EXHIBIT 10.8
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WARRANT AGREEMENT
BY AND BETWEEN
NATIONAL MEDIA CORPORATION
AND
VALUEVISION INTERNATIONAL, INC.
DATED AS OF JANUARY 5, 1998
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TABLE OF CONTENTS
PAGE
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SECTION 1. Warrant Certificates.................................................. 1
SECTION 2. Execution of Warrant Certificates..................................... 1
SECTION 3. Warrant Register...................................................... 1
SECTION 4. Registration of Transfers and Exchanges............................... 1
SECTION 5. Warrants; Exercise of Warrants........................................ 2
SECTION 6. Payment of Taxes...................................................... 4
SECTION 7. Mutilated or Missing Warrant Certificates............................. 4
SECTION 8. Reservation of Warrant Shares; Rights................................. 4
SECTION 9. Obtaining Stock Exchange Listings ................................... 5
SECTION 10. Adjustment of Exercise Price and Number of Warrant Shares Issuable.... 5
(a) Adjustment for Change in Capital Stock................................ 5
(b) Adjustment for Rights Issue........................................... 6
(c) Adjustment for Other Distributions.................................... 7
(d) Adjustment for Below Market Issuances of Common Stock................. 8
(e) Adjustment for Below Market Issuances of Convertible or
Exchangeable Securities............................................... 9
(g) Consideration Received................................................ 11
(h) When De Minimis Adjustment May Be Deferred............................ 12
(i) When No Adjustment Required........................................... 12
(j) Notice of Adjustment.................................................. 12
(k) Voluntary Reduction................................................... 12
(l) Notice of Certain Transactions........................................ 13
(m) Reorganization of Company............................................. 13
(n) [Intentionally Omitted]............................................... 14
(o) When Issuance or Payment May Be Deferred.............................. 14
(p) Adjustment in Number of Shares........................................ 14
(q) Form of Warrants...................................................... 15
SECTION 11. Fractional Interests.................................................. 15
SECTION 12. Notices to Warrant holders............................................ 15
SECTION 13. Notices to Company and ValueVision.................................... 16
i
PAGE
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SECTION 14. Supplements and Amendments............................................ 17
SECTION 15. Successors............................................................ 17
SECTION 16. Governing Law......................................................... 17
SECTION 17. Benefits of This Agreement............................................ 17
SECTION 18. Counterparts.......................................................... 17
EXHIBIT A.......................................................................... 19
ii
THIS WARRANT AGREEMENT (the "Agreement") is dated as of January 5, 1998
and entered into by and between NATIONAL MEDIA CORPORATION, a Delaware
corporation (the "Company"), and ValueVision International, Inc., a Minnesota
corporation ("ValueVision").
WHEREAS, the Company proposes to issue to ValueVision, or its designee,
Common Stock Warrants, as hereinafter described (the "Warrants"), to purchase up
to an aggregate of 250,000 shares of Common Stock, $.01 par value per share, of
the Company (the "Common Stock") (the Common Stock issuable on exercise of the
Warrants being referred to herein as the "Warrant Shares").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Warrant Certificates. The certificates evidencing the
Warrants (the "Warrant Certificates") to be delivered pursuant to this Agreement
shall be in registered form only and shall be substantially in the form set
forth in Exhibit A attached hereto.
SECTION 2. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board or its
President or a Vice President and by its Secretary or an Assistant Secretary
under its corporate seal. Each such signature upon the Warrant Certificates may
be in the form of a facsimile signature of the present or any future Chairman of
the Board, President, Vice President, Secretary or Assistant Secretary and may
be imprinted or otherwise reproduced on the Warrant Certificates and for that
purpose the Company may adopt and use the facsimile signature of any person who
shall have been Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary, notwithstanding the fact that at the time the Warrant
Certificates shall be delivered or disposed of he shall have ceased to hold such
office. The seal of the Company may be in the form of a facsimile thereof and
may be impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company; and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate, although at the date of the execution
of this Warrant Agreement any such person was not such officer.
