVision nor any ValueVision ERISA Affiliate
sponsors or has previously sponsored, maintained, contributed to or incurred an
obligation to contribute to any Employee Benefit Plan that provides or will
provide benefits described in Section 3(1) of ERISA to any former employee or
retiree of ValueVision or any ValueVision ERISA Affiliate, except as required
under Part 6 of Title I of ERISA and Section 4980B of the Code;
(iii) all ValueVision Employee Plans that cover or have covered
employees or former employees of ValueVision have been maintained and operated,
and currently are, in compliance in all material respects with their terms, the
requirements prescribed by any and all applicable laws (including ERISA and the
Code), orders, or governmental rules and regulations in effect with respect
thereto, and ValueVision and the ValueVision ERISA Affiliates have performed
all material obligations required to be performed by them under, are not in any
material respect in default under or in violation of, and have no knowledge of
any default or violation by any other party to, any of the ValueVision Employee
Plans;
(iv) each ValueVision Employee Plan that covers or has covered
employees or former employees of ValueVision and is intended to qualify under
Section 401(a) of the Code and each trust established pursuant to each such
ValueVision Employee Plan that is intended to qualify under Section 501(a) of
the Code is the subject of a favorable determination letter from the IRS, a
copy of which has been delivered to National Media, and, to ValueVision's
knowledge, nothing has occurred which may reasonably be expected to impair such
determination or otherwise adversely affect the tax-qualified status of such
ValueVision Employee Plan;
(v) ValueVision and the ValueVision ERISA Affiliates have made full
and timely payment of all amounts required to be contributed under the terms of
each ValueVision Employee Plan and applicable law or required to be paid as
expenses under such ValueVision Employee Plan; and
(vi) other than claims for benefits in the ordinary course, there is
no claim, suit, action, dispute, arbitration or legal, administrative or other
proceeding or governmental investigation or audit pending, or, to the knowledge
of ValueVision, threatened, alleging any breach of the terms of any ValueVision
Employee Plan or of any fiduciary duty thereunder or violation of any
applicable law with respect to any such ValueVision Employee Plan.
(d) With respect to the ValueVision Employee Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of ValueVision, there
exists no condition or set of circumstances in connection with which
ValueVision could be subject to any liability that is reasonably likely to have
a ValueVision Material Adverse Effect under ERISA, the Code or any other
applicable law.
(e) Except as set forth on the ValueVision Disclosure Schedule and except
as disclosed in the ValueVision SEC Reports filed prior to the date of this
Agreement, and except as provided for in this Agreement, neither ValueVision
nor any of its Subsidiaries is a party to any oral or written (i) agreement
with any officer or other key employee of ValueVision or any of its
19
Subsidiaries, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving ValueVision
of the nature contemplated by this Agreement, (ii) agreement with any officer
of ValueVision providing any term of employment or compensation guarantee
extending for a period longer than one year from the date hereof and for the
payment of compensation in excess of $100,000 per annum, or (iii) agreement or
plan, including any stock option plan, stock appreciation right plan,
restricted stock plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. None of the execution and
delivery of this Agreement or any of the Transaction Documents or the
consummation of the transactions contemplated hereunder or thereunder will
trigger any "change of control" or similar provisions resulting in the
acceleration of benefits or compensation with respect to any agreements with
any officer or other key employee of ValueVision or any of its Subsidiaries
except for such applicable agreements as set forth on the ValueVision
Disclosure Schedule (the "ValueVision Parachute Agreements"). The aggregate
amounts payable under the ValueVision Parachute Agreements as a result of the
transactions contemplated by this Agreement and each of the Transaction
Documents will not exceed $0.
Section 3.14. Compliance With Laws. Each of ValueVision and its
Subsidiaries has complied with, is not in violation of, and has not received
any notices of violation with respect to, any federal, state or local statute,
law or regulation with respect to the conduct of its business, or the ownership
or operation of its business, except for failures to comply or violations
which, individually or in the aggregate, have not had and are not reasonably
likely to have a ValueVision Material Adverse Effect.
Section 3.15. Accounting and Tax Matters.
(a) To the knowledge of ValueVision and its Subsidiaries, after consulting
with its independent auditors, neither ValueVision nor any of its Affiliates
(as defined in Section 5.12) has taken or agreed to take any action which would
prevent the ValueVision Merger from constituting a transaction qualifying as a
reorganization under Section 368 of the Code or the Mergers from constituting
transactions qualifying as transfers under Section 351 of the Code.
(b) To the knowledge of ValueVision and its Subsidiaries, the
stockholders of ValueVision have no present plan, intention or arrangement to
sell or otherwise dispose of any of the Parent Common Stock received in the
ValueVision Merger that would cause the ValueVision Merger to fail to qualify
as a reorganization under Section 368 of the Code or the Mergers to fail to
qualify as transfers under Section 351 of the Code.
Section 3.16. Registration Statement; Joint Proxy Statement/Prospectus.
The information to be supplied by ValueVision or its Subsidiaries or about
ValueVision or its Subsidiaries by ValueVision's agents for inclusion in the
registration statement on Form S-4 pursuant to which shares of Parent Common
Stock issued in the Mergers will be registered under the Securities Act (the
"Registration Statement"), shall not at the time the Registration Statement is
declared effective by the SEC contain any untrue statement of a material fact
or omit to state any material fact required to be stated in the Registration
Statement or necessary in order to make
20
the statements in the Registration Statement, in light of the circumstances
under which they were made, not misleading. The information supplied by
ValueVision or its Subsidiaries for inclusion in the joint proxy
statement/prospectus to be sent to the stockholders of National Media and
ValueVision in connection with the meeting of ValueVision' stockholders (the
"ValueVision Stockholders' Meeting") and the meeting of National Media's
stockholders (the "National Media Stockholders' Meeting") to consider this
Agreement and the Mergers (the "Joint Proxy Statement/Prospectus") shall not,
on the date the Joint Proxy Statement/Prospectus is first mailed to
stockholders of ValueVision or National Media, at the time of the ValueVision
Stockholders' Meeting and the National Media Stockholders' Meeting and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, omit to state any material fact necessary in order to
make the statements made in the Joint Proxy Statement/Prospectus not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the ValueVision Stockholders' Meeting or the National Media
Stockholders' Meeting which has become false or misleading. If at any time
prior to the Effective Time any event relating to ValueVision or any of its
Affiliates, officers or directors should be discovered by ValueVision which
should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, ValueVision shall promptly
inform National Media.
Section 3.17 Labor Matters. Except as disclosed in the ValueVision SEC
Reports filed prior to the date hereof, neither ValueVision nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is ValueVision or any of its
Subsidiaries the subject of any material proceeding asserting that ValueVision
or any of its Subsidiaries has committed an unfair labor practice or is seeking
to compel it to bargain with any labor union or labor organization nor, as of
the date of this Agreement, is there pending or, to the knowledge of the
executive officers of ValueVision, threatened, any material labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving ValueVision or
any of its Subsidiaries.
Section 3.18. Insurance. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by ValueVision or any of its Subsidiaries
are with reputable insurance carriers, provide full and adequate coverage for
all normal risks incident to the business of ValueVision and its Subsidiaries
and their respective properties and assets, and are in character and amount at
least equivalent to that carried by persons engaged in similar businesses and
subject to the same or similar perils or hazards, except for any such failures
to maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a ValueVision Material Adverse Effect.
Section 3.19. Opinion of Financial Advisor. The financial advisor of
ValueVision, Bear Xxxxxxx & Co., has delivered to ValueVision an opinion dated
the date of this Agreement to the effect that the ValueVision Exchange Ratio is
fair to the holders of ValueVision Common Stock from a financial point of view.
21
Section 3.20. No Existing Discussions. As of the date hereof, neither
ValueVision nor any of its Affiliates is engaged, directly or indirectly, in
any discussions or negotiations with any other party with respect to an
Acquisition Proposal (as defined in Section 5.3).
Section 3.21. Sections 302A.671 and 302A.673 of the MBCA Not Applicable.
The Board of Directors of ValueVision has taken all actions necessary under the
MBCA, including approving the transactions contemplated by the Agreement and
each of the Transaction Documents to which it is a party, to ensure that
Section 302A.673 of the MBCA applicable to a "business combination" does not,
and will not, apply to the transactions contemplated hereunder and thereunder.
The restrictions contained in Section 302A.671 of the MBCA applicable to
"control share acquisitions" will not apply to the authorization, execution,
delivery and performance of this Agreement or each of the Transaction Documents
by ValueVision to which it is a party or the consummation of the ValueVision
Merger by ValueVision. No other "fair price," "moratorium," or other similar
anti-takeover statute or regulation is applicable to ValueVision or (by reason
of ValueVision's participation therein) the ValueVision Merger or the other
transactions contemplated by this Agreement or the other Transaction Documents
to which it is a party.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF NATIONAL MEDIA
National Media represents and warrants to ValueVision that the statements
contained in this Article IV are true and correct, except as set forth on the
disclosure schedules delivered by National Media to ValueVision on or before
the date of this Agreement (the "National Media Disclosure Schedule"). The
National Media Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
IV and the disclosure in any paragraph shall qualify other paragraphs in this
Article IV only to the extent that it is reasonably apparent from a reading of
such document that it also qualifies or applies to such other paragraphs.
Section 4.1. Organization of National Media. Each of National Media and
National Media's Material Subsidiaries (as defined below) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power to own,
lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the failure to be so qualified would have a material adverse effect on the
business, properties, financial condition or results of operations of National
Media and its Subsidiaries, taken as a whole (a "National Media Material
Adverse Effect"). Except as set forth on the National Media Disclosure
Schedule or in the National Media SEC Reports (as defined in Section 4.4) filed
prior to the date hereof, neither National Media nor any of its Subsidiaries
directly or indirectly owns (other than ownership interests in National Media
or in one or more of its Subsidiaries) any equity or similar interest in, or
any interest that is mandatorily convertible into or exchangeable or
exercisable for, any corporation, partnership, joint venture or other business
association or entity, excluding securities in any publicly traded company held
for investment by National Media and comprising less than
22
five percent (5%) of the outstanding stock of such company. A true, correct
and complete copy of the Certificate of Incorporation and other similar
organizational documents of National Media and each of National Media's
Material Subsidiaries (as defined below) has been delivered to ValueVision.
"National Media's Material Subsidiaries" shall mean those subsidiaries of
National Media set forth on the National Media Disclosure Schedule, which
Subsidiaries constitute all of National Media's "significant subsidiaries" as
defined in Rule 1-02 of Regulation S-X under the Securities Act.
Section 4.2. National Media Capital Structure.
