Amendment to General Statement of Beneficial Ownership — Schedule 13D
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EX-13 — Annual or Quarterly Report to Security Holders
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AMENDED AND RESTATED OPERATING AGREEMENT
THIS AGREEMENT is made as of July 27, 1996 between
Montgomery Ward & Co., Incorporated, an Illinois corporation
("MW") and ValueVision International, Inc., a Minnesota
corporation ("VVI").
R E C I T A L S
A. MW and VVI are parties to a certain Operating
Agreement, dated March 13, 1995 (the "Original Agreement"),
pursuant to which MW granted to VVI certain rights, and
agreed to certain restrictions on its activities, in
connection with Television Home Shopping (as herein
defined).
B. Effective concurrently herewith, VVI is purchasing
from Montgomery Ward Direct, L.P., a Delaware limited
partnership which is a wholly owned indirect subsidiary of
MW ("MWD"), substantially all of the assets of MWD. MWD is
engaged in the business of selling Products (as herein
defined) through direct-mail specialty catalogs. In
addition, concurrently herewith, (x) the existing
Servicemark License Agreement between MW and VVI, dated
March 13, 1995 is being amended and restated to include the
granting to VVI of a license to use the service mark
"Montgomery Ward Direct" (the "MWD Mark") and (y) the
existing Credit Card License and Receivables Sale Agreement
between MW and VVI, dated March 13, 1995 is being amended in
certain respects, to include the use of the Card (as herein
defined) in connection with Catalog Activities (as herein
defined).
C. By virtue of the acquisition of the assets of MWD,
and the grant of the license to use the MWD Mark, the
parties desire to amend and restate the Original Agreement
to (i) cover the direct-mail businesses to be conducted by
VVI under the MWD Mark, and (ii) revise certain provisions
of the Original Agreement to reflect understandings reached
by the parties based upon their fifteen months of experience
in operating under the Original Agreement.
A G R E E M E N T S
NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby
acknowledged, the parties hereby amend and restate the
Original Agreement to read as follows:
1. Certain Definitions. For the purposes of this
Agreement:
(a) "Affiliate" shall mean any Person which
directly or indirectly is controlled by the Person in
question. "Control" means the possession, directly or
indirectly, of the power to direct or to cause the
direction of the management and policies of a Person
whether through ownership of voting securities, through
the power to appoint directors, by contract or
otherwise. For purposes of this Agreement, neither the
General Electric Company ("GE"), nor General Electric
Capital Corporation ("GECC"), nor any subsidiary of GE
or GECC, shall be deemed to be an Affiliate of MW.
(b) "Cable Systems" shall mean individual cable
television systems. Each cable television system shall
be considered to be an individual Cable System,
regardless of whether such cable television system is
operated by an operator of more than one Cable System.
(c) "Card" shall mean any private-label credit
card offered by any member of the MW Group or its
designee to customers of any member of the MW Group,
including but not limited to the Montgomery Ward credit
card and the Lechmere credit card.
(d) "Catalog Activities" shall mean the conduct
of the following activities:
(i) the offer and sale of Products through
mail-order catalog offers (the "Primary Catalog
Activity");
(ii) the offer and sale of Products through
direct mail syndications and reverse syndications
(as such terms are commonly used in the catalog
and direct-mail industry);
(iii) the offer and sale of Products through
telemarketing to customers derived through the
Primary Catalog Activity;
(iv) prospecting for new customers using a
combination catalog and pre-approved credit offer;
(v) use of 30, 60 and 120 second television
commercials for promotion of the Primary Catalog
Activity;
(vi) the offer and sale of Products through
solo and multi-solo mailings to customers derived
through the Primary Catalog Activity; and
(vii) the use of the Internet and on-line
services to promote the Primary Catalog Activity.
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(e) "Effective Date" shall mean March 13, 1995.
(f) "Excluded Products" shall mean unique,
proprietary Products (as herein defined) such as the
PowerGrower, that (x) are developed or promoted by a
member of the MW Group for the primary benefit of the
MW Group, and (y) are not marketed through the use of
any of the Marks.
(g) "HSN" shall mean Home Shopping Network, Inc.,
a Delaware corporation.
(h) "HSN Agreements" shall mean (i) that certain
Agreement, dated as of October 12, 1988 among Signature
Agency, Inc., HSN and HSN Insurance, Inc., (ii) that
certain Agreement, dated as of October 31, 1987,
between Signature's Nationwide Auto Club, Inc., HSN and
Home Shopping Insurance, Inc., (iii) that certain
Agreement, dated as of October 12, 1987, between
Montgomery Ward Life Insurance Company, HSN and Home
Shopping Insurance, Inc., and (iv) that certain
Agreement, dated as of October 10, 1991, among
Montgomery Ward Enterprises, Inc., The Signature Life
Insurance Company of America, Home Shopping Club, Inc.
and HSN Insurance, Inc.
(i) "Marks" shall have the meaning ascribed to
such term in the Restated Servicemark License
Agreement.
(j) "MW Group" shall mean, collectively, MW and
its Affiliates.
(k) "MW Products" shall mean Products offered for
sale by any member of the MW Group.
(l) "MW Services" shall mean services offered
from time to time by Signature (as herein defined).
(m) "New Warrants" shall mean Series P Warrants
to purchase shares of common stock, $.01 par value, of
VVI.
(n) "Person" shall mean a natural person,
corporation, general or limited partnership, limited
liability company or partnership, proprietorship,
association, joint venture, governmental agency, trust,
estate, unincorporated organization, or other entity or
organization whether acting in an individual,
fiduciary, or other capacity.
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(o) "Pledge Agreement" shall mean that certain
Pledge Agreement, dated of even date herewith, between
MW and VVI.
(p) "Product" or "Products" shall mean any
consumer merchandise other than Excluded Products.
(q) "Related Agreements" shall mean the Pledge
Agreement, the Receivables Sale and Purchase Agreement
(as herein defined) and the Restated Servicemark
License Agreement (as herein defined).
(r) "QVC" shall mean QVC Network, Inc., a
Delaware corporation.
(s) "Restated Servicemark License Agreement"
shall mean that certain Amended and Restated
Servicemark License Agreement between MW and VVI,
of even date herewith.
(t) "Receivables Sale and Purchase
Agreement" shall mean that certain Credit Card
License and Receivables Sale Agreement between MW
and VVI, dated March 13, 1995, as amended by a
letter agreement of even date herewith.
(u) "Retailer" shall mean a Person principally
engaged in the retail merchandising of consumer goods
within the United States, other than a member of the MW
Group or VVI. By way of example and not of limitation,
"Retailer" includes merchandisers such as Sears,
J.C.Penney, Macys, Target, and the like.
(v) "Retained Catalog Rights" shall mean the
following:
(i) the right of MW to conduct its existing
special-offers business through statement inserts,
solo and multi-solo mailings and through
syndications;
(ii) the right of Signature (as herein
defined) to market a membership-based shopping
service and to do catalog or solo mailings to
potential members to solicit memberships and to
encourage members to purchase merchandise through
such service; and
(iii) the right of Signature to conduct
continuity businesses.
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(w) "Signature" shall mean Signature
Financial/Marketing, Inc. and its Affiliates, all of
which presently are members of the MW Group.
(x) "Syndicated Programs" shall mean
syndicated/transactional television programming
intended for broadcast over multiple broadcast or cable
television networks, using a format other than that
described in the first sentence of the definition of
Television Home Shopping.
(y) "Taxes" shall mean sales, use, service and
similar taxes.
(z) "Television Home Shopping" shall mean
Product-focused television programming whereby Products
are sold by "on-air" hosts and orders are placed by
viewers directly with the party providing said
television programming or its agents or
representatives, using substantially the format used as
of the date hereof by VVI, HSN and QVC. Without
limiting the generality of the preceding sentence,
Television Home Shopping does not include commercials
or Syndicated Programs, but does, for the five year
period commencing on the date hereof, include so-called
"infomercials" of a length not exceeding 30 minutes.
