SECOND AMENDED AND RESTATED WARRANT AGREEMENT
Warrant Agreement dated as of this 28th day of September, 1996,
by and among ValueVision International, Inc., a Minnesota corporation
(the "Company"), Xxxxxxxxxx Xxxx & Co., Incorporated, an Illinois
corporation ("MW"), Xxxxxxxxxx Xxxx Direct, L.P., a Delaware limited
partnership ("MWD")and Merchant Partners, Limited Partnership, a
Delaware limited partnership ( MPLP ).
R E C I T A L S
A. Pursuant to a Securities Purchase Agreement dated as of
March 13, 1995 by and between the Company and MW, the Company agreed
to issue and sell, and MW agreed to purchase, Existing Warrants (as
herein defined) to purchase an aggregate of 25,000,000 shares of the
Common Stock of the Company, subject to adjustment, under the terms
and subject to the conditions set forth therein. The Existing
Warrants are governed by the terms of a certain Warrant Agreement,
dated August 8, 1995, between MW and VVI (the Original Warrant
Agreement ).
B. Pursuant to a certain Restructuring Agreement, dated July
27, 1996, between the Company and MW (the "Restructuring Agreement"),
the Company and MW agreed to exchange the Series C-O Warrants, to
amend and restate that certain Operating Agreement and that certain
Servicemark License Agreement, and to amend that certain Credit Card
Receivables Sale and Purchase Agreement, all dated as of March 13,
1995, and to amend and restate that certain Registration Rights
Agreement, dated August 8, 1995 and this Agreement, all in
consideration of the issuance by VVI of new Series P Warrants to
purchase an aggregate of 1,484,462 shares of Common Stock (the
"Exchange Warrants").
D. Pursuant to an Asset Purchase Agreement, dated as of July
27, 1996, between the Company s subsidiary, ValueVision Direct
Marketing Company, Inc., and MWD (the "Asset Purchase Agreement"),
ValueVision Direct Marketing Company, Inc. delivered to MWD, as
consideration for the sale of all of MWD's assets, Series P warrants
to purchase an aggregate of 1,484,993 shares of Common Stock (the
"MWD Warrants"). MWD subsequently transferred all of its right title
and interest in and to the MWD Warrants to MW. In addition, MW
transferred certain of its Series P Warrants to MPLP.
E. Pursuant to an Exchange Agreement dated September ___,
1996, (the Exchange Agreement )VVI and MW have agreed to exchange
the Vested Warrants for additional Series P Warrants to purchase an
aggregate of 2,200,000 shares of Common Stock (the Replacement
Warrants )and to amend this Agreement and the Amended and Restated
Registration Rights.
F. MPLP desires to become a party to this Agreement and MW,
MWD, MPLP and VVI desire to amend and restate the Amended and
Restated Warrant Agreement to set forth the terms under which the New
Warrants may be exercised.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the premises set forth
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, MW MPLP
and MWD agree that the Original Warrant Agreement shall be amended
and restated to read as follows:
A. Definition of Terms. As used in this Warrant Agreement,
the following capitalized terms shall have the following respective
meanings:
(a) Asset Purchase Agreement: "Asset Purchase
Agreement" has the meaning assigned thereto in the Recitals.
(b) Business Day: A day other than a Saturday, Sunday
or other day on which banks in the State of Minnesota are
authorized by law to remain closed.
(c) Common Stock: Common stock, $.01 par value per
share, of the Company.
(d) Common Stock Equivalents: Securities that are
convertible into or exercisable for Common Stock.
(e) Company: "Company" has the meaning assigned
thereto in the Preamble.
(f) Conversion Ratio: The number of Warrant Shares of
Common Stock issuable upon the exercise of a Warrant, which
shall initially be 1, subject to adjustment from time to time
pursuant to Section 6.1.
(g) Exchange Act: The Securities Exchange Act of 1934,
as amended.
(h) Exchange Agreement: "Exchange Agreement" has the
meaning assigned thereto in the Recitals.
(i) Exchange Warrants: "Exchange Warrants" has the
meaning assigned thereto in Recital B.