(a) The authorized capital stock of National Media consists of 75,000,000
shares of Common Stock, $.01 par value, and 10,000,000 shares of Preferred
Stock, $.01 par value. As of the date hereof, (i) 25,507,436 shares of
National Media Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and (ii) 705,280 shares of
National Media Common Stock were held in the treasury of National Media or by
Subsidiaries of National Media. The National Media Disclosure Schedule shows
the number of shares of National Media Common Stock reserved for future
issuance pursuant to stock options granted and outstanding as of the date
hereof, the plans under which such options were granted and award agreements
pursuant to which "non-plan" options were granted (collectively, the "National
Media Stock Plans"), and the entities or persons to whom such options were
granted. The National Media Disclosure Schedule also shows the agreements
under which the warrants to purchase an aggregate of 7,093,413 shares of
National Media Common Stock granted and outstanding as of the date hereof (the
"National Media Warrants," and together with the ValueVision Warrants, the
"Warrants") were issued and to whom such warrants were granted. As of the date
hereof, an aggregate number of 86,250 shares of Series B Convertible Preferred
Stock, par value $.01 per share, of National Media, which are currently
convertible into 862,500 shares of National Media Common Stock and which are
currently entitled to vote on all matters submitted to the stockholders of
National Media (with the exception of the election of directors) on an "as
converted" basis (the "Series B Convertible Preferred Stock") and 20,000 shares
of Series C Convertible Preferred Stock, par value $.01 per share, of National
Media which are currently convertible into 3,300,330 (the quotient of $20
million divided by $6.06) shares of National Media Common Stock, plus the
number of shares of National Media Common Stock equal to the quotient of the
Accrued Premium (as defined in the Certificate of Designations (as defined
below)) divided by $6.06 (the "Series C Convertible Preferred Stock" and,
together with the Series B Convertible Preferred Stock the "National Media
Convertible Preferred Stock") are issued and outstanding. All shares of
National Media Common Stock subject to issuance as specified above are duly
authorized and, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be validly issued, fully
paid and nonassessable. Except as set forth on the National Media Disclosure
Schedule, there are no obligations, contingent or otherwise, of National Media
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of National Media Common Stock or the capital stock of any Subsidiary or
to provide funds to or make any material investment (in the form of a loan,
capital contribution or otherwise) in any such Subsidiary or any other entity
other than guarantees of bank obligations of Subsidiaries entered into in the
ordinary course of business. Except as set forth on the National Media
Disclosure Schedule, all of the outstanding shares of capital stock of each of
National Media's Subsidiaries are duly authorized, validly issued, fully
23
paid and nonassessable and all such shares (other than directors' qualifying
shares in the case of foreign Subsidiaries) are beneficially owned by National
Media or another Subsidiary free and clear of all security interests, liens,
claims, pledges, agreements, limitations in National Media's voting rights,
charges or other encumbrances of any nature.
(b) Except as set forth in this Section 4.2 or as reserved for future
grants of options under the National Media Stock Plans or the ValueVision Stock
Option Agreement, and except for the Series A Junior Participating Preferred
Stock issued and issuable under the Rights Agreement dated as of January 3,
1994 between National Media and Mellon Securities Trust Company, as amended
(the "National Media Rights Plan") or as disclosed on the National Media
Disclosure Schedule, (i) there are no equity securities of any class of
National Media or any of its Subsidiaries, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding; (ii) except as set forth in the Certificate of Designations,
Preferences and Rights of the Series C Convertible Preferred Stock (the
"Certificate of Designations") and the Registration Rights Agreement dated as
of September 4, 1997 among National Media and the holders of the Series C
Convertible Preferred Stock, there are no options, warrants, equity securities,
calls, rights, commitments or agreements of any character to which National
Media or any of its Subsidiaries is a party or by which it is bound obligating
National Media or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock of National
Media or any of its Subsidiaries or obligating National Media or any of its
Subsidiaries to grant, extend, accelerate the vesting of or enter into any such
option, warrant, equity security, call, right, commitment or agreement; and
(iii) to the best knowledge of National Media, there are no voting trusts,
proxies or other voting agreements or understandings with respect to the shares
of capital stock of National Media.
Section 4.3. Authority; No Conflict; Required Filings and Consents.
(a) National Media has all requisite corporate power and authority to enter
into this Agreement and each of the Transaction Documents to which it is a
party and to consummate the transactions contemplated by this Agreement and
each of the Transaction Documents to which it is a party. The execution and
delivery of this Agreement and each of the Transactions Documents to which it
is a party and the consummation of the transactions contemplated by this
Agreement and each of the Transaction Documents to which it is a party by
National Media have been duly authorized by all necessary corporate action on
the part of National Media, subject only to the approval and adoption of this
Agreement by National Media's stockholders under the DGCL. This Agreement and
each of the Transaction Documents to which it is a party have been duly
executed and delivered by National Media and constitute the valid and binding
obligations of National Media, enforceable in accordance with their terms,
subject to the Bankruptcy and Equity Exception.
(b) Except as set forth on the National Media Disclosure Schedule, the
execution and delivery of this Agreement and each of the Transaction Documents
to which it is a party by National Media does not, and the consummation of the
transactions contemplated by this Agreement and each of the Transaction
Documents to which it is a party will not, (i) conflict with, or result in any
violation or breach of, any provision of the Certificate of Incorporation or
Bylaws of National Media or any of its Subsidiaries, (ii) result in any
violation or breach of, or
24
constitute (with or without notice or lapse of time, or both) a default (or
give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which National Media or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound (including
the Series C Convertible Preferred Stock), or (iii) conflict with or violate
any permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to National Media or any of its
Subsidiaries or any of its or their properties or assets, except in the case of
(ii) and (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which are not, individually or in the aggregate,
reasonably likely to have a National Media Material Adverse Effect. The
Redemption Agreement pursuant to which holders of the outstanding shares of
Series C Convertible Preferred Stock consent to the authorization, execution
and delivery of this Agreement and each of the Transaction Documents and the
consummation of the transactions contemplated hereunder and thereunder, is
being entered into concurrently with the execution of this Agreement and a form
is attached hereto as Exhibit K. The Series B Consent Agreement pursuant to
which holders of the outstanding shares of National Media Series B Convertible
Preferred Stock consent to the authorization, execution and delivery of this
Agreement and each of the Transaction Documents and the consummation of the
transactions contemplated hereunder and thereunder, is being entered into
concurrently with the execution of this Agreement and a form is attached hereto
as Exhibit L. The CoreStates Consent Agreement pursuant to which CoreStates
consents to the authorization, execution and delivery of this Agreement and
each of the Transaction Documents and the consummation of the transactions
contemplated hereunder and thereunder, is being entered into concurrently with
the execution of this Agreement and a form is attached hereto as Exhibit M.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to National Media or any of its Subsidiaries in connection with the
execution and delivery of this Agreement and each of the Transaction Documents
to which it is a party or the consummation of the transactions contemplated
hereby or thereby, except for (i) the filing of the pre-merger notification
report under the HSR Act, (ii) the filing of a Certificate of Merger with
respect to the National Media Merger with the Delaware Secretary of State,
(iii) the filing of the Joint Proxy Statement/Prospectus with the SEC in
accordance with the Exchange Act, (iv) applicable approvals of the FCC pursuant
to the Communications Act, (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable state or foreign securities laws, and (vi) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not be reasonably likely to have a National Media
Material Adverse Effect.
Section 4.4. SEC Filings; Financial Statements.
(a) National Media has filed and made available to ValueVision all forms,
reports and documents filed or required to be filed by National Media with the
SEC since January 1, 1995 (collectively, the "National Media SEC Reports").
The National Media SEC Reports (i) except as set forth on the National Media
Disclosure Schedule, at the time filed, complied in
25
all material respects with the applicable requirements of the Securities Act
and the Exchange Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
National Media SEC Reports or necessary in order to make the statements in such
National Media SEC Reports, in the light of the circumstances under which they
were made, not misleading. None of National Media's Subsidiaries is required
to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes) contained in the National Media SEC Reports complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to
such financial statements or, in the case of unaudited statements, in
conformity with the requirements of Form 10-Q under the Exchange Act) and
fairly presented in all material respects the consolidated financial position
of National Media and its Subsidiaries as of the dates and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
material in amount. The audited balance sheet of National Media as of March
31, 1997 is referred to herein as the "National Media Balance Sheet."
Section 4.5. No Undisclosed Liabilities. Except as disclosed in the
National Media SEC Reports filed prior to the date hereof or on the National
Media Disclosure Schedule, and except for normal or recurring liabilities
incurred since March 31, 1997 in the ordinary course of business consistent
with past practices, National Media and its Subsidiaries do not have any
liabilities, either accrued, contingent or otherwise (whether or not required
to be reflected in financial statements in accordance with generally accepted
accounting principles), and whether due or to become due, which individually or
in the aggregate, are reasonably likely to have a National Media Material
Adverse Effect.
Section 4.6. Absence of Certain Changes or Events. Except as disclosed
in the National Media SEC Reports filed prior to the date hereof or on the
National Media Disclosure Schedule, since the date of the National Media
Balance Sheet, National Media and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any Material Adverse
Change in National Media and its Subsidiaries, taken as a whole (other than
changes that are the effect or result of economic factors affecting the economy
as a whole or the industry (as described in National Media's Form 10-K for the
fiscal year ended March 31, 1997 (the "National Media 10-K") in which National
Media competes) or any development or combination of developments of which the
management of National Media is aware that, individually or in the aggregate,
has had, or is reasonably likely to have, a National Media Material Adverse
Effect (other than changes that are the effect or result of economic factors
affecting the economy as a whole or the industry (as described in the National
Media 10-K) in which National Media competes); (ii) any damage, destruction or
loss (whether or not covered by insurance) with
26
respect to National Media or any of its Subsidiaries having a National Media
Material Adverse Effect; (iii) any material change by National Media or its
Subsidiaries in their respective accounting methods, principles or practices to
which ValueVision has not previously consented in writing; (iv) any revaluation
by National Media or its Subsidiaries of any of their assets having a National
Media Material Adverse Effect; or (v) any other action or event that would have
required the consent of ValueVision pursuant to Section 5.1 of this Agreement
had such action or event occurred after the date of this Agreement and that,
individually or in the aggregate, has had or is reasonably likely to have a
National Media Material Adverse Effect.
Section 4.7. Taxes.
(a) National Media and each of its Subsidiaries have (i) filed all federal,
state, local and foreign Tax returns and reports required to be filed by them
prior to the date of this Agreement (taking into account all applicable
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clauses (i), (ii) or (iii) for any such
filings, payments or accruals that are not reasonably likely, individually or
in the aggregate, to have a National Media Material Adverse Effect. There are
no audits known by National Media to be pending or contemplated with respect to
National Media's tax returns. Neither the IRS nor any other taxing authority
has asserted any claim for Taxes, or to the actual knowledge of the executive
officers of National Media, is threatening to assert any claims for Taxes,
which claims, individually or in the aggregate, are reasonably likely to have a
National Media Material Adverse Effect. National Media and each of its
Subsidiaries have withheld or collected and paid over to the appropriate
governmental authorities (or are properly holding for such payment) all Taxes
required by law to be withheld or collected, except for amounts that are not
reasonably likely, individually or in the aggregate, to have a National Media
Material Adverse Effect. Neither National Media nor any of its Subsidiaries
has made an election under Section 341(f) of the Code, except for any such
elections that are not reasonably likely, individually or in the aggregate, to
have a National Media Material Adverse Effect. There are no liens for Taxes
upon the assets of National Media or any of its Subsidiaries (other than liens
for Taxes that are not yet due or that are being contested in good faith by
appropriate proceedings), except for liens that are not reasonably likely,
individually or in the aggregate, to have a National Media Material Adverse
Effect. No extension of a statute of limitations relating to any Taxes is in
effect with respect to National Media and its Subsidiaries.
(b) Neither National Media nor any of its Subsidiaries has been a member
of an affiliated group of corporations filing a consolidated federal income tax
return (or a group of corporations filing a consolidated, combined or unitary
income tax return under comparable provisions of state, local or foreign tax
law) for any taxable period beginning on or after April 1, 1991, other than a
group the common parent of which was National Media or any Subsidiary of
National Media.
(c) Neither National Media nor any of its Subsidiaries has any obligation
under any agreement or arrangement with any other person with respect to Taxes
of such other person (including pursuant to Treas. Reg. Section 1.1502-6 or
comparable provisions of state, local or foreign
27
tax law) and including any liability for Taxes of any predecessor entity,
except for obligations that are not reasonably likely, individually or in the
aggregate, to have an National Media Material Adverse Effect.
(d) Neither National Media nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
Section 4.8. Properties.
(a) Neither National Media nor any of its Subsidiaries is in default
under any of their respective leases for real property, except where the
existence of such defaults, individually or in the aggregate, is not reasonably
likely to have a National Media Material Adverse Effect.