(aa) "ViaTV" shall mean RSTV, Inc., a Florida
corporation.
(y) "VVI" shall mean ValueVision International,
Inc. and its Affiliates.
(z) "VVI Cataloging Business" shall mean the
conduct by VVI of Catalog Activities, through the use
of one or more of the Marks and/or offering customers
the use of the Card.
Other definitions are contained in the body of this
Agreement.
2. Exclusivity. During the term of this Agreement:
(a) No member of the MW Group will, directly or
indirectly:
(i) sell or offer for sale any Product
through Television Home Shopping or Catalog
Activities within the United States, except
through VVI; provided, however that this Section
2(a)(i) shall not apply to (w) Excluded Products,
(x) Retained Catalog Rights, or (y) Products
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offered for sale by any business that is acquired
from a third party after the Effective Date by any
member of the MW Group;
(ii) start up a Television Home Shopping
business or, for a period of five years,
commencing on the date hereof, a Catalog
Activities business;
(iii) acquire 10% or more of the outstanding
equity securities (or securities representing 10%
or more of the aggregate voting power of the
outstanding securities) of a Person principally
engaged in Television Home Shopping, including,
without limitation, HSN, QVC, and ViaTV, or, for a
period of five years, commencing on the date
hereof, Catalog Activities; or
(iv) enter into, or assist any Person (i) to
obtain, arrangements for Cable System carriage of
Television Home Shopping, including, without
limitation, by purchasing advertising time on any
such Cable System for the purpose of so assisting
such Person, or purchase advertising time on
Television Home Shopping programming on any Cable
System, except with VVI pursuant to this
Agreement, or (ii) in starting-up, developing or
conducting any Catalog Activities (other than the
Retained Catalog Rights).
This Section 2(a) shall not prevent any member of the
MW Group from acquiring a voting or equity interest in,
or the operating assets of, a Person that engages in
Television Home Shopping or Catalog Activities other
than as a principal business; provided, however, that
if the MW Group shall acquire a Person, or the assets
of a Person, engaged in Catalog Activites other than as
a principal business, MW shall notify VVI, and, if VVI
shall desire to purchase the portion of such Person
which is engaged in Catalog Activities, MW shall
negotiate in good faith with VVI with a view to selling
such portion to VVI.
(b) Without the prior written consent of MW,
which shall not unreasonably be withheld:
(i) VVI and its Affiliates will not sell or
offer for sale any Products through Television
Home Shopping within the United States using the
servicemarks, trade names or trademarks of any
Retailer; and
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(ii) VVI and its Affiliates shall not engage
in Catalog Activities using any servicemarks,
trade names or trademarks of any Retailer other
than MW and its Affiliates, or offer for sale
through Catalog Activities services which are
competitive with MW Services then being offered by
Signature, provided that Signature shall have
offered such MW Services prior to the time
competitive services are intended to be offered by
VVI;
(c) Except as otherwise provided in the HSN
Agreements, MW shall give to VVI the first opportunity
to offer for sale, via Television Home Shopping, MW
Services which MW considers in good faith to be
appropriate for sale by means of Television Home
Shopping. MW shall do so by giving VVI notice of MW's
intent to offer such MW Services, and the prices, terms
and other economic terms with respect to such MW
Services which MW desires. MW and VVI shall thereupon
negotiate in good faith over whether VVI shall offer
such MW Services, and the terms of any such offer. If
MW and VVI reach an agreement with respect to such MW
Service within 30 days after the commencement of
negotiations, then VVI shall have the exclusive right
to offer such MW Service through Television Home
Shopping. If the parties do not so reach an agreement,
MW shall thereafter have the right to offer such MW
Service to other Television Home Shopping networks on
such terms as MW shall determine in its sole judgement,
provided that the Card shall not be offered and the
Marks shall not be used in connection with the offering
of such MW Services on such networks.
(d) MW shall give to VVI the first opportunity to
carry any Syndicated Program which MW desires to be
distributed by a broadcast or cable television network
engaged primarily in Television Home Shopping,
including without limitation VVI, HSN, QVC and ViaTV.
MW shall do so by giving VVI notice of MW's intent to
so distribute such Syndicated Program, and the economic
terms with respect to such Syndicated Program which MW
desires. MW and VVI shall thereupon negotiate in good
faith over the terms pursuant to which such Syndicated
Program would be broadcast by VVI and the compensation,
if any, payable to MW therefor. If MW and VVI reach an
agreement with respect to such Syndicated Program
within 30 days after the commencement of negotiations,
then MW shall not offer such Syndicated Program over
any broadcast or cable television network engaged
primarily in Television Home Shopping other than VVI.
If the parties do not so reach an agreement, MW shall
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thereafter have the right to offer such Syndicated
Program to other Television Home Shopping networks on
terms not materially less favorable to MW than the
terms which were offered to VVI, provided that the Card
shall not be offered and the Marks shall not be used in
connection with such Syndicated Program on such
network.
3. Marks. MW shall not license or permit any
Person, other than VVI or its Affiliates, to use the Marks
(or marks confusingly similar thereto) in Television Home
Shopping or Catalog Activities, nor shall MW license or
permit any Person other than VVI engaged primarily in
Television Home Shopping or Catalog Activities, including
without limitation QVC, HSN and ViaTV, to use the Marks (or
marks confusingly similar thereto) for any purpose.
4. Card. MW shall not license or permit any Person,
other than VVI, to use the Card to sell or offer for sale
any Products through Television Home Shopping or Catalog
Activities, nor shall MW license or permit any Person other
than VVI engaged primarily in Television Home Shopping
(including without limitation QVC, HSN, and ViaTV) or
Catalog Activities, to use the Card for any purpose,
provided, however, that notwithstanding the foregoing, the
Card may be used for any purpose other than to sell or offer
for sale any Products through Television Home Shopping or
Catalog Activities (other than through the Retained Catalog
Rights) by (i) any member of the MW Group, and (ii) any
person that was using the Card prior to such time as MW
obtained actual knowledge that such Person was controlled by
a company engaged primarily in Television Home Shopping or
Catalog Activities.
5. Programming and Catalog Content. VVI shall have
exclusive control over all television programming for
Television Home Shopping, and catalog and mailing content
for Catalog Activities, including without limitation,
product selection, method and form of presentation and
content; provided, however, that any Television Home
Shopping programming, and any Catalog Activity, employing
any of the Marks, or using the Card, shall be subject to the
provisions of the Restated Servicemark License Agreement and
the Receivables Sale and Purchase Agreement. Nothing
contained herein shall preclude VVI from offering television
programming in formats other than Television Home Shopping.
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6. Fulfillment. VVI shall have sole responsibility
for, and exclusive control over, fulfillment except as
provided herein. Without limiting the generality of the
preceding sentence:
(a) Except as provided in this paragraph, VVI
shall have sole responsibility for and exclusive
control over inbound telemarketing and fulfillment of
viewer orders generated through Television Home
Shopping, and fulfillment of sales generated through
Catalog Activities, either from VVI's inventory or
through drop-shipments arranged by VVI with MW or other
drop-ship vendors. Notwithstanding the foregoing, MW
shall have responsibility for fulfillment of viewer or
customer orders that are drop-shipped from MW to the
customer.
(b) Except as provided in this paragraph, VVI
shall bear the sole risk of loss with respect to all
merchandise, including MW Products, including the loss
of risk in transit and the risk of theft.
Notwithstanding the foregoing, MW shall bear the sole
risk of loss, including the risk of loss in transit and
the risk of theft, for orders that are drop-shipped
from MW to the customer.