(j) Exercise Price Per Share: The "Exercise Price Per
Share" shall mean in the case of New Warrants, the exercise
price payable for each Warrant Share upon exercise of a New
Warrant, which shall initially be set at $.01 per share,
subject to adjustment from time to time pursuant to Section
6.1.
(k) Existing Warrants: Warrants issued pursuant to the
Securities Purchase Agreement and the Warrant Agreement.
(l) Expiration Date: August 8, 2003, or if such day is
not a Business Day, the next succeeding day which is a Business
Day.
(m) HSR Act: "HSR Act" has the meaning assigned
thereto in Section 5.9.
(n) Market Price: The Market Price per share of Common
Stock at any date shall be deemed to be the average of the
daily closing prices for the 20 consecutive trading days ending
on such date. The closing price for each day shall be the last
sale price of the Common Stock, or in case no such reported
sales take place on such day, the average of the last reported
bid and asked prices of the Common Stock, in either case on the
principal national securities exchange on which the Common
Stock is admitted to trading or listed, or if not listed or
admitted to trading on any such exchange, as reported by
NASDAQ, or other similar organization if NASDAQ is no longer
reporting such information, or if not so available, the fair
market price of the Common Stock as determined in good faith by
the Board of Directors.
(o) MPLP: "MPLP" has the meaning assigned thereto in
Section 13.
(p) MW: "MW" has the meaning assigned thereto in the
Preamble.
(q) MWD: "MWD" has the meaning assigned thereto in the
Preamble.
(r) MWD Warrants: "MWD Warrants has the meaning
assigned thereto in Recital E.
(s) MW Group: "MW Group" has the meaning assigned
thereto in that certain Amended and Restated Operating
Agreement by and between MW and the Company of even date
herewith.
(t) NASD: National Association of Securities Dealers,
Inc. and NASDAQ: NASD Automatic Quotation System.
(u) New Warrants: Warrants in the form attached hereto
as Exhibit A to be issued on the date hereof pursuant to the
Exchange Agreement, the Restructuring Agreement and the Asset
Purchase Agreement in exchange for all of the Existing Warrants
including but not limited to the Series A-B Warrants, and all
other warrants that may be issued in their place (together
evidencing the right to purchase an aggregate of 5,169,455
shares of Common Stock), subject to adjustment pursuant to
Section 6 hereof. The New Warrants include the Exchange
Warrants, the Replacement Warrants and the MWD Warrants.
(v) Original Warrant Agreement: That certain Warrant
Agreement, dated August 8, 1995, between the Company and MW.
(w) Replacement Warrants: Warrants in the form
attached hereto as Exhibit A to be issued on the date hereof
pursuant to the Exchange Agreement in exchange for all of the
Vested Warrants, and all other warrants that may be issued in
their place, to purchase an aggregate of 2,200,000 shares of
Common Stock subject to adjustment pursuant to Section 6
hereof.
(x) Exchange Agreement: "Exchange Agreement" has the
meaning assigned thereto in the Recitals.
(y) Series A-B Warrants: "Series A-B Warrants" has the
meaning assigned thereto in the Recitals.
(z) Series C-O Warrants: "Series C-O Warrants" has the
meaning assigned thereto in the Recitals.
(aa) SEC: The Securities and Exchange Commission.
(ab) Securities Purchase Agreement: "Securities
Purchase Agreement" has the meaning assigned thereto in the
Recitals.
(ac) Term: "Term" has the meaning assigned thereto in
Section 15.
(ad) Warrants: The New Warrants.
(ae) Warrant Shares: "Warrant Shares" has the meaning
assigned thereto in Section 2.
B. Warrant Shares. Each New Warrant will initially be
exercisable for one share of Common Stock (a "Warrant Share"),
subject to adjustment pursuant to Section 6 hereof.
C. Vesting. All New Warrants shall be fully vested when
issued.
D. Expiration of Warrants. All Warrants shall expire at
5:00 pm Minneapolis, Minnesota time, on the Expiration Date. All
Warrants that are not exercised on or prior to the Expiration Date
shall become void on the Expiration Date, and all rights hereunder
and under such Warrants shall thereupon cease.