(b) Neither National Media nor any of its Subsidiaries owns any real
property.
Section 4.9. Intellectual Property. Other than as set forth on the
National Media Disclosure Schedule, each of National Media and its Subsidiaries
owns, or is licensed or otherwise possesses legally enforceable rights to use,
all trademarks, trade names, service marks, copyrights, and any applications
for such trademarks, trade names, service marks and copyrights, know-how,
computer software programs or applications, and tangible or intangible
proprietary information or material that are necessary to conduct the business
of each of National Media and its Subsidiaries as currently conducted, subject
to such exceptions that would not be reasonably likely to have a National Media
Material Adverse Effect. Other than as set forth on the National Media
Disclosure Schedule, neither National Media nor any of its Subsidiaries has any
knowledge of any assertion or claim challenging the validity of any of such
intellectual property, except such assertions or claims that, individually or
in the aggregate, are not reasonably likely to have a National Media Material
Adverse Effect.
Section 4.10. Agreements, Contracts and Commitments. Neither National
Media nor any of its Subsidiaries has breached, or received in writing any
claim or notice that it has breached, any of the terms or conditions of any
material agreement, contract or commitment filed or required to be filed as an
exhibit to the National Media SEC Reports ("National Media Material Contracts")
in such a manner as, individually or in the aggregate, is reasonably likely to
have a National Media Material Adverse Effect. Each National Media Material
Contract that has not expired by its terms is in full force and effect.
Section 4.11. Litigation. Except as described in the National Media SEC
Reports filed prior to the date hereof or as set forth on the National Media
Disclosure Schedule, there is no action, suit or proceeding, claim, arbitration
or investigation against National Media or any of its Subsidiaries pending or
as to which National Media or any of its Subsidiaries has received any written
notice of assertion, which, individually or in the aggregate, is reasonably
likely to have a National Media Material Adverse Effect or a material adverse
effect on the ability of National Media to consummate the transactions
contemplated by this Agreement.
Section 4.12. Environmental Matters. To the knowledge of National Media
and its Subsidiaries, except as disclosed in the National Media SEC Reports
filed prior to the date hereof
28
and except for such matters that, individually or in the aggregate, are not
reasonably likely to have a National Media Material Adverse Effect: (i)
National Media and its Subsidiaries are in material compliance with all
applicable Environmental Laws; (ii) the properties currently owned or operated
by National Media and its Subsidiaries (including soils, groundwater, surface
water, buildings or other structures) are not contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by National Media
or any of its Subsidiaries were not contaminated with Hazardous Substances
during the period of ownership or operation by National Media or any of its
Subsidiaries; (iv) neither National Media nor its Subsidiaries are subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (v) neither National Media nor any of its Subsidiaries has been
associated with any release or threat of release of any Hazardous Substance;
(vi) neither National Media nor any of its Subsidiaries has received any
written notice, demand, letter, claim or request for information alleging that
National Media or any of its Subsidiaries may be in violation of or liable
under any Environmental Law; (vii) neither National Media nor any of its
Subsidiaries is subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or is subject to any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (viii) there are no
circumstances or conditions involving National Media or any of its Subsidiaries
that could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use or transfer of any
property of National Media pursuant to any Environmental Law.
Section 4.13. Employee Benefit Plans.
(a) National Media has listed on the National Media Disclosure Schedule all
Employee Benefit Plans, as defined in Section 3.13(a) of this Agreement, and
all Benefit Arrangements, as defined in Section 3.13(a) of this Agreement, (i)
which are maintained, contributed to or required to be contributed to by
National Media or any entity that, together with National Media as of the
relevant measuring date under ERISA, is or was required to be treated as a
single employer under Section 414 of the Code ("National Media ERISA
Affiliate") or under which National Media or any National Media ERISA Affiliate
may incur any liability, and (ii) which cover the employees, former employees,
directors or former directors of National Media or any National Media ERISA
Affiliate ("National Media Employee Plans").
(b) A true and complete copy of each written National Media Employee Plan
that covers employees or former employees of National Media or any Subsidiary
of National Media, including each amendment thereto and any trust agreement,
insurance contract, collective bargaining agreement, or other funding or
investment arrangements for the benefits under such National Media Employee
Plan, has been delivered to ValueVision. In addition, with respect to each
such National Media Employee Plan to the extent applicable, National Media has
delivered to ValueVision the most recently filed Federal Forms 5500 (solely
with respect to the National Media 401(k) Plan), the most recent summary plan
description (including any summaries of material modifications), the most
recent IRS determination letter, if applicable, the most recent actuarial
report or valuation, if applicable, and all material employee communications
with respect to each such National Media Employee Plan.
(c) Except as set forth on the National Media Disclosure Schedule:
29
(i) Neither National Media nor any National Media ERISA Affiliate
sponsors, maintains, contributes to, or has any obligation to contribute to any
Employee Benefit Plan regulated under Title IV of ERISA, other than a
"multiemployer plan," as defined in Sections 3(37) and 4001(a)(3) of ERISA,
("Pension Plan"); with respect to any Pension Plan previously sponsored,
maintained or contributed to by National Media or any National Media ERISA
Affiliate or with respect to which National Media or any National Media ERISA
Affiliate previously incurred an obligation to contribute:
(A) As of the last day of the last plan year of each such Pension
Plan and as of the Closing Date, the "amount of unfunded benefit
liabilities" as defined in Section 4001(a)(18) of ERISA (but excluding
from the definition of "current value" of "assets" of such Pension Plan,
accrued but unpaid contributions) did not and will not exceed zero.
(B) No such Pension Plan has been terminated so as to subject,
directly or indirectly, National Media or any National Media ERISA
Affiliate to any liability, contingent or otherwise, or the imposition
of any lien under Title IV of ERISA;
(C) No proceeding has been initiated by any person, including the
Pension Benefit Guaranty Corporation ("PBGC"), to terminate any such
Pension Plan;
(D) No liability to the PBGC exists or is reasonably expected to be
incurred with respect to any such Pension Plan that could subject,
directly or indirectly, National Media or any National Media ERISA
Affiliate to any liability, contingent or otherwise, or the imposition
of any lien under Title IV of ERISA, whether to the PBGC or to any other
person;
(E) No "reportable event," as defined in Section 4043 of ERISA (to
the extent the reporting of such event to the PBGC has not been waived)
has occurred and is continuing with respect to any such Pension Plan;
(F) No such Pension Plan which is subject to Section 302 of ERISA
or Section 412 of the Code has incurred an "accumulated funding
deficiency," within the meaning of Section 302 of ERISA and 412 of the
Code, whether or not such deficiency has been waived;
(G) Neither National Media nor any National Media ERISA Affiliate
has, at any time, (i) ceased operations at a facility so as to become
subject to the provisions of Section 4068(e) of ERISA, (ii) withdrawn as
a substantial employer so as to become subject to the provisions of
Section 4063 of ERISA, or (iii) ceased making contributions on or before
the Closing Date to any Pension Plan subject to Section 4064(a) of ERISA
to which National Media or any National Media ERISA Affiliate made
contributions during the five years prior to the Closing Date.
30
(ii) neither National Media nor any National Media ERISA Affiliate
sponsors or has previously sponsored, maintained, contributed to or incurred an
obligation to contribute to any "multiemployer plan," as defined in Sections
3(37) and 4001(a)(3) of ERISA;
(iii) neither National Media nor any National Media ERISA
Affiliate sponsors or has previously sponsored, maintained, contributed to or
incurred an obligation to contribute to any Employee Benefit Plan that provides
or will provide benefits described in Section 3(1) of ERISA to any former
employee or retiree of National Media or any National Media ERISA Affiliate,
except as required under Part 6 of Title I of ERISA and Section 4980B of the
Code;
(iv) all National Media Employee Plans that cover or have covered
employees or former employees of National Media have been maintained and
operated, and currently are, in compliance in all material respects with their
terms, the requirements prescribed by any and all applicable laws (including
ERISA and the Code), orders, or governmental rules and regulations in effect
with respect thereto, and National Media and the National Media ERISA
Affiliates have performed all material obligations required to be performed by
them under, are not in any material respect in default under or in violation
of, and have no knowledge of any default or violation by any other party to,
any of the National Media Employee Plans;
(v) each National Media Employee Plan that covers or has covered
employees or former employees of National Media and is intended to qualify
under Section 401(a) of the Code and each trust established pursuant to each
such National Media Employee Plan that is intended to qualify under Section
501(a) of the Code is the subject of a favorable determination letter from the
IRS, a copy of which has been delivered to ValueVision, and, to National
Media's knowledge, nothing has occurred which may reasonably be expected to
impair such determination or otherwise adversely affect the tax-qualified
status of such National Media Employee Plan;
(vi) National Media and the National Media ERISA Affiliates have
made full and timely payment of all amounts required to be contributed under
the terms of each National Media Employee Plan and applicable law or required
to be paid as expenses under such National Media Employee Plan; and
(vii) other than claims for benefits in the ordinary course,
there is no claim, suit, action, dispute, arbitration or legal, administrative
or other proceeding or governmental investigation or audit pending, or, to the
knowledge of National Media, threatened, alleging any breach of the terms of
any National Media Employee Plan or of any fiduciary duty thereunder or
violation of any applicable law with respect to any such National Media
Employee Plan.
(d) With respect to the National Media Employee Plans, individually and
in the aggregate, no event has occurred, and to the knowledge of National
Media, there exists no condition or set of circumstances in connection with
which National Media could be subject to any liability that is reasonably
likely to have a National Media Material Adverse Effect under ERISA, the Code
or any other applicable law.
31
(e) Except as disclosed in the National Media SEC Reports filed prior to
the date of this Agreement or on the National Media Disclosure Schedule, and
except as provided for in this Agreement, neither National Media nor any of its
Subsidiaries is a party to any oral or written (i) agreement with any officer
or other key employee of National Media or any of its Subsidiaries, the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving National Media of the nature
contemplated by this Agreement, (ii) agreement with any officer of National
Media providing any term of employment or compensation guarantee extending for
a period longer than one year from the date hereof and for the payment of
compensation in excess of $100,000 per annum, or (iii) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. None of the execution or
delivery of this Agreement or any of the Transaction Documents to which it is a
party or the consummation of the transactions contemplated hereunder or
thereunder will trigger any "change in control" or similar provisions resulting
in an acceleration of benefits or compensation thereunder with respect to any
agreements with any officer or other key employee of National Media or any of
its Subsidiaries except for such applicable agreements as set forth on the
National Media Disclosure Schedule (the "National Media Parachute Agreements").
Except as set forth on the National Media Disclosure Schedule, the aggregate
amounts payable under the National Media Parachute Agreements as a result of
the transactions contemplated by this Agreement and each of the Transaction
Documents will not exceed $600,000.
Section 4.14. Compliance With Laws. Except as disclosed on the National
Media Disclosure Schedule, each of National Media and its Subsidiaries has
complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state or local statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for failures to comply or violations which,
individually or in the aggregate, have not had and are not reasonably likely to
have a National Media Material Adverse Effect.
Section 4.15. Accounting and Tax Matters.
(a) To the knowledge of National Media and its Subsidiaries, after
consulting with its independent auditors, neither National Media nor any of its
Affiliates (as defined in Section 5.12) has taken or agreed to take any action
which would prevent the Mergers from constituting transactions qualifying as
transfers under Section 351 of the Code.
(b) To the knowledge of National Media and its Subsidiaries, the
stockholders of National Media have no present plan, intention or arrangement
to sell or otherwise dispose of any of the Parent Common Stock received in the
National Media Merger that would cause the Mergers to fail to qualify as
transfers under Section 351 of the Code.
(c) None of National Media's non-United States Subsidiaries have, excluding
the effects of any guarantees made by any such Subsidiaries with respect to the
Demand Note, any
32
"applicable earnings" for purposes of Section 956 of the Code as of the end of
each such Subsidiary's tax year ending on or after the date hereof.
