SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
Under The Securities Act of 1933
THE DIANA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-2448698
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8200 West Brown Deer Road
Suite 200
Milwaukee, Wisconsin 53223
(414) 355-0037
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Richard Y. Fisher
The Diana Corporation
8200 West Brown Deer Road
Suite 200
Milwaukee, WI 53223
(414) 355-0037
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies of all communications to:
Robert S. Risoleo
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
212/558-4000
Larry D. Lieberman
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, WI 53202
414/273-3500
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Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or reinvestment plans, please check the
following box. ___
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. X
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. ___
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ___
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. ___
CALCULATION OF REGISTRATION FEE
Proposed
Title of Each Proposed Maximum
Class of Shares Maximum Aggregate Amount of
Securities to to be Offering Price Offering Registration
be Registered Registered Per Unit Price Fee
- ------------- ---------- -------------- ---------- ------------
Common Stock 350,000 $15.5625 $5,446,875 $1,879(1)
Common Stock 158,500 $32.1875 (2) $5,101,719 $1,546
(1) Paid on February 20, 1996.
(2) Estimated solely for the purpose of calculating the registration fee
in accordance with Rule 457(c) under the Securities Act of 1933 based
on the reported average of the high and low prices of the Common Stock
on the New York Stock Exchange on October 15, 1996.
--------------------------
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
===========================================================================
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PROSPECTUS
508,500 Shares
The Diana Corporation
Common Stock
This Prospectus relates to up to 508,500 shares of common stock, $1.00
par value per share (the "Shares"), of The Diana Corporation (the
"Company") which may be offered from time to time by the selling
shareholders named herein (the "Selling Shareholders"). The Company will
not receive any of the proceeds from the sale of the Shares by the Selling
Shareholders. The Company will bear the costs relating to the registration
of the Shares, estimated to be approximately $45,000.
The Shares may be offered for sale from time to time by the Selling
Shareholders named herein, or by their pledgees, donees, transferees or
other successors in interest, to or through underwriters or directly to
other purchasers or through agents in one or more transactions on or
through the facilities of the New York Stock Exchange, Inc. ("NYSE"), in
the over-the-counter market, in one or more private transactions, or in a
combination of such methods of sale, at prices and on terms then
prevailing, at prices related to such prices, or at negotiated prices. A
Selling Shareholder may pledge all or a portion of the Shares as collateral
in loan transactions. Upon default by any such Selling Shareholder, the
pledgee in such loan transaction would have the same rights of sale as the
Selling Shareholder under this Prospectus. A Selling Shareholder may also
transfer Shares by gift, and upon any such transfer the donee would have
the same rights of sale as such Selling Shareholder under this Prospectus.
The Selling Shareholders and any brokers and dealers through whom sales of
the Shares are made may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933, as amended, and the commissions or discounts
and other compensation paid to such persons may be regarded as
underwriters' compensation.
The Shares are included for quotation on the NYSE under the symbol
"DNA". On October 18, 1996 the last sale price of a Share on the NYSE was
$32.50.
See "Risk Factors" beginning on page 3 for a discussion of certain
information that should be considered in connection with an investment in
the Shares.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------
The date of this Prospectus is October , 1996.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
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AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and
other information with the Securities and Exchange Commission (the
"Commission"). The Company has filed with the Commission a Registration
Statement on Form S-3 (the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the Shares
offered hereby. This Prospectus does not contain all the information set
forth in the Registration Statement and exhibits thereto, or amendments
thereto, to which reference is hereby made. Such reports, proxy and
information statements, Registration Statement and exhibits and other
information filed by the Company may be inspected and, upon payment of
prescribed fees, copied at the public reference facilities of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street N.W.,
Washington, D.C. 20549, and at the Regional Offices of the Commission at 7
World Trade Center, 13th Floor, New York, New York 10048, and at Suite
1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661.
The Commission maintains a web site (http://www.sec.gov) that contains
reports, proxy and other information statements and other information
regarding registrants that file electronically with the Commission. In
addition, the Company's Common Stock is included for quotation on the NYSE,
and such reports, proxy and information statements, Registration Statement
and other information concerning the Company should be available for
inspection and copying at the offices of the New York Stock Exchange, Inc.,
20 Broad Street, New York, New York 10005, on which exchange the Shares are
traded.