E. Exercise of Warrants.
1. Exercise Period. Any or all Warrants may be
exercised by the holder thereof at any time and from time to time
after 9:00 am, Minneapolis, Minnesota time, on the date hereof, and
before 5:00 pm, Minneapolis, Minnesota time, on the Expiration Date.
2. Exercise Procedure. The Warrant holder may
exercise Warrants during any time that such Warrants are exercisable
in whole or in part, by presentation and surrender of the Warrant
Certificate to the Company at its principal executive offices, with
the Subscription Form annexed thereto duly executed and accompanied
by payment of the full Exercise Price Per Share for each Warrant
Share to be purchased in immediately available funds by wire transfer
to a bank designated by the Company from time to time.
3. Issuance of Warrant Shares. Subject to Section
5.9, upon receipt of the Warrant Certificate with Subscription Form
duly executed and accompanied by payment of the aggregate Exercise
Price Per Share for the Warrant Shares for which the Warrant is then
being exercised, and provided that the holder has made any government
filings, and has obtained any governmental actions, consents,
approvals, or waiver, required on the holder's part in order to
exercise the Warrants, the Company shall cause to be issued
certificates for the total number of whole shares of Common Stock for
which the Warrant is being exercised (adjusted to reflect the effect
of the provisions contained in Section 6 hereof, if any), in such
denominations as are requested for delivery to the holder, and the
Company shall thereupon deliver such certificates to the holder. The
holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not then
be actually delivered to the holder. If at the time a Warrant is
exercised, a Registration Statement is not in effect to register
under the Securities Act the Warrant Shares issuable upon exercise of
such Warrant, the Company may require the holder to make such
representations, and may place such legends on certificates
representing the Warrant Shares, as are customary and may be
reasonably required in the opinion of counsel to the Company to
permit the Warrant Shares to be issued without such registration.
4. Residual Warrants. In case the Warrant holder
shall exercise a Warrant with respect to less than all of the Warrant
Shares that may be purchased under such Warrant, the Company shall
execute a Warrant in the form of such Warrant for the balance of such
Warrant Shares and deliver such Warrant to the holder.
5. Transfer Taxes. The Company shall pay any and all
stock transfer and similar taxes which may be payable in respect of
the issue of the Warrant or in respect of the issue of any Warrant
Shares.
6. Reservation of Shares. The Company hereby agrees
that at all times while any Warrants are outstanding there shall be
reserved for issuance and delivery upon exercise of the Warrants such
number of shares of Common Stock or other shares of capital stock of
the Company from time to time issuable upon exercise of the Warrants.
All such shares shall be duly authorized, and when issued upon such
exercise, shall be validly issued, fully paid and nonassessable, free
and clear of all liens, security interests, charges and other
encumbrances or restrictions on sale and free and clear of all
preemptive rights.
7. Fractional Shares. The Company shall not be
required to issue any fraction of a share of its capital stock in
connection with the exercise of a Warrant. The holder of Warrants
will be required to exercise such number of Warrants so that a whole
number of shares of Common Stock will be issued, or, at the Company's
sole option, the Company may (i) pay such holder an amount in cash
equal to such fraction of a share multiplied by the Market Price of
one share of Common Stock on the exercise date, or (ii) may issue the
larger number of whole shares purchasable upon exercise of the
Warrant, and may require such holder to pay an additional amount
equal to the exercise price multiplied by the balance of the share.
8. Listing. Prior to the issuance of shares of Common
Stock upon exercise of a Warrant, the Company shall use its
reasonable best efforts to secure the listing of such shares of
Common Stock upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance upon exercise of the
Warrant) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all shares of Common Stock
from time to time issuable upon the exercise of the Warrant; and the
Company shall so list on each national securities exchange or
automated quotation system, and shall maintain such listing of, any
other shares of capital stock of the Company issuable upon the
exercise of the Warrant if and so long as any shares of the same
class shall be listed on such national securities exchange or
automated quotation system.