Section 4.16. Registration Statement; Joint Proxy Statement/Prospectus. The
information to be supplied by National Media or its Subsidiaries or about
National Media or its Subsidiaries by National Media's agents for inclusion in
the Registration Statement shall not at the time the Registration Statement is
declared effective by the SEC contain any untrue statement of a material fact
or omit to state any material fact required to be stated in the Registration
Statement or necessary in order to make the statements in the Registration
Statement, in light of the circumstances under which they were made, not
misleading. The information to be supplied by National Media or its
Subsidiaries or about National Media or its Subsidiaries by National Media's
agents for inclusion in the Joint Proxy Statement/Prospectus shall not, on the
date the Joint Proxy Statement/Prospectus is first mailed to stockholders of
National Media or ValueVision, at the time of the National Media Stockholders'
Meeting and the ValueVision Stockholders' Meeting and at the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it shall be made, is false or misleading with respect to any
material fact, omit to state any material fact necessary in order to make the
statements made in the Joint Proxy Statement/Prospectus not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the National Media Stockholders' Meeting or the ValueVision
Stockholders' Meeting which has become false or misleading. If at any time
prior to the Effective Time any event relating to National Media or any of its
Affiliates, officers or directors should be discovered by National Media which
should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, National Media shall
promptly inform ValueVision.
Section 4.17. Labor Matters. Except as disclosed in the National Media SEC
Reports filed prior to the date hereof, neither National Media nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is National Media or any of its
Subsidiaries the subject of any material proceeding asserting that National
Media or any of its Subsidiaries has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or labor organization nor,
as of the date of this Agreement, is there pending or, to the knowledge of the
executive officers of National Media, threatened, any material labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving National Media
or any of its Subsidiaries.
Section 4.18. Insurance. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by National Media or any of its
Subsidiaries are with reputable insurance carriers, provide full and adequate
coverage for all normal risks incident to the business of National Media and
its Subsidiaries and their respective properties and assets, and are in
character and amount at least equivalent to that carried by persons engaged in
similar businesses and subject to the same or similar perils or hazards, except
for any such failures to maintain insurance policies that, individually or in
the aggregate, are not reasonably likely to have a National Media Material
Adverse Effect.
33
Section 4.19. Opinion of Financial Advisor. The financial advisor of
National Media, Xxxxxx Brothers, Inc., has delivered to National Media an
opinion dated the date of this Agreement to the effect that the National Media
Exchange Ratio is fair to the holders of National Media Common Stock from a
financial point of view.
Section 4.20. No Existing Discussions. As of the date hereof, neither
National Media nor any of its Affiliates is engaged, directly or indirectly, in
any discussions or negotiations with any other party with respect to an
Acquisition Proposal.
Section 4.21. Section 203 of the DGCL and Sections 2538, 2555, and 2564
of the Pennsylvania Business Corporation Law Not Applicable. The Board of
Directors of National Media has taken all actions necessary under the DGCL and
the Pennsylvania Business Corporation Law ("PBCL"), including approving the
transactions contemplated by this Agreement and each of the Transaction
Documents to which it is a party, to ensure that Section 203 of the DGCL
applicable to a "business combination" (as defined in Section 203 of the DGCL)
and Sections 2538, 2555 and 2564 of the PBCL applicable to a "business
combination," "control share acquisitions and transaction with "interested
shareholders," do not, and will not, apply to the transactions contemplated
hereunder and thereunder. No other "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation is applicable
to National Media or (by reason of National Media's participation therein) the
National Media Merger or the other transactions contemplated by this Agreement
or the other Transaction Documents to which it is a party.
Section 4.22. National Media Rights Plan. Under the terms of the
National Media Rights Plan, the transactions contemplated by this Agreement
will not cause a Distribution Date to occur or cause the rights issued pursuant
to the National Media Rights Plan to become exercisable and all such rights
shall become non-exercisable at the Effective Time.
ARTICLE V.
COVENANTS
Section 5.1. Conduct of Business. Except as set forth on Section 5.1 of
the ValueVision Disclosure Schedule or the National Media Disclosure Schedule,
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, ValueVision
and National Media each agrees as to itself and its respective Subsidiaries
(except to the extent that the other party shall otherwise consent in writing)
to carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, to pay
or perform its other obligations when due, and, to the extent consistent with
such business, use all reasonable efforts consistent with past practices and
policies to (i) preserve intact its present business organization, (ii) keep
available the services of its present officers and key employees and (iii)
preserve its relationships with customers, suppliers, distributors, and others
having business dealings with it. Except as expressly contemplated by this
Agreement (including the Exhibits attached hereto) or as set forth on Section
5.1 of the ValueVision Disclosure Schedule or the National Media Disclosure
Schedule, during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
ValueVision and National Media each shall
34
not (and shall not permit any of its respective Subsidiaries to), without the
written consent of the other party:
(a) Accelerate, amend or change the period of exercisability of options or
restricted stock granted under any employee stock plan of such party or
authorize cash payments in exchange for any options granted under any of such
plans, except as required by the terms of such plans or any related agreements
in effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock, except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service to such
party;
(c) Issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or securities convertible
into or exchangeable for shares of its capital stock, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities, other than (i) the grant of options consistent with past practices
to employees, officers, directors or consultants, but in no event grant more
than the total number of authorized options available under such party's stock
option plans and (ii) the issuance of shares of ValueVision Common Stock or
National Media Common Stock, as the case may be, pursuant to the exercise of
options, warrants or the National Media Convertible Preferred Stock outstanding
on the date of this Agreement;
(d) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership
or other business organization or division, or otherwise acquire or agree to
acquire any assets (other than inventory and other items in the ordinary course
of business), except for any such acquisitions involving aggregate
consideration of not more than $1,000,000;
(e) Sell, lease, license or otherwise dispose of any of its material
properties or assets, except for transactions in the ordinary course of
business; provided, however, that in no event shall either party enter into any
agreement, option or other arrangements (including without limitation any joint
venture) involving the licensing of such party's name or system in any foreign
country, except for transactions in the ordinary course of business;
(f) (i) Increase or agree to increase the compensation payable or to become
payable to its directors, officers, employees or consultants, except for
increases in salary or wages of employees (other than officers) in accordance
with past practices, (ii) grant any additional severance or termination pay to,
or enter into any employment or severance agreements with, any consultants,
employees, officers or directors (iii) enter into any collective bargaining
agreement (other than as required by law or extensions to existing agreements
in the ordinary course of business), or (iv) establish, adopt, enter into or
amend any bonus, profit
35
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, trust, fund, policy or arrangement for the benefit of any directors,
officers, employees or consultants;
(g) Amend or propose to amend its Certificate of Incorporation or
Articles of Incorporation, as the case may be, or Bylaws;
(h) Incur any indebtedness for borrowed money other than in the ordinary
course of business;
(i) Take any action that would or is reasonably likely to result in a
material breach of any provision of this Agreement or any of the Transaction
Documents to which it is a party or in any of its representations and
warranties set forth in this Agreement or any of the Transaction Documents to
which it is a party being untrue on and as of the Closing Date;
(j) Make or rescind any material express or deemed election relating to
Taxes, settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes,
or change any of its methods of reporting income or deductions for federal
income Tax purposes from those employed in the preparation of its federal
income tax return for the taxable year ending January 31, 1997 with respect to
ValueVision and March 31, 1997 with respect to National Media, except as may be
required by applicable law;
(k) Settle any stockholder litigation relating to the transactions
contemplated hereby; or
(l) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (k) above.
Section 5.2. Cooperation; Notice; Cure. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of
ValueVision and National Media shall confer on a regular and frequent basis
with one or more representatives of the other party to report on the general
status of ongoing operations and shall promptly provide the other party or its
counsel with copies of all filings made by such party with the SEC or with any
Governmental Entity in connection with this Agreement, the Mergers and the
transactions contemplated hereby and thereby. Each of ValueVision and National
Media shall notify the other of, and will use all commercially reasonable
efforts to cure before the Closing Date, any event, transaction or
circumstance, as soon as practical after it becomes known to such party, that
causes or will cause any covenant or agreement of ValueVision or National Media
under this Agreement to be breached or that renders or will render untrue any
representation or warranty of ValueVision or National Media contained in this
Agreement. Each of ValueVision and National Media also shall notify the other
in writing of, and will use all commercially reasonable efforts to cure, before
the Closing Date, any violation or breach, as soon as practical after it
becomes known to such party, of any representation, warranty, covenant or
agreement made by ValueVision or National Media. No notice given pursuant to
this paragraph shall have any effect on the representations, warranties,
covenants or agreements contained in this Agreement for purposes of determining
satisfaction of any condition contained herein. Notwithstanding anything to
the
36
contrary in this Agreement, (i) neither ValueVision nor any of its Subsidiaries
nor National Media nor any of its Subsidiaries shall be obligated to sell or
otherwise transfer any of its broadcast assets to obtain the FCC Consent
Application (as defined in Section 5.8(a)) and (ii) if any of National Media's
Directors (as defined in Section 5.19(a)) are not approved of by the FCC, then
National Media shall as expeditiously as possible upon notice of such
nonapproval replace any such director with another National Media Director
until all of National Media's Directors have been approved of by the FCC.
Section 5.3. No Solicitation.
(a) ValueVision and National Media each shall not, directly or indirectly,
through any officer, director, employee, financial advisor, representative or
agent of such party (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transaction involving such
party or any of its Subsidiaries, other than the transactions contemplated by
this Agreement (any of the foregoing inquiries or proposals being referred to
in this Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions with any third party concerning, or provide any non-public
information to any person or entity relating to, any Acquisition Proposal, or
(iii) agree to or recommend any Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent ValueVision or National
Media, or their respective Board of Directors, from (A) furnishing non-public
information to, or entering into discussions or negotiations with, any person
or entity in connection with an unsolicited bona fide written Acquisition
Proposal by such person or entity or modifying or withdrawing its
recommendation with respect to the transactions contemplated hereby or
recommending an unsolicited bona fide written Acquisition Proposal to the
stockholders of such party, if and only to the extent that (1) the Board of
Directors of such party believes in good faith (after consultation with its
financial advisor) that such Acquisition Proposal is reasonably capable of
being completed on the terms proposed and, after taking into account the
strategic benefits anticipated to be derived from the Mergers and the long-term
prospects of ValueVision and National Media as a combined company, would, if
consummated, result in a transaction more favorable to the stockholders of such
party over the long term than the transaction contemplated by this Agreement
and the Board of Directors of such party determines in good faith after
consultation with outside legal counsel that such action is required for such
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law and (2) prior to furnishing such non-public information to, or
entering into discussions or negotiations with, such person or entity, such
Board of Directors receives from such person or entity an executed
confidentiality and standstill agreement with terms no less favorable to such
party than those contained in the Confidentiality Agreement dated August 19,
1997 between National Media and ValueVision (the "Confidentiality Agreement");
or (B) complying with Rule 14e-2 promulgated under the Exchange Act with regard
to an Acquisition Proposal. Each of ValueVision and National Media agrees not
to release any third party from, or waive any provision of, any standstill
agreement to which it is a party or any confidentiality agreement between it
and another person who has made, or who may reasonably be considered likely to
make, an Acquisition Proposal, unless its Board of Directors determines in good
faith after
37
consultation with outside legal counsel that such action is necessary for such
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law.
(b) ValueVision and National Media shall each notify the other party
immediately after receipt by ValueVision or National Media (or their advisors)
of any Acquisition Proposal or any request for nonpublic information in
connection with an Acquisition Proposal or for access to the properties, books
or records of such party by any person or entity that informs such party that
it is considering making, or has made, an Acquisition Proposal. Such notice
shall be made orally and in writing and shall indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal, inquiry
or contact. Such party shall continue to keep the other party hereto informed,
on a current basis, of the status of any such discussions or negotiations and
the terms being discussed or negotiated.