Forward-Looking Statements
Certain statements contained in this Prospectus, including the
documents incorporated by reference, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors, which may cause the actual results,
performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by the forward-
looking statements. Forward-looking statements include, but are not
limited to, those relating to potential customers or product deliveries,
product pricing (other than historical product pricing), projected unit or
dollar sales, anticipated financing needs or requirements for the Company
or any of its subsidiaries, statements with respect to projected costs or
capital expenditures, and product development and product roll-out plans.
Factors which may cause actual results to differ from those expressed or
implied by the forward-looking statements include, but are not limited to,
(i) those identified under "Risk Factors" beginning on page 3 hereof, (ii)
those identified or referenced under "Forward-Looking Statements" in the
Company's most recent Form 10-K, (iii) product demand, (iv) industry
conditions and developments, (v) general economic conditions and (vi) other
risks indicated in filings with the Commission.
--------------------------
No person has been authorized to give any information or to make on
behalf of the Company or any Selling Shareholder any representations, other
than those contained in this Prospectus, in connection with the offer made
hereby, and, if given or made, such other information or representation
must not be relied upon as having been authorized by the Company or any
Selling Shareholder. This Prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, any security other than the
securities offered hereby, or an offer to sell or solicitation of any offer
to buy such securities in any jurisdiction in which such offer or
solicitation is not qualified or to any person to whom such offer or
solicitation would be unlawful. Neither the delivery of this Prospectus
nor any sale made hereunder shall under any circumstances create any
implication that there has been no change in the affairs of the Company
since the date hereof or that the information contained or incorporated by
reference herein is correct as of any date subsequent to the date hereof.
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RISK FACTORS
Prior to making an investment, prospective purchasers of the Shares
should consider all of the information included or incorporated by
reference in the Prospectus and, in particular, should evaluate the
following risk factors:
Resignation of Key Employees of C&L Communications, Inc. ("C&L")
In fiscal 1996, C&L's sales were approximately 28% lower than those
for fiscal 1995. For the five months ended August 1996, C&L's sales have
decreased less then 1% compared to sales for the same period of time in
fiscal 1996 and C&L has incurred a small loss. Since prior management was
unsuccessful in implementing its business plan, the Chief Executive Officer
of C&L was replaced on October 5, 1995. Immediately thereafter, the Chief
Financial Officer and Vice President of Sales and Marketing resigned from
C&L and formed a competitive business. In addition, the sales manager and
six out of fourteen sales people, among others, resigned from C&L, some of
whom went to work for the newly formed competitor. Subsequently, C&L's
leading salesman, who was one of those who left the Company, returned to
C&L. Although C&L is now operating with a full complement of employees,
the turnover among officers and employees adversely affected C&L's results
of operations. There can be no assurances that its past level of
profitability will be restored.
Loan Covenant Violations
APC violated a financial covenant requiring net cash flow in excess of
($125,000) for the period ending July 22, 1995. The violation was waived
by the lender. A Waiver and Fifth Amendment to Loan and Security Agreement
was entered into between APC and its lender which provided for the
following financial covenants for the remainder of fiscal 1996: minimum
tangible net worth of $4,000,000 through March 29, 1996 and $4,350,000 on
March 30, 1996, net earnings of not less than $8,000 and net cash flow on a
rolling 13-period basis (measured at the end of each four week period)
ranging from ($215,000) to $500,000. APC violated the financial covenant
requiring net cash flow in excess of ($190,000) for the period ending
October 14, 1995. The violation was waived by the lender. A Waiver and
Sixth Amendment to Loan and Security Agreement was entered into between APC
and its lender which provided for the following financial covenants for the
remainder of fiscal 1996: minimum tangible net worth of $3,900,000, a net
loss of not greater than $400,000 and net cash flow on a rolling 13-period
basis (measured at the end of each four week period) ranging from
($465,000) to $230,000. At March 30, 1996, APC violated a financial
covenant requiring that the net loss for fiscal 1996 cannot exceed
$400,000. In addition, APC violated a provision regarding transactions
with affiliates due to the conversion of its $1,400,000 note payable to The
Diana Corporation into preferred stock of APC. The violations were waived
by the lender. A Waiver and Seventh Amendment to Loan and Security
Agreement was entered into between APC and its lender providing for the
following financial covenants during fiscal 1997: minimum tangible net
worth of $3,900,000 through March 28, 1997 and $4,400,000 on March 29,
1997, a net loss of not greater than $40,000 and net cash flow on a rolling
13-period basis (measured at the end of each four week period) ranging from
$385,000 to $500,000. APC violated a financial covenant requiring net cash
flow of $400,000 for the period ended June 22, 1996. The lender has not
waived this violation. However, in October 1996, APC refinanced its
revolving line of credit with a new lender. The new credit facility
provides for a revolving line of credit up to $10 million with certain
terms more favorable than the previous credit facility.