9. Approvals of Regulatory Authorities. In the event
any filings with or approvals by any federal or state regulatory
agency would be required by virtue of the exercise of any of the
Warrants (including, without limitation, the U.S. Departments of
Justice and Commerce under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act ("HSR Act") or the Federal Communications Commission
under the Federal Communications Act), such exercise of such Warrant
shall be conditional upon (x) expiration or termination of the
waiting period under the HSR Act, and (y) receipt of any other
required regulatory approvals, but shall otherwise be unconditional.
If this Section 5.9 is applicable, (x) the parties will cooperate
with each other and make such respective filings and take such other
respective actions as may be necessary or desirable in order that the
exercise of any such Warrant shall be in accordance with applicable
laws, and (y) the Term of this agreement shall be extended, if
required, during the period in which applications for regulatory
approvals are pending before regulatory authorities.
F. Exercise Price Per Share and Conversion Ratio Adjustments.
The Exercise Price Per Share and the Conversion Ratio, and the kind
of Warrant Shares shall be subject to adjustment from time to time
upon the occurrence of certain events and at the times as provided
for in this Section 6.
1. Mechanical Adjustments. If at any time prior to the
exercise of any Warrant, the Company shall (i) declare a dividend or
make a distribution on the Common Stock payable in shares of its
capital stock (whether shares of Common Stock or of capital stock of
any other class); (ii) subdivide, reclassify or recapitalize
outstanding Common Stock into a greater number of shares;
(iii) combine, reclassify or recapitalize its outstanding Common
Stock into a smaller number of shares, or (iv) issue any shares of
its capital stock by reclassification of its Common Stock (including
any such reclassification in connection with a consolidation or a
merger in which the Company is the continuing corporation),
excluding, however, any dividend, distribution, reclassification or
recapitalization that requires the payment of more than nominal
additional consideration by security holders, the Conversion Ratio in
effect at the time of the record date of such dividend, distribution,
subdivision, combination, reclassification or recapitalization shall
be immediately adjusted so that upon exercise of a Warrant the holder
thereof shall be entitled to receive the aggregate number and kind of
shares which, if the Warrants had been exercised in full immediately
prior to such event, the holder thereof would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
distribution, subdivision, combination, reclassification or
recapitalization, for the same aggregate consideration. The Exercise
Price Per Share payable upon exercise of each Warrant shall
simultaneously be adjusted by multiplying the initial Exercise Price
Per Share in effect for such Warrant by the Conversion Ratio in
effect immediately prior to such adjustment and dividing the products
so obtained by the Conversion Ratio, as adjusted. Any adjustments
required by this Section 6.1 shall be made successively immediately
after the record date, in the case of a dividend or distribution, or
the effective date, in the case of a subdivision, combination,
reclassification or recapitalization, to allow the purchase of such
aggregate number and kind of shares, subject to Section 6.4.
2. Subsequent Adjustments. In the event that at any
time, as a result of any adjustment made pursuant to Section 6, the
holder of a Warrant thereafter shall become entitled to receive any
shares of the Company other than Common Stock, thereafter the number
of such other shares so receivable upon exercise of any Warrant shall
be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to
the Common Stock contained in Section 6, subject to Section 6.6.
3. No Adjustment for Cash Dividends. No adjustment in
respect of any cash dividends not constituting Special Dividends
shall be made during the term of the Warrants or upon the exercise of
any Warrant.
6.4 Notice of Adjustment. No adjustment in the Conversion
Ratio shall be required unless such adjustment would increase or
decrease the Conversion Ratio by at least .001; provided, however,
that any adjustments which by reason of this Section 6.6 are not
required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 6
shall be made to the nearest one-hundredth of a share or the nearest
tenth of a cent, as the case may be. The adjusted Conversion Ratio
may be rounded off to the nearest one millionth (six places to the
right of the decimal point). Whenever the Conversion Ratio or the
Exercise Price Per Share is adjusted as herein provided, the Company
shall prepare and deliver forthwith to all holders of Warrants a
certificate signed by its Chief Financial Officer, setting forth the
adjusted Conversion Ratio, the adjusted number of shares purchasable
upon the exercise of Warrants and the Exercise Price Per Share of
such shares after such adjustment, setting forth a brief statement of
the facts requiring such adjustment and setting forth the computation
by which such adjustment was made. The failure to give such notice
or any defect therein shall not affect the validity or effectiveness
of any such adjustment.