Section 5.4. Joint Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practicable after the execution of this Agreement,
ValueVision and National Media shall prepare and file with the SEC the Joint
Proxy Statement/Prospectus and will cause Parent to prepare and file with the
SEC the Registration Statement in which the Joint Proxy Statement/Prospectus
will be included as a prospectus. ValueVision and National Media shall use all
reasonable efforts to cause the Registration Statement to become effective as
soon after such filing as practical. The Joint Proxy Statement/Prospectus
shall include the recommendation of the Board of Directors of ValueVision in
favor of this Agreement and the ValueVision Merger and the recommendation of
the Board of Directors of National Media in favor of this Agreement and the
National Media Merger; provided that the Board of Directors of either party may
modify or withdraw such recommendation if such Board of Directors believes in
good faith after consultation with outside legal counsel that the modification
or withdrawal of such recommendation is necessary for such Board of Directors
to comply with its fiduciary duties under applicable law.
(b) ValueVision and National Media shall make all necessary filings with
respect to the Merger under the Securities Act, the Exchange Act, applicable
state blue sky laws and the rules and regulations thereunder.
(c) ValueVision and National Media shall use their best efforts to
furnish to each other all information required for any application or other
filing to be made pursuant to the rules and regulations of any applicable law
(including all information required to be included in the Joint Proxy
Statement/Prospectus and the Registration Statement) in connection with the
transactions contemplated by this Agreement.
Section 5.5. Nasdaq Quotation and NYSE Listing. ValueVision agrees to
use its reasonable best efforts to continue the quotation of ValueVision Common
Stock on Nasdaq during the term of this Agreement and National Media agrees to
use its reasonable best efforts to continue the quotation and listing of
National Media Common Stock on the New York Stock Exchange (the "NYSE") during
the term of this Agreement.
Section 5.6. Access to Information. Upon reasonable notice, ValueVision
and National Media shall each (and shall cause each of their respective
Subsidiaries to) afford to the officers,
38
employees, accountants, counsel and other representatives of the other, access,
during normal business hours during the period prior to the Effective Time, to
all its personnel, properties, books, contracts, commitments and records and,
during such period, each of ValueVision and National Media shall, and shall
cause each of their respective Subsidiaries to, furnish promptly to the other
(a) a copy of each report, schedule, registration statement and other document
filed or received by it during such period pursuant to the requirements of
federal securities laws and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. The
parties will hold any such information which is nonpublic in confidence in
accordance with the Confidentiality Agreement. No information or knowledge
obtained in any investigation pursuant to this Section 5.6 shall affect or be
deemed to modify any representation or warranty contained in this Agreement or
the conditions to the obligations of the parties to consummate the Merger.
Section 5.7. Stockholders Meetings. ValueVision and National Media each
shall call a meeting of its respective stockholders to be held as promptly as
practicable for the purpose of voting, in the case of ValueVision, upon this
Agreement and the ValueVision Merger and, in the case of National Media, upon
this Agreement and the National Media Merger. Subject to Sections 5.3 and 5.4,
ValueVision and National Media shall, through their respective Boards of
Directors, recommend to their respective stockholders approval of such matters
and shall coordinate and cooperate with respect to the timing of such meetings
and shall use their best efforts to hold such meetings on the same day and as
soon as practicable after the date hereof. Unless otherwise required to comply
with the applicable fiduciary duties of the respective directors of ValueVision
and National Media, as determined by such directors in good faith after
consultation with outside legal counsel, each party shall use all reasonable
efforts to solicit from stockholders of such party proxies in favor of such
matters.
Section 5.8. Legal Conditions to Merger.
(a) ValueVision and National Media shall each use all reasonable efforts to
(i) take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary and proper under applicable law to consummate and
make effective the transactions contemplated hereby as promptly as practicable,
(ii) obtain from any Governmental Entity or any other third party any consents,
licenses, permits, waivers, approvals, authorizations, or orders required to be
obtained or made by ValueVision or National Media or any of their Subsidiaries
in connection with the authorization, execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby including, without
limitation, the Mergers, and (iii) as promptly as practicable, make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement and the Mergers required under (A) the Securities Act
and the Exchange Act, and any other applicable federal or state securities
laws, (B) the HSR Act and any related governmental request thereunder, (C) the
Communications Act (including the filing of one or more requisite applications
with the FCC requesting its written consent to the transactions contemplated
hereby (the "FCC Consent Application"), and (D) any other applicable law.
ValueVision and National Media shall cooperate with each other in connection
with the making of all such filings, including providing copies of all such
documents to the non-filing party and its advisors prior to filing and, if
39
requested, to accept all reasonable additions, deletions or changes suggested
in connection therewith.
(b) ValueVision and National Media agree, and shall cause each of their
respective Subsidiaries, to cooperate and to use their respective best efforts
to obtain any government clearances required for Closing (including through
compliance with the HSR Act and any applicable foreign government reporting
requirements), to respond to any government requests for information, and to
contest and resist any action, including any legislative, administrative or
judicial action, and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order (whether temporary, preliminary or
permanent) (an "Order") that restricts, prevents or prohibits the consummation
of the Mergers or any other transactions contemplated by this Agreement. The
parties hereto will consult and cooperate with one another, and consider in
good faith the views of one another, in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to the HSR Act, the Communications Act or
any other federal, state or foreign antitrust or fair trade law. ValueVision
and National Media shall cooperate and work together in any proceedings or
negotiations with any Governmental Entity relating to any of the foregoing.
Notwithstanding anything to the contrary in this Section 5.8, neither
ValueVision nor National Media, nor any of their respective Subsidiaries, shall
be required to take any action that would reasonably be expected to
substantially impair the overall benefits expected, as of the date hereof, to
be realized from the consummation of the Mergers.
(c) Each of ValueVision and National Media shall give (or shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, all reasonable efforts to obtain
any third party consents related to or required in connection with the Mergers.
(d) National Media shall duly comply with all of its obligations under, and
shall diligently prosecute all of its rights under, the Redemption Agreement.
Section 5.9. Public Disclosure. ValueVision and National Media shall
agree on the form and content of the initial press release regarding the
transactions contemplated hereby and thereafter shall consult with each other
before issuing, and use all reasonable efforts to agree upon, any press release
or other public statement with respect to any of the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation.
Section 5.10. Tax-Free Reorganization and Transfer. ValueVision and
National Media shall each use all reasonable efforts to cause the ValueVision
Merger to be treated as a reorganization within the meaning of Section 368 of
the Code and the Mergers to be treated as transfers within the meaning of
Section 351 of the Code.
Section 5.11. Affiliate Agreements. Upon the execution of this Agreement,
ValueVision and National Media will provide each other with a list of those
persons who are, in ValueVision's or National Media's respective reasonable
judgment, "affiliates" of ValueVision or National Media, as the case may be,
within the meaning of Rule 145 (each such person who is
40
an "affiliate" of ValueVision or National Media within the meaning of Rule 145
is referred to as an "Affiliate") promulgated under the Securities Act ("Rule
145"). ValueVision and National Media shall provide each other such
information and documents as the other party shall reasonably request for
purposes of reviewing such list and shall notify the other party in writing
regarding any change in the identity of its Affiliates prior to the Closing
Date. ValueVision and National Media shall each use all reasonable efforts to
deliver or cause to be delivered to each other by January 30, 1998 (and in any
case prior to the Effective Time) from each of its Affiliates, an executed
Affiliate Agreement, substantially similar to the form attached hereto as
Exhibit F, by which each Affiliate of ValueVision and each Affiliate of
National Media agrees to comply with the applicable requirements of Rule 145
and for the ValueVision Merger to qualify as a tax-free reorganization within
the meaning of Section 368 and the Mergers to qualify as transfers within the
meaning of Section 351 of the Code (an "Affiliate Agreement"). Parent shall be
entitled to place appropriate legends on the certificates evidencing any Parent
Common Stock to be received by such Affiliates of ValueVision or National Media
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for Parent Common Stock, consistent with the
terms of the Affiliate Agreements (provided that such legends or stop transfer
instructions shall be removed, when such shares of Parent Common Stock are
generally transferable without any restrictions imposed by Rule 145, upon the
request of any stockholder that is not then an Affiliate of Parent).
Section 5.12. National Listing or Nasdaq Quotation. ValueVision and
National Media shall cause Parent to promptly prepare and submit an application
to the NYSE, if Parent is eligible for such listing, or, if not so eligible, to
another national securities exchange or market to list or quote the shares of
Parent Common Stock to be issued in the Mergers and upon exercise or conversion
of ValueVision Stock Options, the ValueVision Warrants, the National Media
Stock Options and the National Media Warrants, and shall use all reasonable
efforts to cause such shares to be approved for listing or quotation on the
NYSE or such other exchange or market, as the case may be, prior to the
Effective Time, subject to official notice of issuance.
Section 5.13. Stock Plans.
(a) At the Effective Time, each outstanding ValueVision Stock Option
under the ValueVision Stock Plans and each outstanding National Media Stock
Option under the National Media Stock Plans, in each case whether vested or
unvested, shall be deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such ValueVision Stock Option or
National Media Stock Option, as the case may be the same number of shares of
Parent Common Stock as the holder of such ValueVision Stock Option or National
Media Stock Option, as the case may be, would have been entitled to receive
pursuant to the ValueVision Merger or the National Media Merger, respectively,
had such holder exercised such option in full immediately prior to the
Effective Time (rounded downward to the nearest whole number), at a price per
share (rounded downward to the nearest whole cent) equal to (y) the aggregate
exercise price for the shares of ValueVision Common Stock or National Media
Common Stock, as the case may be, purchasable pursuant to such ValueVision
Stock Option or such National Media Stock Option immediately prior to the
Effective Time divided by (z) the number of full shares of Parent Common Stock
deemed purchasable pursuant to such ValueVision Stock Option or National Media
Stock Option, as the case may be, in accordance with the foregoing.
41
(b) As soon as practicable after the Effective Time, Parent shall deliver
to the participants in the ValueVision Stock Plans and the National Media Stock
Plans appropriate notice setting forth such participants' rights pursuant
thereto and the grants pursuant to ValueVision Stock Plans or National Media
Stock Plans, as the case may be, shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 5.13 after
giving effect to the Mergers).
(c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery
under ValueVision Stock Plans and National Media Stock Plans assumed in
accordance with this Section 5.13. As soon as practicable after the Effective
Time, Parent shall file a registration statement on Form S-8 (or any successor
or other appropriate forms), or another appropriate form with respect to the
shares of Parent Common Stock subject to such options and shall use its best
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
(d) The Board of Directors of each of ValueVision and National Media shall,
prior to or as of the Effective Time, take all necessary actions, pursuant to
and in accordance with the terms of the ValueVision Stock Plans and the
instruments evidencing the ValueVision Stock Options, or the National Media
Stock Plans and the instruments evidencing the National Media Stock Options, as
the case may be, to provide for the conversion of the ValueVision Stock Options
and the National Media Stock Options into options to acquire Parent Common
Stock in accordance with this Section 5.13, and that no consent of the holders
of the ValueVision Stock Options or National Media Stock Options is required in
connection with such conversion.
(e) The Board of Directors of each of ValueVision and National Media shall,
prior to or as of the Effective Time, take appropriate action to approve the
deemed disposition of the ValueVision Stock Options or National Media Stock
Options, as the case may be, for purposes of excepting such disposition under
Rule 16b-3(e) promulgated under the Exchange Act. The Board of Directors of
Parent shall, prior to or as of the Effective Time, take appropriate action to
approve the deemed grant of options to purchase Parent Common Stock under the
ValueVision Stock Options and the National Media Stock Options (as converted
pursuant to this Section 5.13) for purposes of excepting such grant under Rule
16b-3(d) promulgated under the Exchange Act.