SECTION 3. Warrant Register. The Company shall number and
register the Warrant Certificates in a register as they are issued.
SECTION 4. Registration of Transfers and Exchanges. The Company
shall from time to time register the transfer of any outstanding Warrant
Certificates in a Warrant register to be maintained by the Company upon
surrender of such Warrant Certificates accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company, duly
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executed by the registered holder or holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be cancelled and
disposed of by the Company.
The Warrant holders agree that each certificate representing Warrant
Shares will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
Warrant Certificates may be exchanged at the option of the holder(s)
thereof, when surrendered to the Company at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants (in denominations representing a multiple of
25,000 shares). Warrant Certificates surrendered for exchange shall be
cancelled and disposed of by the Company.
If, at the time of the surrender of any of the Warrants in connection
with any exercise, transfer, or exchange of any of the Warrants, the
Company may require, as a condition of allowing such exercise, transfer or
exchange that the holder or transferee of the Warrants, as the case may be,
furnish to the Company a written opinion of counsel (which opinion shall be in
form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such exercise, transfer, or exchange may be
made without registration under the Securities Act of 1933, as amended (the
"Securities Act").
SECTION 5. Warrants; Exercise of Warrants. (a) Subject to the
terms of this Agreement, at any time after the earlier to occur of (1) the 75th
day after termination of the Agreement and Plan of Reorganization and Merger
dated as of the date hereof by and among ValueVision, the Company and ▇-▇
Holdings Corp. (the "Merger Agreement") and (2) a default under the $10.0
million Demand Promissory Note between ValueVision and the Company dated as of
the date hereof (the "Demand Note"), each holder of the Warrants shall have the
right, which may be exercised commencing at the opening of business on the
foregoing date and until the earlier of (i) 5:00 p.m., New York City time, on
January 5, 2003 and (ii) the occurrence of a Termination Event (as defined
below) (the "Exercise Period"), to receive from the Company the number of fully
paid and nonassessable Warrant Shares which the holder may at the time be
entitled to receive on exercise of such Warrants and payment to the Company of
the Exercise Price (as defined below) then in effect for such Warrant Shares.
Each Warrant not exercised prior to the earlier of (i) 5:00 p.m., New York City
time, on January 5, 2003 and (ii) the occurrence of a Termination Event, shall
become null and void and all rights thereunder and all rights in respect thereof
under this Agreement shall cease as of such time.
2
For purposes of this Agreement, "Termination Event" shall mean (i) the
consummation of the transactions contemplated by the Merger Agreement or (ii)
the termination by the Company of the Merger Agreement, if such termination
results from a breach of any covenant thereunder by ValueVision or in the event
the shareholders of ValueVision do not approve the terms of the proposed merger
as contemplated under the Merger Agreement; provided, however, that if (x)
within seventy-five days after the occurrence of the Termination Event, the
Company has not paid in full in cash all of its obligations (including any
interest thereon) under the Demand Note or (y) a default by the Company occurs
under the Demand Note during such seventy-five day period, no Termination Event
shall be deemed to have occurred.
(b) A Warrant may be exercised by surrender to the Company at its office
designated for such purpose (the address of which is set forth in Section 13
hereof) of the certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be guaranteed by a bank or trust
company having an office or correspondent in the United States or a broker or
dealer which is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc., and upon payment to the Company of the
exercise price (the "Exercise Price") which is set forth in the form of Warrant
Certificate attached hereto as Exhibit A, subject to adjustment pursuant to
Section 10, for the number of Warrant Shares in respect of which such Warrants
are then exercised. Payment of the aggregate Exercise Price shall be made (i)
in cash or by certified or official bank check payable to the order of the
Company or (ii) in the manner provided in Section 5(a).