In fiscal 1996, C&L violated its financial covenant requiring a
minimum level of $1 million of pre-tax income calculated on a twelve month
rolling basis. This violation triggered a violation of certain covenants
prohibiting payments to affiliate companies. In June 1996, C&L and its
lender entered into a waiver and amendment agreement relating to these
violations and to avoid violating certain financial covenants in fiscal
1997. The amendment provides for, among other things, a change in the
computation of the minimum level of pre-tax income from that described
above to a cumulative minimum level of income from operations of $115,000
through June 30, 1996, $446,000 through September 30, 1996, $730,000
through December 31, 1996 and $1,174,000 through March 31, 1997. For
periods after March 31, 1997, the cumulative required income from
operations shall be determined by the lender based on projections made by
C&L.
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Consolidation of Long Distance and/or Local Carriers and Its Possible
Effect on the Company
Over the last few years, the telecommunications industry has
experienced significant consolidation of smaller long distance carriers.
As a result, C&L, which historically has marketed its products to smaller
long distance carriers, has experienced significant reduction in demand for
certain of its products as many of its customers were consolidated. C&L
has attempted to mitigate this problem, in part, by diversifying its
product offerings. In addition, the Company believes that the recently
enacted Federal Telecommunications Act of 1996 will benefit Sattel
Communications LLC ("Sattel") because of the potential new demand for
inexpensive and scalable switching equipment sold by Sattel.
Recent Introduction of DataNet Into the Telecommunications Market;
Limited History of Sales
Sattel's DataNet product has undergone successful internal and
external testing. Sattel did not have any sales of the DataNet product for
the twelve months ended March 30, 1996 and the first quarter of fiscal 1997.
Sattel's commercial sales during the first quarter of fiscal 1997 of $841,000
included sales of $796,000 to one customer for DSS Switches under a purchase
order. Sattel has provided the customer with an option to purchase Datanet
capability in the future. Since the product has yet to establish a
successful track record in production environments over extended periods of
time, there can be no assurance of its acceptance in volume by, and operation
in, the telecommunications market in general will be successful.
Existing Competition to Sattel's DSS Switching Products
The digital switching market in general and the Internet/Online market
in particular are extremely competitive. The Company uses a combination of
patents, trade secrets and confidentiality agreements to protect the
products and features that it believes give it competitive advantages.
There can be no assurance, however, that other competitors cannot
functionally replicate most of the Company's products and features. Many
of these competitors have much greater access to resources and funding than
does the Company. Likewise, while the Company will continue to develop new
and improved products and features, there is no guarantee that other
competitive firms cannot develop features which equal or possibly exceed
the Company's offerings.
Manufacturing Capacity and Product Margins
Sattel currently outsources its manufacturing. Final test and
assembly is performed by Sattel and Sattel Technologies, Inc. ("STI")
(California). Sattel is currently increasing its capacity every month as
well as developing new manufacturing sources. Sattel recently signed a
contract with Samina as an additional outsource manufacturer of its
products. There can be no assurance, however, that in the event of
substantial increases in demand, that Sattel can successfully deliver its
products in a timely fashion and/or without additional expense which would
result in a deterioration in product margins.