(f) At the Effective Time, the Parent shall adopt the stock plan (the
"Parent Stock Plan") substantially in the form attached hereto as Exhibit O.
Section 5.14. Brokers or Finders. Each of National Media and ValueVision
represents, as to itself, its Subsidiaries and its Affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement,
except Bear Xxxxxxx & Co. Incorporated, whose fees and expenses will be paid by
ValueVision in accordance with ValueVision's agreement with such firm (a copy
of which has been delivered by ValueVision to National Media prior to the date
of this Agreement), and Xxxxxx Brothers, Inc., whose fees and expenses will be
paid by National Media in accordance with National Media's agreement with such
firm (a copy of which has been delivered by
42
National Media prior to the date of this Agreement); provided, however, that if
the Mergers are consummated, such fees shall be paid by ValueVision in
accordance with Section 7.3 hereof. Each of National Media and ValueVision
agrees to indemnify and hold the other harmless from and against any and all
claims, liabilities or obligations with respect to any such fees, commissions
or expenses asserted by any person on the basis of any act or statement alleged
to have been made by such party or any of its Affiliates.
Section 5.15. Indemnification.
(a) From and after the Effective Time, Parent agrees that it will, and will
cause the Surviving Corporations to, indemnify and hold harmless each present
and former director and officer of ValueVision and National Media (the
"Indemnified Parties"), against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities or amounts paid
in settlement (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent that
ValueVision or National Media, as the case may be, would have been permitted
under Minnesota law and Delaware law, as the case may be, and its articles or
certificate of incorporation, as the case may be, or bylaws in effect on the
date hereof to indemnify such Indemnified Party (and Parent and the Surviving
Corporation shall also advance expenses as incurred to the fullest extent
permitted under applicable law, provided the Indemnified Party to whom expenses
are advanced provides an undertaking to repay such advances if it is ultimately
determined that such Indemnified Party is not entitled to indemnification).
(b) For a period of six years after the Effective Time, Parent shall
maintain or shall cause the Surviving Corporations to maintain (to the extent
available in the market) in effect a directors' and officers' liability
insurance policy covering those persons who are currently covered by
ValueVision's or National Media's directors' and officers' liability insurance
policy (copies of which have been heretofore delivered by ValueVision and
National Media to each other) with coverage in amount and scope at least as
favorable as ValueVision's or National Media's existing coverage; provided that
in no event shall Parent or the Surviving Corporations be required to expend in
excess of 200% of the annual premium currently paid by ValueVision or National
Media, as the case may be, for such coverage (in either case, the "Current
Premium"); and if such premium would at any time exceed 200% of the Current
Premium, then the Surviving Corporations shall maintain insurance policies
which provide the maximum and best coverage available at an annual premium
equal to 200% of the Current Premium.
(c) The provisions of this Section 5.15 are intended to be in addition to
the rights otherwise available to the current officers and directors of
ValueVision and National Media by law, charter, statute, bylaw or agreement,
and shall operate for the benefit of, and shall be enforceable by, each of the
Indemnified Parties, their heirs and their representatives.
Section 5.16. Letter of National Media's Accountants. National Media
shall use all reasonable efforts to cause to be delivered to ValueVision and
National Media a letter of Ernst & Young LLP, National Media's independent
accountants, dated a date within two business days before the date on which the
Registration Statement shall become effective and addressed to
43
ValueVision, in form reasonably satisfactory to ValueVision and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
Section 5.17. Letter of ValueVision's Accountants. ValueVision shall use
all reasonable efforts to cause to be delivered to National Media and
ValueVision a letter of Xxxxxx Xxxxxxxx LLP, ValueVision's independent
accountants, dated a date within two business days before the date on which the
Registration Statement shall become effective and addressed to National Media,
in form reasonably satisfactory to National Media and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
Section 5.18. Stock Option Agreements. National Media and ValueVision each
agree to fully perform their respective obligations under the Stock Option
Agreements.
Section 5.19. Post-Merger Parent Corporate Governance.
(a) At the Effective Time, the total number of persons serving on the
Board of Directors of Parent shall be ten (unless otherwise agreed in writing
by ValueVision and National Media prior to the Effective Time), five of whom
shall be ValueVision Directors, five of whom shall be National Media Directors
(as such terms are defined below), all of which ValueVision Directors and
National Media Directors shall be spread as evenly as possible among Parent's
three classes of Directors; provided, however, that if the Board of Directors
shall have elected a Chief Executive Officer to succeed the interim Chief
Executive Officer identified in Section 5.19(b)(i) below prior to the Effective
Time and such officer takes office prior to such date, then the Board of
Directors of Parent shall be expanded to 11 members and such officer shall be
appointed to the Board of Directors to fill the vacancy created by such
expansion of the Board. The persons to serve initially on the Board of
Directors of Parent at the Effective Time who are ValueVision Directors shall
be selected solely by and at the absolute discretion of the Board of Directors
of ValueVision prior to the Effective Time; and, subject to the second
following sentence, the persons to serve initially on the Board of Directors of
Parent at the Effective Time who are National Media Directors shall be selected
solely by and at the absolute discretion of the Board of Directors of National
Media prior to the Effective Time. In the event that, prior to the Effective
Time, any person so selected to serve on the Board of Directors of Parent after
the Effective Time is unable or unwilling to serve in such position, the Board
of Directors which selected such person shall designate another of its members
to serve in such person's stead in accordance with the provisions of the
immediately preceding sentence. To the extent any holder of National Media's
or Parent's Series B Convertible Preferred Stock is entitled to designate any
director to the Board of Directors of Parent, such director shall be deemed to
be a National Media Director. The term "ValueVision Director" means any person
serving as a Director of ValueVision or any of its Subsidiaries on the date
hereof who becomes a Director of Parent at the Effective Time and any successor
director appointed or elected pursuant to Article III, Section 1 of the Bylaws
of Parent; and the term "National Media Director" means any person serving as a
Director of National Media or any of its Subsidiaries on the date hereof who
becomes a Director of Parent at the Effective Time and any successor director
appointed or elected pursuant to Article III, Section 1 of the Bylaws of
Parent.
44
(b) Subject to Section 8.5, at the Effective Time, (i) Xxxxxx X.
Xxxxxxxx, the current Chief Executive Officer of ValueVision, shall hold the
position of interim Chief Executive Officer and Co-Chairman of the Board of
Parent, (ii) Xxxxxxxxx X. Xxxxxx, a current director of National Media, shall
hold the position of Co-Chairman of the Board of Parent, (iii) Xxxxxxxx X.
Xxxxxxx, the current President and Chief Operating Officer of ValueVision,
shall hold the position of President and Chief Operating Officer of Parent and
(iv) Xxxxxx X. Xxxxxxxxx, the current Chief Financial Officer of ValueVision,
shall hold the position of Chief Financial Officer of Parent. If any of the
persons identified in the preceding sentence is unable or unwilling to hold
such offices as set forth above, his successor shall be selected by the Board
of Directors of Parent in accordance with the Bylaws of Parent.
(c) Subject to Section 8.5, at the Effective Time and continuing until the
third anniversary of the Effective Time, Parent shall have an Executive
Committee which shall always be comprised of three ValueVision Directors (who
initially shall be Xxxxxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxxxx and Xxxxxx X.
Xxxxxxxx) and two National Media Directors (who initially shall be Xxxxxxxxx X.
Xxxxxx and Xxxxxx X. Xxxxxxxx). Until the third anniversary of the Effective
Time, the Executive Committee shall have responsibility for recommending to the
full Board of Directors a successor Chief Executive Officer (and any successor
thereto) to the interim Chief Executive Officer of the Parent, which search for
such successor Chief Executive Officer shall commence as promptly as reasonably
practicable, and shall have, to the fullest extent permitted by Delaware law,
all of the powers, duties and responsibilities (including, without limitation,
those relating to any and all issues relating to the FCC and any assets subject
to its regulation) of the entire Board of Directors of Parent (except with
respect to those actions that require a Supermajority Vote as set forth and
defined in the Bylaws of Parent).
(d) Subject to Section 8.5, at the Effective Time and continuing until the
third anniversary of the Effective Time, Parent shall have a Compensation
Committee which shall always be comprised of two ValueVision Directors and one
National Media Director, each of whom shall meet the requirements of
independence as established by the exchange or market on which Parent's stock
is then traded or quoted. Until the third anniversary of the Effective Time,
the Compensation Committee shall have responsibility for (i) reviewing the
compensation and employee benefit policies of Parent, (ii) recommending to the
Executive Committee base salary amounts and incentive awards for all elected
officers of Parent and setting guidelines for the administration of all
salaries, (iii) administering incentive compensation and awarding stock options
to employees under any Parent stock option or compensation plan and amending or
modifying any provisions of such stock option or compensation plan that may be
amended or modified without stockholder approval and (iv) supervising all
administrative matters with respect to the foregoing.
(e) Each of ValueVision and National Media shall take such action as shall
reasonably be deemed by either thereof to be advisable to give effect to the
provisions set forth in this Section 5.19, including without limitation
incorporating such provisions in the Bylaws of Parent in effect at the
Effective Time.
Section 5.20. Name of Parent. Prior to the Effective Time, ValueVision and
National Media shall use reasonable efforts to decide on a new corporate name
for Parent.
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Section 5.21. Parent Stockholder Rights Plan. Prior to the Effective Time,
ValueVision and National Media shall cause Parent to adopt a Stockholder Rights
Plan (the "Parent Rights Plan") that is substantially in the form of the
Stockholders Rights Agreement attached hereto as Exhibit P.
Section 5.22. The Warrants. At the Effective Time, each Warrant shall
thereafter solely represent the right to acquire, on the same terms and
conditions as are currently applicable under the Warrants, the same number of
shares of Parent Common Stock as a holder of the Warrants would have been
entitled to receive pursuant to the ValueVision Merger or the National Media
Merger, as the case may be, had such holder exercised the Warrants in full
immediately prior to the Effective Time (rounded downward to the nearest whole
number), at the price per share (rounded downward to the nearest whole cent)
equal to (y) the aggregate exercise price for the shares of ValueVision Common
Stock or the National Media Common Stock, as the case may be, purchasable
pursuant to the Warrants immediately prior to the Effective Time divided by (z)
the number of full shares of Parent Common Stock deemed purchasable pursuant to
the Warrants in accordance with the foregoing. At the Effective Time, Parent
shall agree to issue any required shares of Parent Common Stock upon exercise
of the Warrants in accordance with the foregoing.
Section 5.23. Conveyance Taxes. ValueVision and National Media shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees or any similar
taxes which become payable in connection with the transactions contemplated by
this Agreement that are required or permitted to be filed on or before the
Effective Time. ValueVision shall pay, and National Media shall pay, without
deduction or withholding from any amount payable to the holders of ValueVision
Common Stock or National Media Common Stock, as the case may be, any such taxes
or fees imposed by any Governmental Entity (and any penalties and interest with
respect to such taxes and fees), which become payable in connection with the
transactions contemplated by this Agreement, on behalf of their respective
stockholders.
Section 5.24. Stockholder Litigation. Each of ValueVision and National
Media shall give the other the reasonable opportunity to participate in the
defense of any stockholder litigation against ValueVision or National Media, as
applicable, and its directors relating to the transactions contemplated hereby.