Subject to the provisions of Section 6 hereof, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants together with cash as provided in Section 11;
provided, however, that if any capital reorganization or reclassification of
capital stock or consolidation, merger or lease or sale of assets is proposed to
be effected by the Company as described in subsection (m) of Section 10 hereof,
or a tender offer or an exchange offer for shares of Common Stock of the Company
shall be made, upon such surrender of Warrants and payment of the Exercise Price
as aforesaid, the Company shall, as soon as possible, but in any event not later
than two business days thereafter, issue and cause to be delivered the full
number of Warrant Shares issuable upon the exercise of such Warrants in the
manner described in this sentence together with cash as provided in Section 11.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part and, in the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued and delivered pursuant to the provisions of this
Section and of Section 2 hereof.
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All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the Warrant holders during normal business hours at its office.
SECTION 6. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer
involving the issue of any Warrant Certificates or any certificates for Warrant
Shares in a name other than that of the registered holder of a Warrant
Certificate surrendered upon the exercise of a Warrant, and the Company shall
not be required to issue or deliver such Warrant Certificates or certificates
for Warrant Shares unless and until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
SECTION 7. Mutilated or Missing Warrant Certificates. In case any
of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate and
indemnity, if requested, also reasonably satisfactory to it. Applicants for
such substitute Warrant Certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.
SECTION 8. Reservation of Warrant Shares; Rights. The Company
will at all times reserve and keep available, free from preemptive rights, out
of the aggregate of its authorized but unissued Common Stock or its authorized
and issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company shall issue, together with each Warrant Share issued upon
exercise of a Warrant, one Right (as defined in the Merger Agreement) (or other
securities in lieu thereof), and any rights issued to holders of Common Stock in
addition thereto or in replacement therefor, whether or not such rights shall be
exercisable at such time, but only if such rights are issued and outstanding and
held by other holders of Common Stock at such time and have not expired.
The Company or, if appointed, the transfer agent for the Common Stock
(the "Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The
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Company will furnish such Transfer Agent a copy of all notices of adjustments
and certificates related thereto, transmitted to each holder pursuant to Section
12 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 10 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.
SECTION 9. Obtaining Stock Exchange Listings. The Company shall
from time to time take all action which may be necessary so that the Warrant
Shares, immediately upon their issuance upon the exercise of Warrants, will be
listed on the principal securities exchanges and markets within the United
States of America, if any, on which other shares of Common Stock are then
listed.
SECTION 10. Adjustment of Exercise Price and Number of Warrant
Shares Issuable. The Exercise Price and the number of Warrant Shares issuable
upon the exercise of each Warrant are subject to adjustment from time to time
upon the occurrence of the events enumerated in this Section 10. For purposes
of this Section 10, "Common Stock" means shares now or hereafter authorized of
any class of common stock of the Company and any other stock of the Company,
however designated, that has the right (subject to any prior rights of any class
or series of preferred stock) to participate in any distribution of the assets
or earnings of the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares; or
(3) combines its outstanding shares of Common Stock into a smaller
number of shares;
then the Exercise Price in effect immediately prior to such action shall be
proportionately adjusted in accordance with the formula:
Where:
5
O
E' = E x -
A
E'= the adjusted Exercise Price
E = the current Exercise Price
O = the number of shares of Common Stock outstanding prior to such action
A = the number of shares of Common Stock outstanding immediately after
such action
In the case of a dividend or distribution the adjustment shall become
effective immediately after the record date for determination of holders of
shares of Common Stock entitled to receive such dividend or distribution, and in
the case of a subdivision or combination, the adjustment shall become effective
immediately after the effective date of such corporate action.
If after an adjustment a holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the
Company shall determine the allocation of the adjusted Exercise Price between
the classes of capital stock. After such allocation, the exercise privilege and
the Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section 10.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Rights Issue.
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them at any time after the record date
mentioned below to purchase shares of Common Stock at a price per share less
than the Current Market Price (as defined in Section 10(f)) per share on that
record date, the Exercise Price shall be adjusted in accordance with the
formula:
N x P
O + -----
M
E' + E x ---------
O + N
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where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record date.
N = the number of additional shares of Common Stock issuable upon exercise
of the rights, options or warrants offered.