(c) VVI shall bear the sole credit risk with
respect to all Products, including MW Products, and MW
Services, which VVI shall sell on credit, excluding,
however, any Product sold through use of the Card,
except as otherwise provided in the Restated Receivable
Sales and Purchase Agreement.
(d) Except as provided in this paragraph, VVI
will be solely responsible for collecting from its
customers any Taxes which may be due on any sales of
Product (including MW Products) or MW Services to its
customers and shall remit all such amounts to the
appropriate taxing authorities. Notwithstanding the
foregoing, MW shall be solely responsible for
collection of Taxes from its customers who buy Product
or MW Services using the Card, except as provided in
the Restated Receivable Sales and Purchase Agreement.
Nevertheless, MW shall remit to VVI, pursuant to the
Restated Receivable Sales and Purchase Agreement, an
amount equal to the Taxes charged to customers by VVI
on each purchase using the Card, which amount VVI shall
remit to the appropriate taxing authority.
(e) VVI will not modify its standard 30-day
Product return period (except for Products constituting
"seconds", Products which have been repaired or
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reconditioned or close-outs) without MW's consent,
which consent will not unreasonably be withheld. VVI
and MW shall instruct customers to return Product
purchased from VVI through Television Home Shopping or
Catalog Activities (other than Product drop-shipped by
MW) to VVI, and not to MW stores. In the event that MW
accepts returns of Product purchased from VVI through
Television Home Shopping or Catalog Activities in
accordance with VVI's return policy, MW shall promptly
ship such product to VVI. If such return was accepted
in accordance with VVI's return policy, VVI will bear
the freight cost associated with such return;
otherwise, VVI and MW will each bear 50% of such cost.
7. Purchase of MW Products and MW Services from MW.
(a) VVI shall have the right, exercisable from
time to time upon written notice to MW using an agreed
form of purchase order, to purchase MW Products, for
the purpose of resale by means of Television Home
Shopping or Catalog Activities, subject to (i)
applicable restrictions in vendor agreements pursuant
to which MW purchased such MW Products, and (ii) MW's
own requirements for MW Products. Upon request, MW
will advise VVI as to whether an agreement with any of
MW's vendors contains any restrictions on MW's ability
to resell Product from such vendor to VVI. MW shall
have the sole right to determine its requirements for
such MW Products. The prices of such MW Products shall
not exceed MW's direct cost thereof (including freight,
but excluding corporate overhead charges), and the
terms of sale shall be the same terms as those under
which MW purchased such MW Products, except that such
MW Products shall be shipped to VVI f.o.b. MW's
warehouses. MW agrees to use commercially reasonable
efforts to assist VVI to obtain vendors' consents and
any necessary trademark licenses. VVI will cease
offering via Television Home Shopping any MW Product
with respect to which MW advises VVI in writing that
the vendor has specifically requested that such MW
Product not be sold via Television Home Shopping
("Withdrawn Product"). MW will accept returns of all
such Withdrawn Product from VVI and will reimburse to
VVI the purchase price and freight charges paid by VVI
in acquiring or returning such Withdrawn Product.
(b) Prices and terms with respect to MW Services
shall be as agreed from time to time by MW and VVI with
respect to the particular MW Service to be offered
through Television Home Shopping or Catalog Activities.
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(c) MW shall have the right to establish a credit
limit, and credit terms, for all VVI purchases pursuant
to this Section 7 and pursuant to Section 8. Except as
provided above with respect to Withdrawn Product,
return privileges with respect to MW Products shall be
as agreed between MW and VVI with respect to the
particular MW Products, and in the absence of such an
agreement, VVI shall not have return privileges, except
with respect to defective goods.
(d) MW disclaims any express or implied
warranties with respect to MW Products, including
without limitation the implied warranties of
merchantability and fitness for a particular purpose,
except for any private-label MW Products as to which MW
offers a manufacturer's warranty (in which case MW's
standard manufacturer's warranty for such MW Product
shall apply). MW will assign to or otherwise make
available to VVI all manufacturer's warranties and
other rights of MW relating to third party claims
arising from MW Products sold by MW to VVI and provide
reasonable assistance to VVI in obtaining the benefits
of such warranties, at no expense to MW; provided,
however, that MW shall retain the concurrent right to
assert such rights with respect to such MW Product.
8. Introductions to MW Vendors. From time to time
during the term hereof, MW will introduce VVI's buyers to
MW's principal vendors and such other MW vendors to which
VVI reasonably requests an introduction, and MW's buyers
will provide reasonable advice and assistance to VVI's
buyers to obtain Product, vendors' consents and licenses,
consistent with the needs of MW's business. In its
discretion, and subject to the terms of its agreements with
its vendors, MW may purchase Product for resale to VVI, on
terms established by MW and acceptable to VVI.
9. Buying Office. During the term hereof, MW will
make available to VVI, without charge, except as provided in
this Section 9, office space and reasonable office support
services at MW's headquarters in Chicago for use as a buying
office. To the extent required in order to efficiently
implement the provisions of this Agreement, during the term
hereof, VVI will make office space and reasonable office
support services available to MW at its headquarters in
Minneapolis, without charge, except as provided in this
Section 9. Each party may charge the other party for any
office support service costs (e.g., long distance telephone,
photocopies, postage), at such party's direct cost
(excluding overhead) to be agreed upon by the parties. The
parties agree to work together in good faith to determine
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the most cost-effective means to equip and operate such
offices.
10. Cable Carriage Agreements and Advertising
Commitments. MW and VVI agree that:
(a) VVI shall, and MW may at its option, use
commercially reasonable efforts to negotiate for long
term cable carriage agreements pursuant to which Cable
Systems will agree to carry VVI's Television Home
Shopping programming. Each party will use its best
efforts to promptly notify the other of the
commencement of negotiations with any Cable System, and
will permit the other party to participate therein. MW
shall have the right, but not be obligated, to assist
VVI to obtain long term cable carriage agreements by
purchasing advertising time on such Cable Systems, with
cash or non-cash consideration acceptable to the Cable
System (such as MW Services);
(b) subject to the remainder of this paragraph
10, MW shall not be obligated to purchase advertising
time except to the extent it expressly agrees in
writing with the Cable System or VVI to be so obligated
(an "Advertising Commitment"). Notwithstanding the
preceeding sentence, MW hereby makes an Advertising
Commitment that the MW Group will, collectively,
purchase not less than $20,000,000 of advertising time
on Cable Systems through VVI during the five year
period commencing August 1, 1996. The MW Group will
have sole control of (i) the nature and extent of all
advertising it places with Cable Systems, (ii) the
content of all advertisements, and (iii) the selection
of the specific Cable Systems on which it intends to
place advertising. MW shall receive full credit under
this paragraph 10 for any advertising placed by an
Affiliate of MW as of August 1, 1996 through VVI even
though such Affiliate shall have ceased to be an
Affiliate of MW. MW shall use its best efforts to
place (i) $5,000,000 of advertising through VVI during
the one year period commencing August 1, 1996, (ii)
$4,000,000 of advertising during each of the years
commencing on the first, second and third anniversary
of said date, and (iii) $3,000,000 of advertising
during the year commencing on the fourth anniversary of
said date. To the extent the MW Group shall have
placed less than the minimum amount of advertising for
a one year period referred to in the preceding
sentence, the shortfall shall be carried forward to
subsequent years; provided, however, that MW shall be
obligated to place all $20,000,000 of advertising prior
to August 1, 2001. As collateral security for MW's
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obligations under the preceding portions of this
subparagraph (b), MW shall pledge to VVI New Warrants
to purchase 1,637,138 shares, pursuant to the Pledge
Agreement;
(c) VVI shall not be obligated to enter into any
cable carriage agreement except to the extent that VVI
has determined, in its sole discretion, that such cable
carriage agreement is in the best interests of VVI. If
at any time VVI is required to pay additional amounts
to a Cable System solely because of MW's failure to
purchase advertising time that MW had committed to
purchase in an Advertising Commitment (other than by
reason of a breach of such Advertising Commitment by
such Cable System), MW will reimburse VVI for such
additional amount that VVI is required to pay the Cable
System, not to exceed the difference between the amount
MW committed to expend on advertising with such Cable
System pursuant to such Advertising Commitment, and the
amount paid by MW for advertising under such
Advertising Commitment. In addition to all other
rights and remedies otherwise provided by law, except
as specifically limited hereunder, in the event that MW
breaches an Advertising Commitment, VVI shall have the
termination right provided in subparagraph 22(b)(ii).