Section 5.25. Annual Reports for Welfare Benefit Plans. Prior to the
Closing Date, National Media shall cause to be filed any Annual Return/Report
Federal Form 5500 ("Annual Report") for any National Media Employee Plan that
is an "employee welfare benefit plan" within the meaning of Section 3(1) of
ERISA with respect to which: (i) a filing obligation exists under Section 101
of ERISA or Section 6039D of the Code and (ii) no Annual Report has been timely
filed. National Media further agrees to cause any such filing to be made and
civil penalties paid in accordance with the procedures outlined by the U.S.
Department of Labor for the Delinquent Filer Voluntary Compliance Program at 60
Federal Register 20874, dated April 27, 1995.
Section 5.26. Employment Agreements. Except as set forth on the
National Media Disclosure Schedule, National Media shall, and shall cause each
of its relevant Subsidiaries to,
46
take any and all necessary action to prevent the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereunder from
triggering any "change of control" or similar provisions resulting in an
acceleration of benefits or compensation thereunder with respect to any
agreements with any officer or other key employee of National Media or any of
its Subsidiaries.
Section 5.27. Funding Advance for Redemption Agreement.If all of the
conditions to ValueVision's obligations as set forth in Sections 6.1 and 6.2
hereof (other than the second sentence of Section 6.2(e)) have been satisfied,
then ValueVision shall concurrently with the Closing, advance to National
Media, pursuant to the Series C Note, in immediately available funds, such
amounts as are necessary to consummate the transactions contemplated by the
Redemption Agreement.
ARTICLE VI.
CONDITIONS TO MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect the Mergers.
The respective obligations of each party to this Agreement to effect the
Mergers shall be subject to the satisfaction or waiver in writing by each of
National Media and ValueVision prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement, the ValueVision Merger and the
National Media Merger shall have been approved in the manner required under the
MBCA and the DGCL, as the case may be, by the respective holders of the issued
and outstanding shares of capital stock of ValueVision and National Media.
(b) HSR Act. The waiting period applicable to the consummation of the
Mergers under the HSR Act shall have expired or been terminated.
(c) FCC Consents. Subject to the last sentence of Section 5.2, the FCC
shall have granted by Final Order the FCC Consent Application, without
conditions, qualifications or other restrictions that are likely to have a
material adverse effect immediately after the Closing Date on Parent or any of
its Subsidiaries, whether imposed by the FCC or any other Governmental Entity.
"Final Order" means an order, action or decision of a Governmental Entity that
has not been reversed, stayed, or enjoined and as to which the time to appeal,
petition for certiorari or seek reargument or rehearing or administrative
reconsideration or review has expired and as to which no appeal, reargument,
petition for certiorari or rehearing or petition for reconsideration or
application for review is pending or as to which any right to appeal, reargue,
petition for certiorari or rehearing or reconsideration or review has been
waived in writing by each party having such a right or, if any appeal,
reargument, petition for certiorari or rehearing or reconsideration or review
thereof has been sought, the order or judgment of the court or agency has been
affirmed by the highest court (or the administrative entity or body) to which
the order was appealed or from which the argument or rehearing or
reconsideration or review was sought, or certiorari has been denied, and the
time to take any further appeal or to seek certiorari or further reargument or
rehearing, or reconsideration or review, has expired.
47
(d) Approvals. Other than the filing provided for by Section 1.4, all
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any Governmental Entity the
failure of which to file, obtain or occur is reasonably likely to have a
ValueVision Material Adverse Effect or a National Media Material Adverse Effect
shall have been filed, obtained or occurred.
(e) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order.
(f) No Injunctions. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction or statute, rule, regulation which is in effect and
which has the effect of making the Mergers illegal or otherwise prohibiting
consummation of the Mergers.
(g) National Listing or Nasdaq Quotation. The shares of Parent Common
Stock to be issued in the Merger and upon exercise or conversion of ValueVision
Options, the ValueVision Warrants, the National Media Options, and the National
Media Warrants shall have been approved for listing on a national securities
exchange or for quotation on The Nasdaq Stock Market, subject to official
notice of issuance.
(h) Consents Under ValueVision Agreements. ValueVision shall have obtained
the consent or approval of any person whose consent or approval shall be
required under any agreement or instrument in order to permit the consummation
of the transactions contemplated hereby, except those of which, if not
obtained, would not, individually or in the aggregate, have (i) a ValueVision
Material Adverse Effect or (ii) a material adverse effect on the business,
properties, financial condition or results of operations of Parent after the
Merger (a "Parent Material Adverse Effect").
(i) Consents Under National Media Agreements. National Media shall have
obtained the consent or approval of any person whose consent or approval shall
be required under any agreement or instrument in order to permit the
consummation of the transactions contemplated hereby, except those which, if
not obtained, would not, individually or in the aggregate, have (i) a National
Media Material Adverse Effect or (ii) a Parent Material Adverse Effect.
(j) Corporate Governance. ValueVision and National Media shall have taken
all actions necessary so that (i) not later than the Effective Time, the
Certificate of Incorporation and Bylaws of Parent shall have been amended to be
substantially in the form of Exhibit C and Exhibit D attached hereto; and (ii)
at the Effective Time, the composition of the Board of Directors of Parent and
of each Committee of the Board of Directors of Parent shall comply with Section
5.19 hereof (assuming ValueVision has designated the ValueVision Directors and
National Media has designated the National Media Directors, in each case as
contemplated by Section 5.19(a) hereof) and (iii) not later than the Effective
Time, Parent shall have adopted the Parent Rights Plan.
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(k) No Trigger of National Media Rights Plan. No event shall have occurred
that has or would result in the triggering of any right or entitlement of
stockholders of National Media under the National Media Rights Plan, or will
occur as a result of the consummation of the Mergers.
(l) Dissenters' Rights. Holders of no more than 5% of the issued and
outstanding shares of ValueVision Common Stock shall have made the demands and
given the notices required under Minnesota law to assert dissenters' appraisal
rights.
(m) Xxxxxxxxxx Xxxx. The transactions contemplated by the Stipulation
between Xxxxxxxxxx Xxxx & Co., Incorporated and ValueVision regarding the
Assumption and Modification of Executory Contracts and Related Agreements (the
"Settlement Agreement") shall have been approved by the United States
Bankruptcy Court for the District of Delaware (the "Court") on terms
substantially similar to those set forth in the Settlement Agreement; provided,
that, this condition shall be deemed to be satisfied if National Media does not
object to the terms of any approval by the Court within three business days
after any such approval becomes final and non-appealable. ValueVision shall
have consummated the repurchase of the securities contemplated by the
Settlement Agreement.
Section 6.2. Additional Conditions to Obligations of ValueVision. The
obligation of ValueVision to effect the ValueVision Merger is subject to the
satisfaction of each of the following conditions prior to the Effective Time,
any of which may be waived in writing exclusively by ValueVision:
(a) Representations and Warranties. The representations and warranties of
National Media set forth in this Agreement shall be true and correct as of the
date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made
on and as of the Closing Date, except for, (i) changes contemplated by this
Agreement and (ii) inaccuracies which, individually or in the aggregate, have
not had and are not reasonably likely to have a National Media Material Adverse
Effect (without regard to any materiality limitations contained in any such
representation or warranty), or a material adverse effect upon the consummation
of the transactions contemplated hereby; provided, however, that the last three
sentences in Section 4.3(b) must be true and correct in all respects; and
ValueVision shall have received a certificate signed on behalf of National
Media by the chief executive officer and the chief financial officer of
National Media to such effect.
(b) Performance of Obligations of National Media. National Media shall
have performed in all material respects all material obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
ValueVision shall have received a certificate signed on behalf of National
Media by the chief executive officer and the chief financial officer of
National Media to such effect.
(c) Tax Opinion. ValueVision shall have received the opinion of Xxxxxx &
Xxxxxxx, counsel to ValueVision, to the effect that, for Federal income tax
purposes, the ValueVision Merger will be treated as a tax-free reorganization
within the meaning of Section 368 of the Code and each of the Mergers will be
treated as transfers within the meaning of
49
Section 351 of the Code (it being agreed that National Media shall provide
reasonable cooperation, including the delivery of such certifications as shall
be reasonably requested, to Xxxxxx & Xxxxxxx to enable it to render such
opinion).
(d) Termination of Telemarketing, Production and Post-Production Agreement.
The Telemarketing, Production and Post-Production Agreement dated as of April
13, 1995 by and between National Media and ValueVision, as amended, shall have
been terminated and all liabilities, obligations and amounts owed or incurred
by ValueVision to National Media thereunder shall have been released and
forever discharged.
(e) Series C Convertible Preferred Stock. Each of the holders of the
Series C Convertible Preferred Stock shall have duly executed the Redemption
Agreement in the form attached hereto as Exhibit K, which Agreement shall be in
full force and effect and no material breach shall have occurred thereunder as
of the Closing Date. National Media shall have, as of the Effective Time,
redeemed all of the outstanding shares of the Series C Convertible Preferred
Stock (and the Series D Convertible Preferred Stock issued in exchange
therefore) pursuant to such Redemption Agreement and none of such shares shall
remain outstanding as of the Effective Time.
(f) Transaction Documents. National Media shall have executed each of the
Transaction Documents to which it is a party, each of which shall be in full
force and effect and legally binding against National Media and no material
breach by National Media shall have occurred thereunder as of the Closing Date.
Each of National Media's Subsidiaries shall have executed the Subsidiary
Guarantee in the form attached hereto as Exhibit Q, which shall be in full
force and effect and legally binding against such Subsidiaries.
Section 6.3. Additional Conditions to Obligations of National Media. The
obligations of National Media to effect the National Media Merger are subject
to the satisfaction of each of the following conditions prior to the Effective
Time, any of which may be waived in writing exclusively by National Media:
(a) Representations and Warranties. The representations and warranties of
ValueVision set forth in this Agreement shall be true and correct as of the
date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made
on and as of the Closing Date, except for, (i) changes contemplated by this
Agreement, (ii) inaccuracies which relate to the Settlement Agreement or the
failure to consummate the transactions contemplated thereby and (iii)
inaccuracies which, individually or in the aggregate, have not had and are not
reasonably likely to have a ValueVision Material Adverse Effect (without regard
to any materiality limitations contained in any such representation or
warranty), or a material adverse effect upon the consummation of the
transactions contemplated hereby; and National Media shall have received a
certificate signed on behalf of ValueVision by the chief executive officer and
the chief financial officer of ValueVision to such effect.
(b) Performance of Obligations of ValueVision. ValueVision shall have
performed in all material respects all material obligations required to be
performed by it under this Agreement at or prior to the Closing Date; and
National Media shall have received a
50
certificate signed on behalf of ValueVision by the chief executive officer and
the chief financial officer of ValueVision to such effect.
(c) Tax Opinion. National Media shall have received a written opinion from
Drinker, Xxxxxx & Xxxxx, LLP, tax counsel to National Media, to the effect that
each of the Mergers will be treated for Federal income tax purposes as
transfers within the meaning of Section 351 of the Code (it being agreed that
ValueVision shall provide reasonable cooperation, including the delivery of
such certifications as shall be reasonably requested, to Drinker, Xxxxxx &
Xxxxx, LLP to enable it to render such opinion).
(d) Transaction Documents. ValueVision shall have duly executed each of
the Transaction Documents to which it is a party, and the Guaranty attached
hereto as Exhibit R (the "VVI Guaranty"), and such Transaction Documents and
VVI Guaranty shall be in full force and effect and legally binding against
ValueVision and no material breach by ValueVision shall have occurred
thereunder as of the Closing Date.
ARTICLE VII.