P = the exercise price per share of the additional shares issuable upon
exercise of the rights, options or warrants.
M = the Current Market Price per share of Common Stock on the record date.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, (i) not all rights, options or
warrants shall have been exercised, or (ii) the exercise price per share for
which shares of Common Stock are issuable pursuant to such rights, options or
warrants shall be increased or decreased solely by virtue of provisions therein
contained for an automatic increase or decrease in such exercise price per share
upon the occurrence of a specified date or event, then, the Exercise Price shall
be immediately readjusted to what it would have been if, in the case of clause
(i) above, "N" in the above formula had been the number of shares actually
issued or, in the case of clause (ii) above, "P" in the above formula had been
the exercise price per share, as so increased or decreased, as the case may be.
(c) Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock any of
its assets (including but not limited to cash), debt securities, preferred
stock, or any rights or warrants to purchase debt securities, preferred stock,
assets or other securities of the Company, the Exercise Price shall be adjusted
in accordance with the formula:
M - F
E' = E x -----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
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M = the Current Market Price per share of Common Stock on the record date
mentioned below.
F = the Fair Market Value (as defined in Section 10(f)) on the record date
of the assets, securities, rights or warrants applicable to one share
of Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This subsection does not apply to rights, options or warrants referred
to in subsection (b) of this Section 10 or distributions of business units of
the Company covered by subsection (n) of this Section 10.
(d) Adjustment for Below Market Issuances of Common Stock.
If the Company issues shares of Common Stock for a consideration per
share less than the Current Market Price per share on the date the Company fixes
the offering price of such additional shares, the Exercise Price shall be
adjusted in accordance with the formula:
P
O + -
M
E' = E x -----
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the issuance of
such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the Current Market Price per share on the date of issuance of such
additional shares.
A = the number of shares outstanding immediately after the issuance of
such additional shares.
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The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsections (b) and (c) of
this Section 10,
(2) the exercise of the Warrants, or
(3) Common Stock issued upon the exercise of rights or warrants issued
to the holders of Common Stock for which rights or warrants an adjustment
has been made pursuant to Section 10(b) or Section 10(e),
No duplicative adjustment shall be made in the event of a right,
warrant or convertible or exchangeable security requiring an adjustment
hereunder and the subsequent exercise or conversion of such right, warrant or
convertible or exercisable security.
(e) Adjustment for Below Market Issuances of Convertible or Exchangeable
Securities.
If the Company issues any securities convertible into or exchangeable
for Common Stock (other than securities issued in transactions described in
subsections (b) and (c) of this Section 10) for a consideration per share of
Common Stock initially deliverable upon conversion or exchange of such
securities less than the Current Market Price per share on the date of issuance
of such convertible or exchangeable securities, the Exercise Price shall be
adjusted in accordance with this formula:
P
O + -
M
E' = E x -----
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the issuance of
such convertible or exchangeable securities.
P = the aggregate consideration received for the issuance of such
convertible or exchangeable securities.
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M = the Current Market Price per share on the date of issuance of such
convertible or exchangeable securities.
D = the maximum number of shares deliverable upon conversion or in exchange
for such convertible or exchangeable securities at the initial
conversion or exchange rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
If (i) all of the Common Stock deliverable upon conversion or exchange
of such securities have not been issued when such securities are no longer
outstanding, or (ii) the exercise price per share for which shares of Common
Stock are issuable pursuant to such securities shall be increased or decreased
solely by virtue of provisions therein contained for an automatic increase or
decrease in such exercise price per share upon the occurrence of a specified
date or event, then the Exercise Price shall promptly be readjusted in
accordance with the formula in this Section 10(e) to the Exercise Price which
would then be in effect had the adjustment upon the issuance of such securities
been made on the basis of, in the case of clause (i) above, the actual number of
shares of Common Stock issued upon conversion or exchange of such securities or,
in the case of clause (ii) above, the exercise price per share, as so increased
or decreased, as the case may be.
(f) Certain Definitions.