11. Board of Directors. Subject to the provisions of
this paragraph 11, commencing on the date of this Agreement
and ending on the first to occur of (x) the date on which MW
owns or shall have the right to own less than 10% of the
outstanding common stock of VVI (computed on a fully diluted
basis) and (y) the date on which this Agreement terminates,
MW will have the right to designate one nominee on
management's slate of nominees for the Board of Directors;
provided, however that MW will not designate as a director
nominee (x) any person who is an officer or director of GE
or GECC or any of their Affiliates, (y) any person with
respect to whom VVI would be required to disclose
information in response to Item 401(f) of Regulation S-K or
Item 401(d) of Regulation S-B, or (z) any proposed nominee
to the extent VVI is advised in writing by its counsel that,
in such counsel's opinion, nomination of such designee would
result in a violation of the fiduciary duties of VVI's
directors. During the period in which MW has the right to
designate a director-nominee, (i) VVI will agree to
recommend such nominee to its stockholders, (ii) VVI (with
respect to any Shares as to which it has voting power) and
Messrs. Robert Johander and Nicholas Jaksich, as long as
such individuals remain members of VVI's Board of Directors,
will each vote all Shares over which they have voting power
in favor of the election of MW's nominee, and (iii) MW will
vote all Shares over which it has voting power in favor of
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VVI's nominees. If this Agreement shall terminate, unless
MW shall at such time own 10% or more of VVI's then
outstanding common stock, MW will cause its designee to
promptly resign from the Board of Directors. The MW
director-nominee, and the directors of MW who were appointed
by GE or GECC, shall each execute such recusal statements as
may be required from time to time in order that none of VVI,
GECC nor GE (as both the ultimate indirect owner of shares
of MW and the owner of National Broadcasting Company, Inc.
and its subsidiaries will be in violation of the multiple
ownership and combined ownership rules, regulations, and
policies of the Federal Communications Commission.
12. [Intentionally omitted.]
13. Insurance.
(a) VVI shall purchase and maintain in effect at
all times during the term of this Agreement, the
following policies of insurance:
(i) A policy of commercial general liability
insurance, on an occurrence rather than a claims
made basis, including coverage for contractual
liability, product liability, business automobile
liability insurance, personal injury, and property
damage and advertising injury, naming MW as an
additional insured, with a combined single limit
of liability for bodily injury and property damage
of not less than $1 million, and endorsed to
eliminate the exclusion for coverage as to
property in MW's care, custody and control;
(ii) A policy of employer's liability
insurance with a combined single limit of
liability of $500,000 per occurrence and in the
aggregate.
(iii) Umbrella liability insurance on an
occurrence basis with a $10,000,000 combined
single limit of liability per occurrence and in
the aggregate.
(iv) Director's and officer's liability
insurance covering all directors and executive
officers, with a combined single limit of not less
than $2,000,000 per occurrence and in the
aggregate.
(v) Crime insurance, including coverage for
employee dishonesty, with a combined single limit
of not less than $1,000,000 per occurrence and in
the aggregate.
-14-
All such insurance shall be endorsed to provide at
least ten (10) days' prior written notice to MW in the
event of any proposed cancellation or modification.
All of the insurance specified in this paragraph shall
be with insurance carriers duly authorized to do
business in Minnesota. Upon request, VVI shall furnish
MW with copies of policies, certificates or other
evidence of all such insurance in conformity with the
requirements of this Agreement. VVI will also use
commercially reasonable efforts to obtain vendor's
endorsements with respect to all material items of
merchandise, other than MW Products or jewelry, sold by
VVI, naming MW as an additional insured.
(b) During the term of this Agreement, MW will:
(i) cause VVI to be named as an additional
insured with respect to all coverages, including
without limitation, contractual liability,
products liability and advertising injury, under
MW's comprehensive general liability insurance
policies with respect to all MW Products; and
(ii) use commercially reasonable efforts to
obtain vendor's endorsements, naming VVI, with
respect to all material MW Products which are sold
to VVI pursuant to this Agreement.
14. Inspection of Records. Each party will have the
right to inspect the other's books, records, and premises
with regard to any transaction under this Agreement and the
Related Agreements. In order to verify the accuracy of all
the above accounts and records, each party will have the
right at its sole cost to copy said books and records. All
information in such books, records, or revealed by such
inspection, shall be deemed to be confidential information
subject to the provisions of Sections 15 (except to the
extent provided in Section 15(a)(i), (ii) and (iii) and
15(b)(i), (ii) and (iii), and 16 hereof).
15. Confidentiality.
(a) In the performance of this Agreement and the
Related Agreements, VVI and its Affiliates may be
exposed to the confidential information or trade
secrets of the MW Group and others. VVI and its
Affiliates shall not disclose to anyone not employed by
the MW Group or MW's designee under the Receivables
Sale and Purchase Agreement nor use except on behalf of
the MW Group or MW's designee under the Receivables
Sale and Purchase Agreement any such confidential
information acquired by VVI or its Affiliates in the
-15-
performance of this Agreement or the Related
Agreements, except as authorized by MW by prior
writing. Information regarding all aspects of the MW
Group's business, either directly or indirectly
disclosed to VVI or its Affiliates or developed by VVI
or its Affiliates in the performance of this Agreement
and the Related Agreements shall be presumed to be
confidential except to the extent that such information
(i) shall have been published or otherwise made freely
available to the general public without restriction
through no wrongdoing of VVI or its Affiliates,
(ii) shall have been obtained from a third party not
reasonably known by VVI or its Affiliates after
reasonable inquiry, to be subject to a confidentiality
agreement with MW or any of its Affiliates or (iii) is
required (in the reasonable opinion of VVI's legal
counsel) to be disclosed pursuant to law or legal
process. With regard to all of such confidential
information, VVI agrees that it and its Affiliates
shall: (a) forever hold in strict confidence such
information; (b) not alter, copy, misappropriate,
misuse, transfer, sell, deliver or divulge, under any
circumstances, any of such confidential information to
anyone other than an employee or agent of VVI or its
Affiliates whose duties require access to such
information and then only in the course of VVI's
performance under this Agreement and such employee or
agent shall be bound by the terms of this paragraph
15(a); and (c) upon the termination of this Agreement,
return all such confidential information to MW or to
destroy same together with all additional copies
thereof.
(b) In the performance of this Agreement and the
Related Agreements, the MW Group (which, for the
purposes of this paragraph 15(b) shall include MW's
designee under the Receivables Sale and Purchase
Agreement) may be exposed to confidential information
or trade secrets of VVI, its Affiliates and others. The
MW Group shall not disclose to anyone not employed by
VVI or its Affiliates nor use except on behalf of VVI
and its Affiliates any such confidential information
acquired by the MW Group in the performance of this
Agreement and the Related Agreements, except as
authorized by VVI by prior writing. Information
regarding all aspects of VVI's business either directly
or indirectly disclosed to the MW Group or developed by
any member of the MW Group in the performance of this
Agreement and the Related Agreements shall be presumed
to be confidential except to the extent that such
information (i) shall have been published or otherwise
made freely available to the general public without
-16-
restriction through no wrongdoing of the MW Group,
(ii) shall have been obtained from a third party not
reasonably known by the MW Group, after reasonable
inquiry, to be subject to a confidentiality agreement
with VVI or any of its Affiliates or (iii) is required
(in the reasonable opinion of MW's legal counsel) to be
disclosed pursuant to law or legal process. With
regard to all of such confidential information, the MW
Group shall: (a) forever hold in strict confidence such
information; (b) not alter, copy, misappropriate,
misuse, transfer, sell, deliver or divulge, under any
circumstances, any of such confidential information to
anyone other than an employee or agent of the MW Group
whose duties require access to such information and
then only in the course of the MW Group's performance
under this Agreement and such employee or agent shall
be bound by the terms of this paragraph 15(b); and (c)
upon the termination of this Agreement, return all such
confidential information to VVI or to destroy same
together with all additional copies thereof.