Risks Associated With Potential Expansion Into International Markets
One component of Sattel's strategy is a planned expansion into
international markets. There can be no assurance that Sattel will obtain
the permits and operating licenses required for it to operate, hire and
train employees or to market, sell and deliver high quality services, in
particular, in international markets. In addition to the uncertainty as to
Sattel's ability to expand its international presence, there are certain
risks inherent to doing business on an international level, such as
unexpected changes in regulatory requirements, trade barriers, difficulties
in staffing and managing foreign operations, longer payment cycles,
problems in collecting accounts receivable, political instability,
fluctuations in currency exchange rates, seasonal reductions in business
activity, and potentially adverse tax consequences, which could adversely
impact the success of Sattel's international operations. In many
countries, Sattel may need to enter into a joint venture or other strategic
relationships with one or more third parties in order to successfully
conduct its operations. There can be no assurance that such factors will
not have an adverse effect on Sattel's future international operations and,
consequently, on Sattel's business, results of operations and financial
condition.
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Sattel's Competition
The telecommunications switching equipment and access businesses are
highly competitive. Currently Sattel competes with or faces potential
competition from a number of national and regional telecommunications
equipment providers such as Ascend, Xylogic, Xircom, Racal Datacom, and US
Robotics. In the switching equipment segment, while Sattel provides
smaller scalable switches, there are other large manufacturers of large
scalable switches such as Lucent Technologies, Nortel, Digital Switch,
Siemens and others. While these larger manufacturers have not demonstrated
movement at this time into Sattel's target market, there is no assurance
that they will not do so in the future. It is also possible that large
communications carriers such as AT&T Corp., MCI Communications Corp. and
Sprint Corporation may enter the telecommunications access and/or switching
equipment business. In addition, the Regional Bell Operating Companies
("RBOC"), when and if legally permitted, may enter the telecommunications
access and/or switching equipment business. Many of Sattel's competitors
possess financial resources significantly greater than those of Sattel and
accordingly could initiate and support prolonged price competition to gain
market share.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated in this Prospectus by
reference:
(1) the Company's Annual Report on Form 10-K for the year ended
March 30, 1996, Form 10-K/A for the year ended March 30, 1996 filed
with the Commission on October 16, 1996 and Form 10-K/A for the year
ended April 1, 1995 filed with the Commission on July 23, 1996;
(2) the Company's Form 10-Q for the quarter ended July 20, 1996
filed with the Commission on September 3, 1996, Form 10-Q/A for the
quarter ended July 20, 1996 filed with the Commission on October 18,
1996 and Form 10-Q/A for the quarter ended January 6, 1996 filed with
the Commission on July 12, 1996;
(3) the Company's Current Reports on Form 8-K or Form 8-K/A filed
with the Commission on December 5, 1995, January 31, 1996, February
1, 1996, April 1, 1996, July 12, 1996, July 15, 1996, August 14, 1996
and September 11, 1996.
(4) the description of the Company's Common Stock contained in
the Company's Registration Statement on Form 8-A filed with the
Commission under the Exchange Act, including any amendment or report
filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company
pursuant to Section 13, 14 or 15(d) of the Exchange Act and prior to the
termination of the offering of the Common Stock offered hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a
part hereof. Such documents, and the documents listed above, are
hereinafter referred to as "Incorporated Documents." Any statement
contained herein or in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed Incorporated
Document modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
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The information relating to the Company contained in this Prospectus
summarizes, is based upon, or refers to, information and financial
statements contained in one or more Incorporated Documents; accordingly,
such information contained herein is qualified in its entirety by reference
to Incorporated Documents and should be read in conjunction therewith.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered, upon the written or oral request of
any such person, a copy of any or all of the Incorporated Documents, other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such copies
should be directed to Corporate Secretary, The Diana Corporation, 8200 West
Brown Deer Road, Suite 200, Milwaukee, Wisconsin 53223, telephone (414)
355-0037.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
by the Selling Shareholders.