(1) Current Market Price.
In subsections (b), (c), (d) and (e) of this Section 10, the
current market price per share of Common Stock on any date is:
(i) if the Common Stock is not registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), then the Fair
Market Value of the Common Stock based upon the Fair Market Value of
100% of Company if sold as a going concern and without regard to any
discount for the lack of liquidity or on the basis that the relevant
shares of the Common Stock do not constitute a majority or controlling
interest in Company and assuming, if applicable, the exercise or
conversion of all in-the-money warrants, convertible securities,
options or other rights to subscribe for or purchase any additional
shares of capital stock of Company or securities convertible or
exchangeable into such capital stock; or
(ii) if the Common Stock is registered under the Exchange Act, the
average of the Quoted Prices of the Common Stock for 20 consecutive
trading days immediately preceding the date in question. The "Quoted
Price" of the Common Stock is the last reported sales price of the
Common Stock on the New York Stock Exchange ("NYSE"), or if the Common
Stock is reported by Nasdaq National Market System, as reported by
Nasdaq National Market System, or if the Common Stock is listed on a
national securities exchange other than the
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NYSE, the last reported sales price of the Common Stock on such
exchange (which shall be for consolidated trading if applicable to such
exchange), or if neither so reported or listed, the last reported bid
price of the Common Stock.
(2) Fair Market Value. Fair Market Value means the value obtainable
upon a sale in an arm's length transaction to a third party under usual
and normal circumstances, with neither the buyer nor the seller under
any compulsion to act, with equity to both, as determined by the Board
of Directors of the Company (the "Board") in good faith; provided,
however, that if ValueVision shall dispute the Fair Market Value as
determined by the Board, ValueVision may undertake to have it and the
Company retain an Independent Expert. The determination of Fair Market
Value by the Independent Expert shall be final, binding and conclusive
on the Company and ValueVision. All costs and expenses of the
Independent Expert shall be borne by ValueVision unless the
determination of Fair Market Value by the Independent Expert is more
than 5% more favorable to Company than the Fair Market Value determined
by the Board, in which event the cost of the Independent Expert shall
be shared equally by ValueVision and Company, or more than 10% more
favorable to Company than the Fair Market Value determined by the
Board, in which event the cost of the Independent Expert shall be borne
solely by Company.
(3) Independent Expert. Independent Expert means an investment banking
firm reasonably agreeable to Company and ValueVision who does not (and
whose Affiliates do not) have a financial interest in Company or any of
its Affiliates.
(g) Consideration Received.
For purposes of any computation respecting consideration received
pursuant to subsections (d) and (e) of this Section 10, the following shall
apply:
(1) in the case of the issuance of shares of Common Stock for cash, the
consideration shall be the amount of such cash, provided that in no case
shall any deduction be made for any commissions, discounts or other expenses
incurred by the Company for any underwriting of the issue or otherwise in
connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the Fair Market Value thereof;
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor shall
be deemed to be the consideration received by the Company for the issuance
of such securities at the date of such issuance plus the additional
consideration as of the date of such issuance, if any, to be received by the
Company upon the conversion or exchange thereof (the consideration in each
case to be determined in the same manner as provided in clauses (1) and (2)
of this subsection).
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(h) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the adjustment
would require an increase or decrease of at least 1% in the Exercise Price. Any
adjustments that are not made shall be carried forward and taken into account
in any subsequent adjustment.
All calculations under this Section shall be made to the nearest cent
or to the nearest 1/100th of a share, as the case may be.
(i) When No Adjustment Required.
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or no par
value of the Common Stock.
No adjustment will be made for shares issued upon the exercise of
the Warrants, upon the conversion of the Demand Note, upon conversion of the
Series C Convertible Preferred Stock outstanding on the date hereof (or the
Series D Convertible Preferred Stock issuable in exchange therefore) or upon the
exercise of the 750,000 options owned by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as of the date hereof.
To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the cash.
(j) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall provide the
notices required by Section 12 hereof.