(c) The obligations of the parties under
paragraphs 15(a) and 15(b) shall survive the
termination or expiration of this Agreement for a
period of five years after such termination or
expiration.
16. Cardholder Data.
(a) Pursuant to the Receivables Sale and Purchase
Agreement, VVI and MW have come into, or will hereafter
come into, possession of the names, addresses and other
data and information ("Cardholder Data") with respect
to VVI viewers or customers who are or become holders
of the Card and who purchase Product from VVI using the
Card ("Cardholders"). Cardholder Data already in MW's
or VVI's possession as of the Effective Date or which
MW or VVI acquires from sources other than the other
party do not constitute Cardholder Data. Customers who
have purchased Product from VVI by use of the Card
(regardless of whether such customers have also used
any other credit card) are referred to herein as
"Cardholder Customers."
(b) The parties agree that (i) all Cardholder
Data provided by MW to VVI with respect to Persons who
are not Cardholder Customers shall remain the sole
property of MW, and (ii) Cardholder Data with respect
to Cardholder Customers will be the joint property of
MW and VVI. Each of MW and VVI may exercise all rights
of ownership with respect to Cardholder Data with
respect to Cardholder Customers; provided, however,
-17-
that (x) no so-called "back-end" marketing of Products
or services by VVI to Cardholder Customers, other than
through Catalog Activities, shall include the use of
the Marks or the offering of the Card without MW's
approval, which shall not unreasonably be withheld, and
(y) VVI will not, directly or indirectly, sell or lease
to parties other than Affiliates of VVI as of the date
hereof any Cardholder Data relating to Cardholder
Customers to any Retailer or to any Person which is
engaged in the rendering of services which are in
competition with any of the MW Services as then offered
by Signature. In any sale or lease of Cardholder Data
pertaining to Cardholder Customers which is not
prohibited pursuant to the preceding sentence, VVI
shall not make available any Cardholder Data pertaining
to the Cardholder Customer's past use of the Card or
such Cardholder Customer's creditworthiness, to the
extent any such information was obtained from the MW
Group or the issuer of the Card.
(c) The obligations of the parties under
paragraphs 16(a) and 16(b) shall survive the
termination or expiration of this Agreement for a
period of five years after such termination or
expiration.
17. Representations and Warranties. The parties make
the following representations and warranties to each other:
(a) MW makes the following representations and
warranties to VVI:
(i) MW is a corporation duly organized,
existing and in good standing under the laws of
the State of Illinois;
(ii) MW has all necessary corporate
authority, and it has obtained all required
consents, to enter into this Agreement and the
Related Agreements, and that such entry shall not
constitute a breach of any other material
agreement to which MW is a party or may be bound;
(iii) MW has obtained all necessary consents,
authorizations, orders or approvals, if any, of
any governmental authority or other person
required on the part of MW for the performance by
MW or its agents of its obligations under this
Agreement and the Related Agreements;
(iv) MW possesses all material permits and
licenses, if any, necessary to the performance of
-18-
its obligations under this Agreement and the
Related Agreements;
(v) No member of the MW Group is subject to,
or obligated under, any provision of (i) their
respective articles of incorporation or by-laws,
(ii) any agreement, arrangement or understanding,
including, without limitation, the HSN Agreements,
(iii) any license, franchise or permit, or (iv)
any law, regulation, order, judgment or decree;
that would be breached or violated, or in respect
of which a right of termination or acceleration or
any encumbrances on any of their respective assets
would be created, by the execution, delivery and
performance of this Agreement and the Related
Agreements by MW;
(vi) neither the execution and delivery of
this Agreement or the Related Agreements by MW and
VVI, nor their performance thereof in accordance
with the terms thereof, will result in a violation
of any applicable law, regulations, orders,
rulings or agreements which violation would have a
material adverse effect on either MW or VVI;
(vii) MW is the user and owner of the entire
right, title and interest in and to the Marks in
the United States subject to any licenses that
have previously been granted;
(viii) MW has no knowledge of any
infringement in the United States of the rights
granted under the Restated Servicemark License
Agreement by any third party; and
(ix) MW has not granted any rights to any
third party that conflict with the rights granted
under the Restated Servicemark License Agreement.
(b) VVI makes the following representations and
warranties to MW:
(i) VVI is a corporation duly organized,
existing and in good standing under the laws of
the State of Minnesota;
(ii) VVI has all necessary corporate
authority, and has obtained all required consents,
to enter into this Agreement and the Related
Agreements and that such entry shall not
constitute the breach of any other material
agreement to which VVI is a party or may be bound;
-19-
(iii) VVI has obtained all necessary
consents, authorizations, orders or approvals, if
any, of any governmental authority or other person
required on the part of VVI for the performance by
VVI or its agents of its obligations under this
Agreement and the Related Agreements;
(iv) VVI possesses all material permits and
licenses, if any, necessary to the performance of
its obligations under this Agreement and the
Related Agreements; and
(v) VVI is not subject to, or obligated
under, any provision of (i) its articles of
incorporation or by-laws, (ii) any agreement,
arrangement or understanding, (iii) any license,
franchise or permit, or (iv) any law, regulation,
order, judgment or decree; that would be breached
or violated, or in respect of which a right of
termination or acceleration or any encumbrances on
any of its assets would be created, by the
execution and delivery of this Agreement and the
Related Agreements by VVI or the performance of
this Agreement or the Related Agreements.
(c) The representations and warranties of the
parties made in this Section 17 shall survive the
execution of this Agreement for an eighteen month
period.
18. Other Obligations of the Parties. The parties
make the following affirmative covenants to each other:
(a) MW makes the following affirmative covenants
to VVI:
(i) MW will comply in all material respects
with all applicable laws and regulations which
affect the performance in any material respect of
MW's obligations under this Agreement and the
Related Agreements.
(ii) MW shall not grant any rights to any
third party that conflict with the rights granted
under the Restated Servicemark License Agreement.
(b) VVI makes the following affirmative covenants
to MW:
(i) VVI will comply in all material respects
with all applicable laws and regulations which
affect the performance in any material respect of
-20-
VVI's obligations under this Agreement and the
Related Agreements; provided, however, that this
covenant shall not be deemed to apply to laws and
regulations with respect to the legality of the
proposed use of the Card or the Revolving Charge
Plan (as defined in the Receivables Sale and
Purchase Agreement) in accordance with the
Receivables Sale and Purchase Agreement;
(ii) not later than ninety (90) days after
the end of each fiscal year of VVI, commencing
with the fiscal year ending January 31, 1998, VVI
shall give to MW a written statement, certified as
accurate by VVI's chief financial officer, setting
forth a detailed computation of gross and net
sales of Products through Catalog Activities for
the preceding fiscal year. MW shall have the
right, exercisable upon reasonable prior notice,
to inspect and copy VVI's books and records
relating to the foregoing computations.
19. Term. Unless sooner terminated pursuant to
paragraph 22 hereof, the term of this Amended and Restated
Operating Agreement shall commence on the date hereof and
end on July 31, 2008.