RECENT DEVELOPMENTS
In May 1996, Sattel and Concentric Network Corporation ("CNC")
announced a portion of a nonbinding Memorandum of Understanding between the
two companies. Full implementation of the Memorandum of Understanding was
subject to final pricing, configuration, due diligence, and the execution
of definitive agreements. Subsequently, CNC placed an order with Sattel to
purchase DSS switches with a total of 20,000 ports. Sattel provided a $5
million bridge loan to CNC because of delays in reaching an agreement with
respect to the wholesale business (discussed in the Memorandum of
Understanding), as well as delays in CNC's overall financing arrangements.
Subsequently, the parties agreed that the wholesale business will be
conducted outside of CNC by a group including Sattel. CNC will offer the
wholesale business "most favored nation" prices, terms and conditions. CNC
granted to Sattel a warrant to purchase 551,470 shares of CNC Series D
Preferred Stock at an exercise price of $1.36 per share as additional
consideration for the bridge loan to CNC. The bridge loan was not a
condition of the Memorandum of Understanding. In August 1996, Sattel
converted the $5 million bridge loan and accrued interest thereon into
3,729,110 shares of CNC Series D Preferred Stock. In September 1996,
Sattel sold to StreamLogic Corporation 1,838,234 shares of its CNC Series D
Preferred Stock for $2.5 million.
On October 14, 1996, the Company acquired from STI its approximate 4%
ownership interest in Sattel for 15,000 shares of the Company's common
stock.
Sattel has positioned its products in the small- to medium-sized
switching market of voice, data and video communications. This target
market is less than 10,000 lines and is optimized at the 500-5,000 line
size. Sattel believes its market primarily consists of emerging and
traditional telecommunications carriers, RBOCs, international telephone
companies, long distance carriers, competitive access providers, Internet
Service Providers and wireless and cable television companies. With
products priced starting under $125,000, Sattel can target potential
customers with existing switching needs or those who can use switching
capacity to increase revenues.
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SELLING SHAREHOLDERS
The following information regarding the Shares offered hereby has been
provided to the Company by the Selling Shareholders identified below and
reflects information concerning beneficial ownership of Shares as of the
date of this Prospectus.
In recognition of the fact that the Selling Shareholders may wish to
be legally permitted to sell their Shares, other than in transactions
exempt from registration under the securities laws, when they deem
appropriate, the Company has filed with the Commission a Registration
Statement on Form S-3 under the Securities Act, of which this Prospectus
forms a part, with respect to the resale of the Shares from time to time.
The Shares may be resold in transactions on the NYSE, on which exchange the
Shares are included and traded, in other public securities markets or in
private transactions or other transactions exempt from registration under
the Securities Act. See "Plan of Distribution."
Shares Owned
Name of Prior to Shares Shares Owned
Selling Shareholder this Offering Offered Hereby(1) After Offering (1)
- ------------------- ------------- -------------- --------------
STI 330,000 330,000 0
Porridge Partners II 63,000 63,000 0
Arthur J. Samberg 21,000 21,000 0
Joseph D. Samberg 21,000 21,000 0
Ardent Research
Partners, L.P. 42,000 42,000 0
Europa International
Inc. 21,000 21,000 0
John M. Kratky 10,500 10,500 0
- -------------------
(1) Some or all of the Shares covered by this Prospectus may be offered
from time to time on a delayed or continuing basis by the Selling
Shareholders.
STI acquired 315,000 of its Shares in connection with the Company's
acquisition of an additional 30% interest in Sattel on January 16, 1996. On
October 14, 1996, STI acquired 15,000 of its shares in connection with the
Company's acquisition of an approximate 4% interest in Sattel. Since
October 1994, the Company has invested $13.9 million and issued 330,000
shares of stock in order to acquire its 80% interest in Sattel, to acquire
ownership of the intellectual property and licenses necessary to
manufacture and market DSS switches, to further engineer and advance such
switches, and to fund Sattel's startup costs, working capital and
investment in Concentric Network Corporation. STI and the Company formed
the predecessor of Sattel in 1994. STI has transferred certain
intellectual property rights to Sattel and has entered, and likely will
continue to enter, into other arrangements with Sattel in the ordinary
course of business, including supplying inventory to Sattel on agreed-upon
terms. The Chairman, President, Chief Executive Officer and majority
shareholder of STI is also a member of the Board of Directors of Sattel.