(k) Voluntary Reduction.
The Company from time to time may reduce the Exercise Price by any
amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period; provided, however, that in no event
may the Exercise Price be less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, the Company shall mail to
Warrant holders a notice of the reduction. The Company shall mail the notice at
least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state the reduced Exercise Price and the period it will be in
effect.
A reduction of the Exercise Price does not change or adjust the
Exercise Price otherwise in effect for purposes of subsections (a), (b), (c),
(d) and (e) of this Section 10.
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(l) Notice of Certain Transactions.
If:
(1) the Company takes any action that would require an adjustment in
the Exercise Price pursuant to subsections (a), (b), (c), (d) or (e) of this
Section 10 and if the Company does not arrange for Warrant holders to
participate pursuant to subsection (i) of this Section 10;
(2) the Company takes any action that would require a supplemental
Warrant Agreement pursuant to subsection (m) of this Section 10; or
(3) there is a liquidation or dissolution of the Company,
the Company shall mail to Warrant holders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Company shall mail the notice at least
15 days before such date. Failure to mail the notice or any defect in it shall
not affect the validity of the transaction.
(m) Reorganization of Company.
If the Company effects a capital reorganization or recapitalization of
its capital stock or consolidates or merges with or into, or transfers or leases
all or substantially all its assets to, any person, then, as a condition
precedent to the consummation of such transaction, lawful and adequate
provisions shall be made whereby the Warrant holder shall thereafter have the
right to purchase and receive upon the basis and the terms and conditions
specified in this Agreement and in lieu of the shares of Common Stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such shares of stock, securities, cash or other
assets which the holder of a Warrant would have received immediately after the
reorganization, recapitalization, consolidation, merger, transfer or lease if
the holder had exercised such Warrant immediately before the effective date of
the transaction, and in any case appropriate provision shall be made with
respect to the rights and interests of the holders thereof to the end that the
provisions hereof (including without limitation provisions for adjustments of
the number of shares of Common Stock purchasable and receivable upon the
exercise of the Warrants) shall thereafter be applicable, as nearly as may be,
in relation to any shares of stock, securities, cash or assets thereafter
deliverable upon the exercise thereof. The Company shall not effect any such
consolidation, merger, transfer or lease, unless, prior to the consummation
thereof, the corporation formed by or surviving any such consolidation or
merger if other than the Company, or the person to which such sale or
conveyance shall have been made, shall enter into and deliver to the holders of
Warrants at the last address thereof appearing on the books of the Company, a
supplemental Warrant Agreement so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section.
13
If the issuer of securities deliverable upon exercise of Warrants under
the supplemental Warrant Agreement is an affiliate of the formed, surviving,
transferee or lessee corporation, that issuer shall join in the supplemental
Warrant Agreement.
If this subsection (m) applies, subsections (a), (b), (c), (d) and (e)
of this Section 10 do not apply.
(n) [Intentionally Omitted]
(o) When Issuance or Payment May Be Deferred.
In any case in which this Section 10 shall require that an adjustment
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event (i)
issuing to the holder of any Warrant exercised after such record date the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price
and (ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to Section 11; provided, however, that the Company shall deliver to
such holder a due ▇▇▇▇ or other appropriate instrument evidencing such holder's
right to receive such additional Warrant Shares, other capital stock and cash
upon the occurrence of the event requiring such adjustment.
(p) Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this Section 10,
each Warrant outstanding prior to the making of the adjustment in the Exercise
Price shall thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Common Stock (calculated to the
nearest hundredth) obtained from the following formula:
E
N' = N x -
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price immediately prior to
adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price immediately prior to adjustment.
14
(q) Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 11. Fractional Interests. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than
one Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 11,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the Current Market Price (as
defined in Section 10(f)) on the day immediately preceding the date the Warrant
is presented for exercise, multiplied by such fraction.