TERMINATION AND AMENDMENT
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 7.1(b) through 7.1(g), by
written notice by the terminating party to the other party), whether before or
after approval of the matters presented in connection with the Mergers by the
stockholders of ValueVision or National Media:
(a) by mutual written consent of ValueVision and National Media; or
(b) by either ValueVision or National Media if the Mergers shall not have
been consummated by June 1, 1998 (the "Outside Date"); provided, however, that
if the Mergers shall have not been consummated by the Outside Date due to the
failure of the condition set forth in Section 6.1(c), the Outside Date shall be
extended to August 31, 1998; and provided, further, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Mergers to occur on or before
such date; or
(c) by either ValueVision or National Media if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other nonappealable final action, in
each case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Mergers; or
(d) (i) by ValueVision, if, at the National Media Stockholders' Meeting
(including any adjournment or postponement thereof), the requisite vote of the
stockholders of National Media in favor of the approval and adoption of this
Agreement and the National Media Merger shall not have been obtained; or (ii)
by National Media if, at the ValueVision Stockholders' Meeting (including any
adjournment or postponement thereof), the requisite vote of the stockholders of
ValueVision in favor of the approval and adoption of this Agreement and the
ValueVision Merger shall not have been obtained; or
51
(e) by ValueVision, if (i) the Board of Directors of National Media shall
have withdrawn or modified its recommendation of this Agreement or the National
Media Merger; (ii) after the receipt by National Media of an Acquisition
Proposal, ValueVision requests in writing that the Board of Directors of
National Media reconfirm its recommendation of this Agreement and the National
Media Merger to the stockholders of National Media and the Board of Directors
of National Media fails to do so within 10 business days after its receipt of
ValueVision's request; (iii) the Board of Directors of National Media shall
have recommended to the stockholders of National Media an Alternative
Transaction (as defined in Section 7.3(e)); (iv) a tender offer or exchange
offer for 20% or more of the outstanding shares of National Media Common Stock
is commenced (other than by ValueVision or an Affiliate of ValueVision) and the
Board of Directors of National Media recommends that the stockholders of
National Media tender their shares in such tender or exchange offer; or (v) for
any reason National Media fails to call and hold the National Media
Stockholders' Meeting by the Outside Date (provided that ValueVision's right to
terminate this Agreement under such clause (v) shall not be available if at
such time National Media would be entitled to terminate this Agreement under
Section 7.1(g)); or
(f) by National Media, if (i) the Board of Directors of ValueVision shall
have withdrawn or modified its recommendation of this Agreement or the
ValueVision Merger; (ii) after the receipt by ValueVision of an Acquisition
Proposal, National Media requests in writing that the Board of Directors of
ValueVision reconfirm its recommendation of this Agreement and the ValueVision
Merger to the stockholders of National Media and the Board of Directors of
ValueVision fails to do so within 10 business days after its receipt of
National Media's request; (iii) the Board of Directors of ValueVision shall
have recommended to the stockholders of ValueVision an Alternative Transaction;
(iv) a tender offer or exchange offer for 20% or more of the outstanding shares
of ValueVision Common Stock is commenced (other than by National Media or an
Affiliate of National Media) and the Board of Directors of ValueVision
recommends that the stockholders of ValueVision tender their shares in such
tender or exchange offer; or (v) for any reason ValueVision fails to call and
hold the ValueVision Stockholders' Meeting by the Outside Date (provided that
National Media's right to terminate this Agreement under such clause (v) shall
not be available if at such time ValueVision would be entitled to terminate
this Agreement under Section 7.1(g)); or
(g) by ValueVision or National Media, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the other party
set forth in this Agreement, which breach (i) will cause the conditions set
forth in Section 6.2(a) or (b) (in the case of termination by ValueVision) or
6.3(a) or (b) (in the case of termination by National Media) not to be
satisfied, and (ii) shall not have been cured within 20 business days following
receipt by the breaching party of written notice of such breach from the other
party.
Section 7.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of ValueVision,
National Media, Parent or their respective officers, directors, stockholders or
Affiliates, except as set forth in Sections 5.15 and 7.3 and except that such
termination shall not limit liability for a willful breach of this Agreement;
provided that, the provisions of Sections 5.15 and 7.3 of this Agreement, the
Stock Option
52
Agreements, the Demand Note, the Series C Note, the Warrant Agreement, the
Registration Rights Agreement and the Confidentiality Agreement shall remain in
full force and effect and survive any termination of this Agreement.
Section 7.3. Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, if the Mergers are
not consummated; provided, however, that if the Mergers are consummated,
ValueVision shall pay for all fees and expenses incurred by National Media in
connection with the Mergers and the transactions contemplated hereunder.
(b) ValueVision shall pay National Media a termination fee of $5.0 million
upon the earliest to occur of the following events:
(i) the termination of this Agreement by National Media pursuant to
Section 7.1(d)(ii), but only if a proposal for an Alternative Transaction
involving ValueVision shall have been publicly announced prior to the
ValueVision Stockholders' Meeting and either a definitive agreement for an
Alternative Transaction is entered into, or an Alternative Transaction is
consummated, within eighteen months of such termination; or
(ii) the termination of this Agreement by National Media pursuant to
Section 7.1(f), if a proposal for an Alternative Transaction involving
ValueVision shall have been made prior to the ValueVision Stockholders'
Meeting.
ValueVision's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of National Media against ValueVision
and any of its Subsidiaries and their respective directors, officers,
employees, agents, advisors or other representatives with respect to the
occurrences giving rise to such payment; provided that this limitation shall
not apply in the event of a willful breach of this Agreement by ValueVision.
Notwithstanding the foregoing, if and to the extent that National Media has
purchased shares of ValueVision Common Stock pursuant to the National Media
Stock Option Agreement, the amount payable to National Media under this Section
7.3(b), together with (i) (x) the amount received by National Media pursuant to
ValueVision' repurchase of Shares (as defined in the National Media Stock
Option Agreement) pursuant to Section 7 of the National Media Stock Option
Agreement, less (y) National Media's purchase price for such Shares, and (ii)
(x) the net cash amounts received by National Media pursuant to the sale of
Shares (or any other securities into which such Shares are converted or
exchanged) to any unaffiliated party, less (y) National Media's purchase price
for such Shares, shall not exceed $7.5 million.
(c) National Media shall pay ValueVision a termination fee of $5.0 million
upon the earliest to occur of the following events:
(i) the termination of this Agreement by ValueVision pursuant to
Section 7.1(d)(i), but only if a proposal for an Alternative Transaction
involving National Media shall have been publicly announced prior to the
National Media Stockholders' Meeting and
53
either an Alternative Transaction is entered into, or an Alternative
Transaction is consummated, within eighteen months of such termination; or
(ii) the termination of this Agreement by ValueVision pursuant to Section
7.1(e), if a proposal for an Alternative Transaction involving National Media
shall have been made prior to the National Media Stockholders' Meeting.
National Media's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of ValueVision against National Media
and any of its Subsidiaries and their respective directors, officers,
employees, agents, advisors or other representatives with respect to the
occurrences giving rise to such payment; provided that this limitation shall
not apply in the event of a willful breach of this Agreement by National Media.
Notwithstanding the foregoing, if and to the extent that ValueVision has
purchased shares of National Media Common Stock pursuant to the ValueVision
Stock Option Agreement, the amount payable to ValueVision under this Section
7.3(c), together with (i) (x) the amount received by ValueVision pursuant to
National Media's repurchase of Shares (as defined in the ValueVision Stock
Option Agreement) pursuant to Section 7 of the ValueVision Stock Option
Agreement, less (y) ValueVision' purchase price for such Shares, and (ii) (x)
the net cash amounts received by ValueVision pursuant to the sale of Shares (or
any other securities into which such Shares are converted or exchanged) to any
unaffiliated party, less (y) ValueVision' purchase price for such Shares, shall
not exceed $7.5 million.
(d) The expenses and fees, if applicable, payable pursuant to
Section 7.3(b) or 7.3(c) shall be paid concurrently with the first to occur of
the events described in Section 7.3(b)(i) or (ii) or 7.3(c)(i) or (ii).
(e) As used in this Agreement, "Alternative Transaction" means either (i) a
transaction pursuant to which any person (or group of persons) other than
ValueVision or National Media or their respective affiliates (a "Third Party"),
acquires more than 20% of the outstanding shares of ValueVision Common Stock or
National Media Common Stock, as the case may be, pursuant to a tender offer or
exchange offer or otherwise, (ii) a merger or other business combination
involving ValueVision or National Media pursuant to which any Third Party
acquires more than 20% of the outstanding shares of ValueVision Common Stock or
National Media Common Stock, as the case may be, or the entity surviving such
merger or business combination, (iii) any other transaction pursuant to which
any Third Party acquires control of assets (including for this purpose the
outstanding equity securities of Subsidiaries of ValueVision or National Media,
and the entity surviving any merger or business combination including any of
them) of ValueVision or National Media having a fair market value (as
determined by the Board of Directors of ValueVision or National Media, as the
case may be, in good faith) equal to more than 20% of the fair market value of
all the assets of ValueVision or National Media, as the case may be, and their
respective Subsidiaries, taken as a whole, immediately prior to such
transaction, or (iv) any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the foregoing.
Section 7.4. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection
with the Mergers by the stockholders of
54
ValueVision or National Media, but, after any such approval, no amendment shall
be made which by law requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto; provided,
however, that this Agreement may be amended in writing without obtaining the
signatures of ValueVision, National Media or Parent solely for the purpose of
adding Merger Sub 1 and Merger Sub 2 as parties to this Agreement.
Section 7.5. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties of
the other parties hereto contained herein or in any document delivered pursuant
hereto and (iii) waive compliance with any of the agreements or conditions of
the other parties hereto contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 1.6, 1.7, 1.8, 2.1, 2.2,
2.3, 2.4, 2.5, 5.10, 5.13, 5.14, 5.15, 5.18, 5.19, 5.22, 5.23, 5.24, 5.25 and
5.26 and this Article VIII, and the agreements of the Affiliates delivered
pursuant to Section 5.11. The Confidentiality Agreement shall survive the
execution and delivery of this Agreement.
Section 8.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to ValueVision, to
ValueVision International, Inc.
0000 Xxxxx Xxx Xxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000-0000
Attention: General Counsel
Telecopy: (000) 000-0000
55
with a copy to
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
(b) if to National Media, to
National Media Corporation
Eleven Penn Center
Suite 1100
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy (000) 000-0000
Section 8.3. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available
if requested by the party to whom such information is to be made available.
The phrases "the date of this Agreement", "the date hereof," and terms of
similar import, unless the context otherwise requires, shall be deemed to refer
to January 5, 1998.
Section 8.4. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 8.5. Entire Agreement; No Third Party Beneficiaries. This
Agreement and all documents and instruments referred to herein (a) constitute
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof and thereof, and (b) except as provided in Section 5.15, are not
intended to confer upon any person (including, without limitation, the
individuals identified in Section 5.19) other than the parties hereto any
rights or remedies hereunder; provided that the Confidentiality Agreement shall
remain in full force and effect until the Effective Time. Each
56
party hereto agrees that, except for the representations and warranties
contained in this Agreement, neither ValueVision nor National Media makes any
other representations or warranties, and each hereby disclaims any other
representations and warranties made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement
or the transactions contemplated hereby, notwithstanding the delivery or
disclosure to the other or the other's representatives of any documentation or
other information with respect to any one or more of the foregoing.
Section 8.6. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard
to any applicable conflicts of law.
Section 8.7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 8.8 References to "Stockholders". All references to "stockholder"
or "stockholders" in this Agreement shall be deemed to refer to "shareholder"
or "shareholders," respectively, with respect to ValueVision.
[Signature Page to Follow]
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IN WITNESS WHEREOF, ValueVision, National Media and Parent have caused
this Agreement to be signed by their respective duly authorized officers as of
the date first written above.
VALUEVISION INTERNATIONAL, INC.
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chairman and Chief Executive
Officer
NATIONAL MEDIA CORPORATION
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: President and Chief Executive
Officer
X-X HOLDINGS CORP.
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
By: Xxxxxx X. Xxxxxxxx
Its: Chief Executive Officer
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