The other Selling Shareholders purchased their Shares from the Company on
March 29, 1996 in a transaction exempt from registration under the
Securities Act pursuant to Section 4(2) thereof. Arthur J. Samberg and
Joseph D. Samberg are general partners of Porridge Partners II.
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PLAN OF DISTRIBUTION
Any distribution of the Shares by a Selling Shareholder, or by
pledgees, donees, transferees or other successors in interest, may be
effected from time to time in one or more of the following transactions:
(a) to underwriters who will acquire the Shares for their own account and
resell them in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the
time of sale (any public offering price and any discount or concessions
allowed or reallowed or paid to dealers may be changed from time to time);
(b) through brokers, acting as principal or agent, in transactions (which
may involve crosses and block transactions) on or through the facilities of
the NYSE, other exchanges, in the over-the-counter market, in special
offerings, or otherwise, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices, at negotiated prices or
at fixed prices; or (c) directly or through brokers or agents in private
sales at negotiated prices, or by any other legally available means.
The Selling Shareholders and any such underwriters, brokers, dealers
or agents, upon effecting the sale of the Shares, may be deemed
"underwriters" as that term is defined by the Securities Act.
Underwriters participating in any offering made pursuant to this
Prospectus (as amended or supplemented from time to time) may receive
underwriting discounts and commissions, and discounts or concessions may be
allowed or reallowed or paid to dealers, and brokers or agents
participating in such transactions may receive brokerage or agent's
commissions or fees.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states
the Shares may not be sold unless the Shares have been registered or
qualified for sale in such state or an exemption from registration or
qualification is available and complied with.
All costs, expenses and fees in connection with the registration of
the Shares will be borne by the Company. Commissions and discounts, if
any, attributable to the sale of the Shares will be borne by the Selling
Shareholders. The Selling Shareholders and/or the Company may agree to
indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the Shares against certain liabilities,
including liabilities arising under the Securities Act. The Company and
the Selling Shareholders may agree to indemnify each other and certain
other persons against certain liabilities in connection with the offering
of the Shares, including liabilities arising under the Securities Act.
The Selling Shareholders may also sell Shares pursuant to Rule 144
under the Securities Act, or otherwise, in lieu of sales by means of this
Prospectus.
LEGAL OPINION
The validity of the Shares hereby has been passed upon by Godfrey &
Kahn, S.C.
EXPERTS
The consolidated financial statements of the Company incorporated in
this Prospectus by reference to the Annual Report on Form 10-K/A for the
year ended March 30, 1996 have been incorporated in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The consolidated financial statements of the Company appearing in its
Annual Report (Form 10-K and amendment thereto) for the year ended March
30, 1996, have been audited by Ernst & Young LLP (fiscal 1995 and 1994),
independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such financial statements are
incorporated herein in reliance upon the report of Ernst & Young LLP
pertaining to such financial statements given upon the authority of such
firms as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses to be incurred
by the Company in connection with the distribution of the securities being
registered hereby:
SEC registration fee............................. $ 3,425
Accounting fees and expenses..................... 13,000
Legal fees and expenses.......................... 25,000
Miscellaneous.................................... 3,575
------
TOTAL........................... $ 45,000
======
All of the above expenses other than the SEC registration fee are
estimates. All of the expenses listed will be paid by the Company.
Item 15. Indemnification of Directors and Officers.
Under Section 145 of the Delaware General Corporation Law, the Company
is in certain circumstances permitted, and in other circumstances may be
required, to indemnify its directors and officers against certain expenses
(including attorneys' fees) and other amounts paid in connection with
certain threatened, pending or completed civil, criminal, administrative or
investigative actions, suits or proceedings (including certain civil
actions and suits which may be instituted by or in the right of the
Company), in which such persons were or are parties, or are threatened to
be made parties, by reason of the fact that such persons were or are
directors or officers of the Company. Such section also permits the
Company to purchase and maintain insurance on behalf of its directors and
officers against liability which may be asserted against, or incurred by,
such persons in their capacities as directors or officers of the Company,
or which may arise out of their status as directors or officers of the
Company whether or not the Company would have the power to indemnify such
persons against such liability under the provisions of such section.