6.5 Form of Warrant After Adjustments. The form of
Warrants need not be changed because of any adjustments in the
Exercise Price Per Share or the number or kind of the Warrant Shares,
and Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of shares as are stated in an
adjusted Warrant, as initially issued.
G. No Rights as Shareholders; Notice to Holders. Nothing
contained in this Agreement or in the Warrants shall be construed as
conferring upon a holder of Warrants by virtue of its status as a
Warrant holder the right to vote or to receive dividends or to
consent or to receive notice as a shareholder in respect of any
meeting of shareholders for the election of directors of the Company
or of any other matter, or any rights whatsoever as shareholders of
the Company. The Company shall give notice to all holders of
Warrants if at any time prior to the expiration or exercise in full
of the Warrants, any of the following events shall occur:
(a) the Company shall authorize the payment of any
dividend payable in any securities upon shares of Common Stock or
authorize the making of any distribution (other than a regular
cash dividend or distribution paid out of net profits legally
available therefor) to all holders of Common Stock;
(b) the Company shall authorize the issuance to all
holders of Common Stock of any additional shares of Common Stock
or Common Stock Equivalents or of rights, options or warrants to
subscribe for or purchase Common Stock or Common Stock Equivalents
or of any other subscription rights, options or warrants;
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger, or
sale or conveyance of the property of the Company as an entirety
or substantially as an entirety); or
(d) a capital reorganization or reclassification of the
Common Stock (other than a change in the par value of the Common
Stock) or any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and that does not result
in any reclassification or change of Common Stock outstanding) or
in the case of any sale or conveyance to another corporation of
the property of the Company as an entirety or substantially as an
entirety.
Such giving of notice shall be initiated (i) at least 5 Business Days
prior to the date fixed as a record date or effective date or (ii)
the date of closing of the Company's stock transfer books for the
determination of the shareholders entitled to such dividend,
distribution or subscription rights, or for the determination of the
shareholders entitled to vote on such proposed merger, consolidation,
sale, conveyance, dissolution, liquidation or winding up. Such
notice shall specify such record date or the date of closing the
stock transfer books, as the case may be. Failure to provide such
notice shall not affect the validity of any action taken in
connection with such dividend, distribution or subscription rights,
or proposed merger, consolidation, sale, conveyance, dissolution,
liquidation or winding up.
H. Lost, Stolen, Mutilated or Destroyed Warrants. If a Warrant
is lost, stolen, mutilated or destroyed, the Company may, on such
terms as to indemnity or otherwise as it may in its discretion impose
(which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and
tenor as, and in substitution for the Warrant.
I. Restrictions on Transfer of Warrants and Warrant Shares.
The Warrants and the Warrant Shares may not be transferred, disposed
of or encumbered (any such action, a "Transfer"), except in
accordance with and subject to the provisions of the Securities Act
and the rules and regulations promulgated thereunder. If at the time
of a Transfer, a Registration Statement is not in effect to register
the Warrant Shares, the Company may require the holder thereof to
make such representations, and to provide the Company with an opinion
of counsel reasonably acceptable to the Company that such Transfer
would not result in violation of any federal or state law regarding
the offering or sale of securities and the Company may place such
legends on certificates representing the Warrant Shares, as are
customary and may be reasonably required in the opinion of counsel to
the Company to permit a Transfer without such registration. Subject
to the foregoing and to Section 13, all Warrants and Warrant Shares
shall be freely transferable.
J. Warrant Register. All Warrants shall be in registered form.
The Company shall maintain a register of the Warrants (the "Warrant
Register"). All Transfers of Warrants shall be recorded in the
Warrant Register.
K. Registration Under the Securities Act of 1933. The Warrant
Shares shall be entitled to certain registration rights provided in
that Registration Rights Agreement by and among the Company, MW and
MWD of even date herewith.