20. Events of Default.
(a) The occurrence of any of the following
circumstances shall be an Event of Default by MW:
(i) MW or any member of the MW Group, as
applicable, shall be in material default of its
material obligations under this Agreement or the
Related Agreements, and such material default
shall not have been cured within 90 days after
notice thereof is given by VVI to MW; or
(ii) any of MW's representations and
warranties contained herein shall have been untrue
in a material respect when made.
(b) It shall be an Event of Default by VVI upon
the occurrence of any of the following circumstances:
(i) VVI shall be in material default of its
material obligations under this Agreement or the
Related Agreements and such material default shall
not have been cured within 90 days after written
notice thereof is given by MW to VVI; or
-21-
(ii) any of VVI's representations and
warranties contained herein shall have been untrue
in a material respect when made.
21. Termination Rights. The parties shall have the
following rights to terminate this Agreement, or portions
thereof, prior to the expiration of the term set forth in
Section 19:
(a) MW shall have the right to terminate those
provisions of this Agreement and the Related Agreements
which permit VVI to engage in Catalog Activities
through the use of the Marks and /or the Card, and
which preclude the MW Group from engaging in Catalog
Activities, if the net sales of VVI and its Affiliates
from Catalog Activities for any two consecutive fiscal
years (commencing February 1, 1997) through the use of
the Marks and/or the offering of the Card shall be less
than $40,000,000 per year. For the purposes of the
preceding sentence:
(i) net sales shall mean gross sales, less
returns, allowances and discounts and shall not
include Taxes; and
(ii) the foregoing right shall be
exercisable during a 90 day period commencing on
the date which is 90 days after the end of the
second such calendar year. If the foregoing right
is not so exercised, the first of such calendar
years shall be ignored for the purposes of
determining whether MW shall again have the right
to terminate said provisions in the event the net
sales of VVI and its Affiliates from Catalog
Activities through the use of the Marks and/or the
Card for the current year shall be less than
$40,000,000;
(b) MW shall have the right to terminate those
portions of this Agreement which pertain to Television
Home Shopping if VVI shall cease to engage in
Television Home Shopping, or in substantially similar
Product merchandising-focused television programming.
Termination pursuant this Section 21(b) shall be
effective on the date such notice is given;
(c) VVI may terminate this Agreement upon the
occurrence of any of the following events:
(i) if during any month, MW fails to pay to
VVI or to Cable Systems (where such failure to pay
Cable Systems results in VVI being required to pay
-22-
an additional amount to the Cable System, and MW
has not reimbursed VVI for such additional amount)
a minimum of 75% of the aggregate dollar amount
required to be paid by MW during said month
pursuant to all outstanding Advertising
Commitments, other than by reason of a breach or
default by such Cable System, and such failure is
not cured by MW within 60 days after written
notice thereof is given to MW by VVI, then VVI may
terminate this Agreement upon written notice to MW
given at any time during the 30 day period
immediately following the expiration of such 60
day cure period;
(ii) a petition shall be filed by or against
MW under any chapter of the Bankruptcy Code (and,
if filed against MW, such petition shall not be
dismissed within sixty days thereafter), MW shall
make an assignment for the benefit of creditors or
a composition with creditors, MW shall admit in
writing its inability to pay its debts as they
become due, or a receiver shall be appointed for
MW or any of its material assets; or
(iii) an Event of Default with respect to MW
shall occur and be continuing.
Termination pursuant to any subparagraph of this
Section 21(c) shall be effective on the date such
notice is given;
(d) MW may terminate this Agreement upon the
occurrence of any of the following events:
(i) a petition shall be filed by or against
VVI under any chapter of the Bankruptcy Code (and,
if filed against VVI, such petition shall not be
dismissed within sixty days thereafter), VVI shall
make an assignment for the benefit of creditors or
a composition with creditors, VVI shall admit in
writing its inability to pay its debts as they
become due, or a receiver shall be appointed for
VVI or any of its material assets; or
(ii) an Event of Default with respect to VVI
shall occur and be continuing.
Termination pursuant to any subparagraph of this
Section 21(c) shall be effective 60 days after the date
on which such notice is given.
-23-
Termination of this Agreement shall operate as a concurrent
termination of the Related Agreements.
22. Effects of Termination. Neither party shall have
any liability to the other party solely by reason of the
termination of this Agreement in accordance with paragraph
21, other than by reason of an Event of Default. No
termination of this Agreement or the Related Agreements
shall affect any obligation of a party under such documents
which arose prior to termination, except as provided
therein, or any obligations of VVI or MW under Section 3.1,
3.2 and 3.5 of the Receivables Sale and Purchase Agreement
in respect of credit authorizations or Credit Sales arising
prior to termination, and Customer Credits and chargebacks
relating to such credit authorizations or Credit Sales.
Notwithstanding any other provision of this Agreement to the
contrary, the termination of this Agreement shall terminate
each party's obligations hereunder, with the exception of
obligations under paragraphs 10, 16, 17, 19(b)(ii), 23, 24,
25, 26, 27 and 28, all of which shall survive any
termination of this Agreement for the periods (if any) set
forth therein and, in the absence of a stated survival
period, indefinitely.
23. VVI Indemnification Covenants.
(a) VVI shall indemnify, defend and hold harmless
the MW Group, and their respective officers, directors,
employees, agents, representatives, successors and
assigns (collectively, "MW Indemnitees") from and
against all liability, demands, claims, actions or
causes of action, assessments, losses, fines,
penalties, costs, damages and expenses, including,
without limitation, reasonable fees and disbursements
of counsel and witness fees, (collectively, "MW
Claims") which are sustained or incurred by such Person
as a result of, or arising out of or by virtue of:
(i) the failure of VVI to comply in all
material respects with, or the material breach by
VVI of any representation or warranty of VVI or of
any of the material covenants of this Agreement or
the Related Agreements to be performed by VVI
(including, without limitation, this paragraph
23);
(ii) product liability claims relating to any
Product purchased by a viewer or customer from
VVI, other than Products sold by MW to VVI which
were defective or dangerous at the time of
delivery to VVI or, if the Product was drop-
-24-
shipped directly to the customer by MW, delivery
to the customer;
(iii) material dilution, disparagement, or
loss of good will to any of the Marks as a result
of VVI's material breach of the Restated
Servicemark License Agreement; or
(iv) VVI's failure to comply in all material
respects with all applicable laws and regulations
materially affecting the performance by VVI of its
obligations under this Agreement and the Related
Agreements; provided, however, that this paragraph
(iv) shall not apply with respect to the
Receivables Sale and Purchase Agreement to the
extent it would, but for this proviso, apply to
the legality of the proposed use of the Card or
the Revolving Charge Plan (as defined in the
Receivables Sale and Purchase Agreement) in
accordance with the Restated Receivables Sale and
Purchase Agreement.
(b) Notwithstanding anything in this Agreement to
the contrary, VVI shall be liable to indemnify the MW
Indemnitees only if the aggregate amount of MW Claims
exceeds $100,000, in which event MW shall be entitled
to indemnification for all MW Claims.
(c) The indemnification covenants provided in
this paragraph 23 shall survive the termination of this
Agreement until two years after the termination hereof,
except with respect to claims made by governmental
entities or other third parties, with respect to which
the indemnification covenants shall survive until four
years after the termination hereof. Any
indemnification claim which is asserted by an MW
Indemnitee during the applicable survival period shall
survive until the final disposition thereof.