SECTION 12. Notices to Warrant holders. Upon any adjustment of the
Exercise Price pursuant to Section 10, the Company shall promptly thereafter (i)
cause to be filed with the Secretary of the Company a certificate of the Chief
Operating Officer and Chief Financial Officer of the Company setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based and
setting forth the number of Warrant Shares (or portion thereof) issuable after
such adjustment in the Exercise Price, upon exercise of a Warrant and payment of
the adjusted Exercise Price, which certificate shall, absent manifest error, be
conclusive evidence of the correctness of the matters set forth therein, and
(ii) cause to be given to each of the registered holders of the Warrant
Certificates at his address appearing on the Warrant register written notice of
such adjustments and a copy of such certificate by first-class mail, postage
prepaid. Where appropriate, such notice may be given in advance and included as
a part of the notice required to be mailed under the other provisions of this
Section 12.
In case:
(a) the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other
than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends payable in shares of Common Stock or
distributions referred to in subsection (a) of Section 10 hereof); or
(c) of any consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of Common
Stock issuable upon exercise of the
15
Warrants (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company;
(e) the Company proposes to take any action (other than actions of the
character described in Section 10(a)) which would require an adjustment of
the Exercise Price pursuant to Section 10; or
(f) the Company proposes to participate in any transaction described in
either Section 10(m) or Section 10(n);
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register, at
least 10 business days prior to the applicable record date hereinafter
specified, or promptly in the case of events for which there is no record date,
by first-class mail, postage prepaid, a written notice stating (i) the date as
of which the holders of record of shares of Common Stock to be entitled to
receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer
or exchange offer for shares of Common Stock, or (iii) the date on which any
such consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure to give the
notice required by this Section 12 or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 13. Notices to Company and ValueVision. Any notice or
demand authorized by this Agreement to be given or made by the registered holder
of any Warrant Certificate to or on the Company shall be sufficiently given or
made when and if deposited in the mail, first class or registered, postage
prepaid, addressed to the office of the Company expressly designated by the
Company at its office for purposes of this Agreement (until the Warrant holders
are otherwise notified in accordance with this Section by the Company), as
follows:
if to the Company, initially at Eleven Penn Center, Suite 1100, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 13, with a copy to Klehr, Harrison,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, 1401
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq.
Any notice pursuant to this Agreement to be given by the Company to the
registered holder(s) of any Warrant Certificate shall be sufficiently given
when and if deposited in the mail, first-class or registered, postage
prepaid, addressed (until the Company is otherwise notified in accordance
with this Section by such holder) to such holder at the following address:
if to a registered holder of any Warrant Certificate, at the most
current address given by such holder to the Company in accordance with the
provisions of this Section 13, which address initially is, with respect to
ValueVision, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: General Counsel, with a copy to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
SECTION 14. Supplements and Amendments. This Agreement may be
supplemented or amended from time to time subject to approval by the parties
hereto.
SECTION 15. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.
SECTION 16. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be construed in
accordance with the internal laws of said State.
SECTION 17. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the registered holders of the Warrant Certificates any legal or equitable
right, remedy or claim under this Agreement; and this Agreement shall be for the
sole and exclusive benefit of the Company and the registered holders of the
Warrant Certificates.
SECTION 18. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[Signature Page Follows]
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
NATIONAL MEDIA CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: President and Chief Executive
Officer
VALUEVISION INTERNATIONAL, INC.
(OR ITS DESIGNEE)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Title: Chairman and Chief Executive
Officer
S-1
EXHIBIT A
[Form of Warrant Certificate]
[Face]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENT OF SUCH ACT OR SUCH LAWS.
No. 1 250,000 Shares
Warrant Certificate
NATIONAL MEDIA CORPORATION
This Warrant Certificate certifies that ValueVision International, Inc.,
("ValueVision") or registered assigns, is the registered holder of 250,000
Warrants expiring on the earlier of (i) January 5, 2003 or (ii) the occurrence
of the Termination Event (as defined below) (the "Warrants") to purchase Common
Stock, $.01 par value (the "Common Stock"), of NATIONAL MEDIA CORPORATION, a
Delaware corporation (the "Company"). Each Warrant entitles the holder upon
exercise to receive from the Company on or before the earlier of (i) 5:00 p.m.