L. Certain Filings. The parties will cooperate with each other
in determining whether action by or in respect of, or filing with,
any governmental body, agency or official, or authority is required,
or any actions, consents, approvals or waivers are required to be
obtained in connection with the transactions and adjustments
contemplated by this Agreement, and provide each other with
reasonable assistance in seeking any such actions, consents,
approvals, or waivers or making any such filings, furnishing
information required in connection therewith, and seeking timely to
obtain any such actions, consents, approvals or waivers.
M. Right of First Offer. No holder of a Warrant or Common
Stock (including Warrant Shares) will transfer, sell, or in any
manner convey any interest in any Warrants or Common Stock (including
Warrant Shares), except through an offering to the public that is
registered under the Securities Act, or pursuant to the provisions of
Rule 144 under the Securities Act (excluding paragraph (k) of Rule
144), unless such holder first offers such Warrants or Common Stock
(including Warrant Shares) to the Company. The holder shall provide
the Company with a written offer specifying the amount of securities
being offered, the purchase price and other terms of such offer. The
Company shall have fifteen (15) days from and after the date of
receipt by the Company of such written offer within which to accept
such offer, or to make a written counteroffer with respect to all or
any part of the securities offered. If the Company does not accept
the holder's offer, or the holder does not accept the Company's
counteroffer, by written notice given within such 15-day period, the
holder may offer and sell such securities to any party within 180
days thereafter on terms that are not less favorable to the holder
than the terms of the later to be made of the holder's last offer to
the Company or the Company's last counteroffer to the holder, if any,
provided that the terms of a sale to a third party shall not be
deemed to be less favorable to the holder solely based on a lower
purchase price paid by the third party if such lower purchase price
is at least 90% of the highest price offered by or to the Company.
This Section 13 shall not apply to any transfer of Warrants or Common
Stock (including Warrant Shares) (i) by any member of the MW Group to
any other member of the MW Group, (ii) by MW to MPLP, or (iii) by
MPLP to its partners, and the partners or stockholders (direct or
remote) of such partners.
N. Term. Subject to Section 5.9, the term of this Agreement
shall begin on the date hereof and expire on August 8, 2003 (the
"Term").
O. Additional Actions and Documents. Each of the parties
hereto agrees to take or cause to be taken such further actions, to
execute, acknowledge, deliver and file or cause to be executed,
acknowledged, delivered and filed such further documents and
instruments, and to use all reasonable efforts to obtain such
consents, as may be necessary or as may be reasonably requested in
order to fully effectuate the purposes, terms and conditions of this
Agreement.
17. Cancellation and Return of Existing Warrants. Effective as
at the date hereof, all Existing Warrants including but not limited
to all of the Series A-B Warrants and the Series C-O Warrants issued
pursuant to the Original Warrant Agreement and the Securities
Purchase Agreement are deemed to have expired unexercised and are
hereby terminated. All Existing Warrants shall be surrendered to the
Company within 30 days of the date hereof.
IN WITNESS WHEREOF, this Warrant Agreement has been duly
executed by the Company under its corporate seal as of the date first
above written.
VALUEVISION INTERNATIONAL, INC.
By: /s/ XXXXXX X. XXXXXXXX
Xxxxxx X. Xxxxxxxx
Its Chief Executive Officer
Attest: /s/ XXXXXX XXXXXXXXX
Secretary
XXXXXXXXXX XXXX & CO., INCORPORATED
By: /s/ XXXX X. XXXXXXX
Executive Vice President
Attest: /s/ XXXXXXX X. XXXXX
Secretary
XXXXXXXXXX XXXX DIRECT, L.P.
By: MW Direct General, Inc., the
general partner
By: /s/ XXXX X. XXXXXXX
Its: Vice President
Attest:/s/ XXXXXX X. XXXX
Secretary
MERCHANT PARTNERS, LIMITED
PARTNERSHIP
By: MERCHANT PARTNERS, LIMITED
PARTNERSHIP, the general partner
By: Merchant Development Corp.,
the general partner
By: /s/ XXXXXXX X. BANK
Its: President
Attest:_______________________
Secretary