Under Article IX of the Company's Bylaws, the Company is in certain
instances required to indemnify its directors and officers against certain
expenses (including attorneys' fees) and other amounts paid in connection
with the defense or settlement of certain threatened, pending or completed
civil, criminal, administrative or investigative actions, suits or
proceedings (including suits which may be instituted by or in the name of
the Company), in which such persons were or are parties, or are threatened
to be made parties, by reason of the fact that such persons were or are
directors or officers of the Company.
Through insurance, the officers and directors of the Company may from
time to time also be insured for acts or omissions related to the conduct
of their duties.
The Company's Restated Certificate of Incorporation limits the
personal liability of directors to the fullest extent permitted by Delaware
law.
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Item 16. Exhibits.
The following Exhibits are filed as part of this Registration
Statement.
Exhibit No.
5.1 Opinion of Godfrey & Kahn, S.C.
10.1 Loan and Security Agreement dated January 2, 1996 between
Sanwa Business Credit Corporation and C&L Communications,
Inc., one of the Company's subsidiaries *
10.2 Exchange Agreement dated January 16, 1996 between the
Company and Sattel Technologies, Inc. *
10.3 Third Supplemental Agreement Relating to Joint Venture dated
October 14, 1996 between the Company and Sattel
Technologies, Inc.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Price Waterhouse LLP
23.3 Consent of Perisho, Tombor, Loomis & Ramirez PC
23.4 Consent of Counsel (included in Exhibit 5.1)
24.1 Powers of Attorney (See Page II-4)
* Filed on February 20, 1996
Item 17. Undertakings.
**(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
Registration Statement;
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
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**(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
**(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
**(i) The undersigned Registrant hereby undertakes that (1) for
purposes of determining any liability under the Securities Act of 1933, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective; and (2)
for the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
- -----------------------
** Paragraph references correspond to those of Item 512 of Regulation S-K.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Amendment to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Milwaukee, State of
Wisconsin, on October 21, 1996.
THE DIANA CORPORATION
/s/ Richard Y. Fisher
Chairman of the Board and President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard Y. Fisher and R. Scott
Miswald, and each of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission and any other regulatory authority, granting unto said attorney-
in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities on the dates indicated.
Signature Title Date
/s/ Richard Y. Fisher Chairman of the Board and October 21, 1996
President (Principal
Executive Officer
/s/ Bruce C. Borchardt Director October 21, 1996
/s/ Jack E. Donnelly Director October 21, 1996
/s/ James J. Fiedler Director October 21, 1996
/s/ Jay M. Lieberman Director October 21, 1996
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<PAGE>
/s/ Sydney B. Lilly Senior Vice President and October 21, 1996
Director
/s/ R. Scott Miswald Vice President, Treasurer October 21, 1996
and Secretary (Principal
Financial and Accounting
Officer)
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<PAGE>
EXHIBIT INDEX
5.1 Opinion of Godfrey & Kahn, S.C.
10.1 Loan and Security Agreement dated January 2, 1996 between
Sanwa Business Credit Corporation and C&L Communications,
Inc., one of the Company's subsidiaries *
10.2 Exchange Agreement dated January 16, 1996 between the
Company and Sattel Technologies, Inc. *
10.3 Third Supplemental Agreement Relating to Joint Venture dated
October 14, 1996 between the Company and Sattel
Technologies, Inc.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Price Waterhouse LLP
23.3 Consent of Perisho, Tombor, Loomis & Ramirez PC
23.4 Consent of Counsel (included in Exhibit 5.1)
24.1 Powers of Attorney (See Page II-4)
* Filed on February 20, 1996.