New York City Time on January 5, 2003 or (ii) the occurrence of the Termination
Event, one fully paid and nonassessable share of Common Stock (a "Warrant
Share") at the initial exercise price (the "Exercise Price") equal to the
average of the Quoted Prices of the Common Stock reported on the New York Stock
Exchange Composite Tape for the twenty (20) consecutive trading days immediately
succeeding the date of the first advance by ValueVision to the Company under the
$10 million Demand Promissory Note between ValueVision and the Company dated as
of the date hereof (the "Demand Note"), payable in lawful money of the United
States of America upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office of the Company designated for such purpose, but
only subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. The Exercise Price and number of Warrant
Shares issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
No Warrant may be exercised after the earlier of (i) 5:00 p.m., New York
Time on January 5, 2003 or (ii) the occurrence of the Termination Event, and to
the extent not exercised by such time such Warrants shall become null and void.
A-1
Reference is hereby made to the further provisions of this Warrant
Certificate set forth below and such further provisions shall for all purposes
have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless signed by officers of
the Company as set forth in Section 2 of the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its President and by its Secretary and has caused its corporate
seal to be affixed hereunto or imprinted hereon.
Dated:
NATIONAL MEDIA CORPORATION
By:
--------------------------
President
By:
--------------------------
Secretary
A-2
[Form of Warrant Certificate]
[Continued]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the earlier of (i) January 5, 2003 and
(ii) the occurrence of the Termination Event. The Warrants (issued in
denominations representing a multiple of 25,000 shares) entitle the holder on
exercise to receive shares of Common Stock, $0.01 par value, of the Company (the
"Common Stock"), and are issued or to be issued pursuant to a Warrant Agreement
dated as of January 5, 1998 (the "Warrant Agreement"), duly executed and
delivered by the Company, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants. A
copy of the Warrant Agreement may be obtained by the holder hereof upon written
request to the Company.
Warrants may be exercised at any time after the earlier to occur of (1)
the 75th day after termination of the Merger Agreement and (2) a default under
the Demand Note and before the earlier to occur of (i) January 5, 2003 and (ii)
the occurrence of the Termination Event. The holder of Warrants evidenced by
this Warrant Certificate may exercise them by surrendering this Warrant
Certificate, with the form of election to purchase set forth hereon properly
completed and executed, together with payment of the Exercise Price at the
office of the Company designated for such purpose, but only subject to the
conditions set forth herein and in the Warrant Agreement referred to below. In
the event that upon any exercise of Warrants evidenced hereby the number of
Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment
shall be made for any dividends on any Common Stock issuable upon exercise of
this Warrant.
For purposes of this Agreement, "Termination Event" shall mean (i) the
consummation of the transactions contemplated by the Merger Agreement or (ii)
the termination by the Company of the Agreement and Plan of Reorganization and
Merger dated as of the date hereof by and among ValueVision, the Company and ▇-▇
Holdings Corp. (the "Merger Agreement"), if such termination results from a
breach of any covenant thereunder by ValueVision or in the event the
shareholders of ValueVision do not approve the terms of the proposed merger as
contemplated under the Merger Agreement; provided, however, that if (x) within
seventy-five (75) days after the occurrence of the Termination Event, the
Company has not paid in full in cash all of its obligations under the Demand
Note or (y) a default by the Company occurs under the Demand Note during such
seventy-five day period, no Termination Event shall be deemed to have occurred.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of
A-3
a share of Common Stock will be issued upon the exercise of any Warrant, but the
Company will pay the cash value thereof determined as provided in the Warrant
Agreement.
The holders of the Warrants are entitled to certain registration rights
with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in full in a Registration Rights Agreement
dated as of January 5, 1998, between the Company and ValueVision. A copy of the
Registration Rights Agreement may be obtained by the holder hereof upon written
request to the Company.
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Company a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
A-4