24. MW Indemnification Covenants.
(a) MW shall indemnify, defend and hold harmless
VVI, its Affiliates, and their respective officers,
directors, employees, agents, representatives,
successors and assigns (collectively, "VVI
Indemnitees") from and against all liability, demands,
claims, actions or causes of action, assessments,
losses, fines, penalties, costs, damages and expenses,
including, without limitation, fees and disbursements
of counsel and witness fees, (collectively, "VVI
Claims") which are sustained or incurred by any such
-25-
Person as a result of, or arising out of or by virtue
of:
(i) the failure of MW to comply in all
material respects with, or the material breach by
MW of any representation or warranty of MW or any
of the material covenants of this Agreement or the
Related Agreements to be performed by MW
(including, without limitation, this paragraph
24);
(ii) any challenge to the validity of any of
the Marks in the United States or right to the
limited license of any of the Marks, or any claim
that any of the Marks infringe in the United
States on the rights of a third party, as a result
of any authorized use by VVI of any of the Marks
pursuant to the Restated Servicemark License
Agreement;
(iii) product liability claims relating to
any Products sold by VVI to its viewers or
customers which were sold by MW to VVI and were
defective or dangerous at the time of delivery to
VVI, or, if the Product was drop-shipped directly
to the customer by MW, delivery to the customer;
(iv) MW's failure to comply in all material
respects with all applicable laws and regulations
materially affecting the performance by MW of its
obligations under this Agreement or the Related
Agreements, including, without limitation, any
failure of the Card or transactions under the
Receivables Sale and Purchase Agreement to comply
with all applicable laws, regulations, orders,
rulings or agreements if used in compliance with
the Receivables Sale and Purchase Agreement.
(b) Notwithstanding anything in this Agreement to
the contrary, MW shall be liable to indemnify VVI only
if the aggregate amount of VVI Claims exceeds $100,000,
in which event VVI shall be entitled to indemnification
for all VVI Claims.
(c) The indemnification covenants provided in
this paragraph 24 shall survive the termination of this
Agreement until two years after the termination hereof,
except with respect to claims made by governmental
entities or other third parties, with respect to which
the indemnification covenants shall survive until four
years after the termination hereof. Any
indemnification claim which is asserted by a VVI
-26-
Indemnitee during the applicable survival period shall
survive until the final disposition thereof.
25. Rights Upon Indemnification. The rights of the MW
Indemnitees and the VVI Indemnitees with respect to claims
asserted by any Person other than the MW Indemnitees and the
VVI Indemnitees shall be governed by the following:
(a) For the purposes of this paragraph 25, an
"Indemnified Party" shall be an MW Indemnitee or VVI
Indemnitee (as the case may be), who is entitled to
indemnification pursuant to paragraph 23 or 24, and an
"Indemnifying Party" shall be either MW or VVI, to the
extent MW or VVI shall have an obligation of
indemnification pursuant to paragraph 23 or 24.
(b) Promptly after receipt by an Indemnified
Party of notice of the commencement of any action which
may result in a claim for indemnification pursuant to
either paragraph 23 or 24, the Indemnified Party will
notify the Indemnifying Party thereof within a
reasonable time thereafter. The failure so to notify
any Indemnifying Party will not relieve it of any
liability for indemnification hereunder as to the
particular item for which indemnification may then be
sought except to the extent that the failure to give
notice shall have been prejudicial to the Indemnifying
Party.
(c) An Indemnified Party shall have the right (i)
to employ separate counsel in any action as to which
indemnification shall be sought under paragraph 23 or
24 of this Agreement and to participate in the defense
thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party
unless (x) the Indemnifying Party has agreed in writing
to pay such fees and expenses, (y) the Indemnifying
Party has failed to assume the defense thereof and
employ counsel within a reasonable period of time after
being given the notice required above, and as a
consequence thereof, the Indemnified Party has employed
separate counsel to protect its rights, or (z) the
named parties to any such action (including any
impleaded parties) include both such Indemnified Party
and the Indemnifying Party and such Indemnified Party
shall have reasonably concluded that representation of
the Indemnified Party and the Indemnifying Party by the
same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such
representation by the same counsel has been proposed)
due to actual or reasonably anticipated conflicts of
interest between the Indemnified Party and the
-27-
Indemnifying Party in the conduct of the defense of
such action (in which case the Indemnifying Party shall
not have the right to direct the defense on behalf of
the Indemnified Party). It is understood, however,
that the Indemnifying Party shall, in connection with
any one such action or separate but substantially
similar or related actions in the same jurisdiction
arising out of the same general allegations or
circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys (in
addition to any local counsel) at any time for all such
Indemnified Parties having actual or reasonably
anticipated conflicts of interest with the Indemnifying
Party.
(d) In any case in which the Indemnifying Party
has assumed the defense of the claim or has agreed to
pay the fees and expenses of counsel for the
Indemnified Party, the Indemnifying Party shall not be
liable for any settlement of such action effected by
the Indemnified Party without the written consent of
the Indemnifying Party, which consent shall not
unreasonably be withheld. No failure of an
Indemnifying Party to assume the defense of a claim or
agree to pay the fees and expenses of counsel for the
Indemnified Party shall relieve the Indemnifying Party
of any obligation of indemnification which such party
shall have under Section 23 or 24 hereof.
(e) The indemnification provided in paragraphs 23
and 24 is for the benefit of the MW Indemnitees and the
VVI Indemnitees only, and shall not be deemed to create
any right (to indemnification or otherwise) for any
other Person.
26. Non-Solicitation. For a period of two years
following termination of this Agreement for any reason, no
member of the MW Group shall employ or solicit the
employment of any officers, executive employees, or on-air
hosts of VVI, or any of the other persons named in Exhibit A
to that certain confidentiality letter, dated December 4,
1994 (or persons performing similar functions).
27. Prevailing Party. If the parties hereto become
parties to any litigation, commenced by or against one
another involving the enforcement of any rights or remedies
under this Agreement or any of the Related Agreements, or
arising on account of a default of the other party in its
performance of such party's obligations under any of the
foregoing, the prevailing party in such litigation shall be
entitled to reimbursement of all of its reasonable legal
fees, costs, and expenses incurred in connection with such
-28-
litigation, (including allocated costs of internal counsel)
and interest accrued thereon from the date of judgment, at
the maximum rate permitted by law.
28. Relationship. This Agreement and the Related
Agreements are not and shall not be construed as an
agreement of lease, partnership, agency or employment of
(x) VVI or of any of VVI's employees or agents by MW, or
(y) MW or any of MW's employees or agents by VVI. The
parties acknowledge and agree that the parties are
independent contractors whose operations are independent,
separate and apart from that of the other. Neither shall
order any merchandise, incur any indebtedness, enter into
any undertaking or make any commitment in the other party's
name or purporting to be on the other party's behalf, except
with the other party's prior written approval. Neither
party will represent, suggest or indicate in any way to any
of its customers, suppliers, printers, service companies or
other business entities that it is financially affiliated
with, backed, supported, maintained or assisted by the other
in any manner, except as may be required to implement the
terms of this Agreement and with the other party's prior
written approval.
29. Publicity. VVI and MW will jointly be responsible
for initiating news releases and related announcements
concerning this Agreement and the Related Agreements.
Disclosures required by applicable law or regulation for
either VVI or MW will be exempt from prior approval but will
be provided in advance to the other party.
30. 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 and the Related Agreements.
31. Notices. All notices, demands, requests or other
communications which may be or are required to be given
pursuant to this Agreement or any of the Related Agreements
shall be in writing and shall be personally delivered,
mailed by first-class,registered or certified mail, postage
prepaid, or sent by electronic or facsimile transmission,
addressed as follows:
If to VVI:
ValueVision International, Inc.