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<PAGE>
EXHIBIT 5.1
GODFREY & KAHN, S.C., ATTORNEYS AT LAW, 780 NORTH WATER STREET,
MILWAUKEE, WISCONSIN 53202-3590
We have been asked by The Diana Corporation, a Delaware corporation
(the "Company"), to render this opinion in connection with Amendment No. 2
to the Company's Registration Statement on Form S-3 to be filed with the
Securities and Exchange Commission on or about October 21, 1996 (the
"Registration Statement"), relating to the sale by certain selling
stockholders (the "Selling Stockholders") of up to an aggregate of 508,500
shares of the Company's common stock, $1.00 par value (the "Shares").
For purposes of the opinion expressed herein, we have examined: (a)
the Registration Statement, (b) copies of the Company's Certificate of
Incorporation and By-laws, as certified by the Company's Secretary, (c)
certain resolutions of the Company's Board of Directors, as certified by
the Company's Secretary and (d) such other proceedings, documents and
records as we have deemed necessary to enable us to render this opinion.
Based upon the foregoing, we are of the opinion that the Shares are
duly authorized, validly issued, fully paid and, subject to Section
180.0622(2)(b) of the Wisconsin Statutes, nonassessable.
Section 180.0622(2)(b) of the Wisconsin Statutes provides that
shareholders of a corporation may be assessed up to the par value of their
shares to satisfy the obligation of such corporation to its employees for
services rendered, but not exceeding six months service in the case of any
individual employee. Certain Wisconsin courts have interpreted "par value"
to mean the full amount paid by the purchaser of shares upon issuance
thereof. The Supreme Court of the State of Wisconsin has interpreted the
substantially similar predecessor to Section 180.0622(2)(b) of the
Wisconsin Statutes to apply to foreign corporations licensed to do
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<PAGE>
business in Wisconsin. We express no opinion regarding the applicability
of Section 180.0622(2)(b) to the Shares.
The foregoing opinion is limited to the laws of the State of Wisconsin
and the General Corporation Law of the State of Delaware.
We consent to the use of this opinion as an exhibit to the
Registration Statement. In giving this consent, however, we do not admit
that we are "experts" within the meaning of Section 11 of the Securities
Act of 1933, as amended, or within the category of persons whose consent is
required by Section 7 of said Act.
Milwaukee, Wisconsin
October 16, 1996 Very Truly Yours
/s/Godfrey & Kahn, S.C.
GODFREY & KAHN, S.C.
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<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 2 to the Registration Statement (Form S-3, No. 333-1055) and
related Prospectus of The Diana Corporation for the registration of 508,500
shares of its common stock and to the incorporation by reference therein of
our report dated June 2, 1995, with respect to the consolidated financial
statements and schedules of The Diana Corporation included in its Annual
Report (Form 10-K/A, Amendment No. 1) for the fiscal year ended March 30,
1996, and our report dated June 2, 1995, except for Note 3 as to which the
date is June 28, 1995, with respect to the consolidated financial
statements and schedules of The Diana Corporation included in its Annual
Report (Form 10-K/A, Amendment No. 1) for the fiscal year ended April 1,
1995, filed with the Securities and Exchange Commission.
Milwaukee, Wisconsin
October 16, 1996 ERNST & YOUNG LLP
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<PAGE>
EXHIBIT 23.2
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 2 to Registration Statement on Form
S-3 of our report dated June 27, 1996, except as to the stock dividend
described in Note 17 which is as of October 2, 1996, appearing on page 21
of The Diana Corporation's Annual Report on Form 10-K/A for the year ended
March 30, 1996. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
October 16, 1996
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<PAGE>
EXHIBIT 23.3
Consent of Perisho Tombor Loomis & Ramirez PC
We consent to the reference to our firm in the Registration Statement (Form
S-3) and related Prospectus of The Diana Corporation for the registration
of 508,500 shares of its common stock and to the incorporation by reference
therein of our report dated October 20, 1995, with respect to the audited
financial statements of Valley Communications, Inc. ("Valley") for the
years ended October 31, 1992, 1993, 1994 and for the ten months ended
August 31, 1995, included in The Diana Corporation's Current Report on Form
8-K filed with the Securities and Exchange Commission on January 31, 1996.
San Jose, California
Perisho Tombor Loomis & Ramirez PC
October 16, 1996
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