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6740 Shady Oak Road
Minneapolis, Minnesota 55344
Attention: Chief Executive Officer
with a copy to:
Maslon, Edelman, Borman & Brand, a
professional limited liability
partnership
3300 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4140
Attention: William M. Mower
If to MW:
Montgomery Ward & Co., Incorporated
619 West Chicago Avenue
Chicago, Illinois 60671
Attention: General Counsel
with a copy to:
Altheimer & Gray
Suite 4000
10 South Wacker Drive
Chicago, Illinois 60606
Attention: Myron Lieberman
Each party may designate by notice in writing a new address
to which any notice, demand, request or communication may
thereafter be so given, served or sent. Each notice,
demand, request or communication which shall be delivered,
mailed or transmitted in the manner described above shall be
deemed sufficiently given, served, sent or received for all
purposes at such time as it is delivered to the addressee or
at such time as delivery is refused by the addressee upon
presentation.
32. Severability. Whenever possible, each provision
of this Agreement and the Related Agreements shall be
interpreted in such a manner as to be effective and valid
under applicable law, but if one or more of the provisions
of any of such documents are subsequently declared invalid
or unenforceable, such invalidity or unenforceability shall
not in any way affect the validity or enforceability of the
remaining provisions of such documents, which shall be
applied and construed so as to reflect substantially the
intent of the parties and achieve the same economic effect
as originally intended by the terms hereof,
unless those provisions which are invalidated or
unenforceable are material to the performance of either
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party's affirmative or negative obligations under the
relevant agreement, in which case the entire such agreement
shall be terminable, at the option of the party whose rights
thereunder have been adversely affected thereby, provided
that such party must exercise its option to terminate such
agreement within ninety (90) days following the date on
which such provision is declared or determined to be
invalid, voidable or unenforceable and the other party must
be given sixty (60) days in which to agree to a valid
modification of such agreement which would substantially
eliminate such adverse effects.
33. Force Majeure. No party shall be liable for any
failure of or delay in the performance of this Agreement or
the Related Agreements for the period that such failure or
delay is due to acts of God, public enemy, war, strikes or
labor disputes, or any other cause beyond the parties'
reasonable control, it being understood that lack of
financial resources is not to be deemed a cause beyond a
party's control. If the delay or failure caused by such
force majeure condition shall continue for more than ninety
(90) days, the party which did not suffer the event shall
have the right, in its sole discretion, to terminate this
Agreement, by giving notice to the other party of its
election to terminate. Each party shall notify the other
party promptly of the occurrence of any such cause and carry
out this Agreement or any of the Related Agreements as
promptly as practicable after such cause is terminated;
provided, however, that the existence of any such cause
shall not extend the term of any agreement.
34. Waivers. Neither the waiver by any party hereto
of a breach of or a default under any of the provisions of
this Agreement or any of the Related Agreements, nor the
failure of any party hereto, on one or more occasions, to
enforce any of the provisions of any of said documents or to
exercise any right, remedy or privilege hereunder shall
thereafter be construed as a waiver of any such provisions,
rights, remedies or privileges hereunder. Any of the terms,
covenants, representations, warranties, or conditions hereof
and thereof may be waived only by a written instrument
executed by the party waiving compliance.
35. Exercise of Rights. No failure or delay on the
part of any party hereto in exercising any right, power or
privilege under this Agreement or any of the Related
Agreements, and no course of dealing between the parties
hereto shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege
under any of such documents preclude any other or further
exercise thereof or the exercise of any other right, power
or privilege.
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36. Binding Effect. Subject to the provisions hereof
and thereof restricting assignment, this Agreement and the
Related Agreements shall be binding upon and shall inure to
the benefit of the parties and their respective successors
and permitted assigns.
37. Entire Agreement. This Agreement and the Related
Agreements contain the entire agreement between the parties
hereto with respect to the matters contained herein and
therein, and supersede all prior oral or written agreements,
commitments or understandings with respect to the matters
provided for herein.
38. Pronouns. All pronouns and any variations thereof
used in this Agreement and the Related Agreements shall be
deemed to refer to the masculine, feminine, neuter, singular
or plural, as the identity of the Person or the context may
require.
39. Headings. Section headings contained in this
Agreement and the Related Agreements are inserted for
convenience of reference only, shall not be deemed to be a
part of such Agreement for any purpose, and shall not in any
way define or affect the meaning, construction or scope of
any of the provisions hereof.
40. Governing Law. This Agreement and the Related
Agreements, the rights and obligations of the parties hereto
and thereto, and any claim or disputes relating to any
thereof, shall be governed by and construed in accordance
with the internal laws of the State of Illinois, without
giving effect to the principles of conflicts of laws
thereof.
41. Execution in Counterparts. To facilitate
execution, this Agreement and the Related Agreements may
each be executed in as many counterparts as may be required,
and it shall not be necessary that the signatures of, or on
behalf of, each party, or that the signatures of all Persons
required to bind any party, appear on each counterpart; but
it shall be sufficient that the signature of, or on behalf
of, each party, or that the signatures of the Persons
required to bind any party, appear on one or more of the
counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in
making proof of this Agreement or any of the Related
Agreements to produce or account for more than the number of
counterparts containing the respective signatures of, or on
behalf of, all of the parties hereto.
42. Assignment. Neither party may assign its rights
under this Agreement or any of the Related Agreements
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without the consent of the other party, which consent may be
granted or withheld in the sole discretion of such other
party. No permitted assignment shall relieve the assignor
of its obligations (which shall be primary and which may be
discharged in whole or in part by the assignee) under this
Agreement or the Related Agreements. Any unauthorized
assignment and any assignment made in contravention of this
Section 42 shall be null and void.
43. Time. Time is to be considered of the essence for
the purposes of this Agreement and the Related Agreements.
44. Amendments and Modification. This Agreement and
the Related Agreements may only be amended or modified by a
subsequent written agreement by the parties hereto.
45. Construction. This Agreement and the Related
Agreements shall not be construed more strictly against one
party than against the other merely by virtue of the fact
that such document may have been prepared primarily by
counsel for one of the parties, it being recognized that
both parties have contributed substantially and materially
to the preparation of such documents.
46. Restructuring of MW Group. As of the date hereof,
the MW Group is exploring various potential strategic
options and restructurings, including without limitation the
potential sale of equity in MW to an investor and an entire
or partial disposition of Signature, such as by means of a
spin-off or an initial public offering (any such
transactions being referred to herein as a "Restructuring").
Provided that as a result of any such Restructuring, MW (or
any successor thereof in the Restructuring) shall remain
obligated to perform all of its obligations under this
Agreement and the Related Agreements, and Signature (or any
successor thereof in the Restructuring) shall become
obligated to perform all of its obligations under this
Agreement and the Related Agreements, VVI (i) hereby
consents to the Restructuring, and (ii) agrees to execute
such amendments to this Agreement as counsel for MW shall
deem to be reasonably necessary in order to reflect the
effects of the Restructuring on this Agreement and the
Related Agreements, including without limitation the
possibility that Signature could cease to be an Affiliate of
MW by virtue of the Restructuring.
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IN WITNESS WHEREOF, the parties hereto have executed
this Agreement effective as of the date first set forth
above.
MONTGOMERY WARD & VALUEVISION
INTERNATIONAL, INC.
CO., INCORPORATED
BY: /s/ JOHN L. WORKMAN BY: /s/ ROBERT L. JOHANDER
TITLE: Executive Vice President TITLE: Chief Executive Officer
Robert L. Johander and Nicholas M. Jaksich hereby join in
the foregoing Agreement for the sole purpose of agreeing to
be bound by clause (ii) of paragraph 11 thereof.
/s/ ROBERT L. JOHANDER /s/ NICHOLAS M. JAKSICH
Robert L. Johander Nicholas M. Jaksich
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Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘SC 13D/A’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 7/31/08 | | 21 |
| | 8/1/01 | | 12 |
| | 1/31/98 | | 21 | | | | | 10-K |
| | 2/1/97 | | 22 |
| Filed on: | | 10/2/96 |
| | 8/1/96 | | 12 |
| | 7/27/96 | | 1 |
| | 3/13/95 | | 1 | | 4 |
| | 12/4/94 | | 28 |
| List all Filings |
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