<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 1, 1996
--------------------
NATIONAL MEDIA CORPORATION
---------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware I-6715 13-2658741
--------------------- ----------------------- ---------------------
(State or other juris- (Commission File Number) (IRS Employer Identi-
diction of incorporation) fication No.)
1700 Walnut Street, Philadelphia, PA 19103
- ------------------------------------ ----------
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code 215-772-5000
------------------
N/A
------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
____________________________________
Exhibit Index appears on Page 41
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
On July 1, 1996, pursuant to the terms of that certain Acquisition
Agreement, dated as of May 29, 1996, by and among National Media
Corporation (the "Company"), Paul Meier, Susan Barnes and Prestige
Marketing Holdings Limited (the "Prestige Acquisition Agreement"), the
Company acquired Prestige Marketing Limited and Prestige
Marketing International Limited (collectively, "Prestige"). On July 2,
1996, pursuant to the terms of that certain Acquisition Agreement,
dated as of May 30, 1996, by and among the Company, Paul Meier, Susan
Barnes, Alan Meier and Tancot Pty Limited (the "Suzanne Paul
Acquisition Agreement"), the Company acquired Suzanne Paul Holdings Pty
Limited and its operating subsidiaries (collectively, "Suzanne Paul").
The acquisitions of Prestige and Suzanne Paul are collectively referred
to as the "Acquisitions."
Pursuant to the terms of the Prestige Acquisition Agreement, the
shareholders of Prestige received an aggregate of approximately $4.2
million in cash and 706,651 shares of the Company's Common Stock.
Pursuant to the terms of the Suzanne Paul Acquisition Agreement, the
shareholders of Suzanne Paul received an aggregate of 81,228 shares of
the Company's Common Stock and a $2.8 million note payable by the
Company which matures on December 5, 1996. The Company also satisfied a
dividend payable to the former shareholders of Suzanne Paul in an
approximate amount of $4.6 million, which was funded by the Company
with borrowings under the Company's revolving credit facility.
Upon consummation of the Acquisitions, each of Paul Meier, Susan Barnes
and Alan Meier, former principals of Prestige and Suzanne Paul, entered
into five (5) year employment agreements (the "Employment Agreements").
The Employment Agreements provide that (i) Paul Meier shall be engaged
as, and hold the positions of, Chief Executive Officer of Prestige,
shall also serve as Chief Executive Officer of Suzanne Paul and shall
serve as Executive Vice President of the Company; (ii) Susan Barnes
shall be engaged as, and hold the positions of, Vice President of
Prestige and Suzanne Paul; and (iii) Alan Meier shall be engaged as,
and hold the positions of, Vice President of Prestige and Suzanne Paul.
The Employment Agreements provide for annual base salaries of
NZ$327,797, NZ$218,531 and AUS$191,131 for each of Paul Meier, Susan
Barnes and Alan Meier, respectively, and provide that each of such
officers may participate in, and be eligible for bonuses pursuant to,
the Company's Management Incentive Plan and shall be entitled to
participate in all other benefit programs generally available to
officers of the Company and its subsidiaries. In addition, pursuant to
the Employment Agreements, each of Paul Meier, Susan Barnes and Alan
Meier are provided with an automobile allowance.
Copies of the Prestige Acquisition Agreement, the Suzanne Paul
Acquisition Agreement and the Employment Agreements of each of Paul
Meier, Susan Barnes and Alan Meier are attached hereto as Exhibits 2.1,
2.2, 99.1, 99.2 and 99.3, respectively.
A copy of the press release announcing the consummation of the
Acquisitions is attached hereto as Exhibit 99.4.
-2-
<PAGE>
<TABLE>
<CAPTION>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
------------------------------------------------------------------
(a) Financial Statements of Businesses Acquired.
-------------------------------------------
<S> <C>
PRESTIGE MARKETING LIMITED FINANCIAL STATEMENTS
Company Directory as at March 31, 1996....................................... 4
Directors' Report for the year ended March 31, 1996.......................... 5
Auditor's Report............................................................. 6
Statement of Financial Position as at March 31, 1996 and 1995................ 7
Statement of Movements in Equity for the years ended March 31, 1996 and
1995........................................................................ 8
Statement of Financial Performance for the years ended March 31, 1996
and 1995.................................................................... 9
Statement of Cash Flows for the years ended March 31, 1996 and 1995.......... 10
Notes to the Financial Statements............................................ 11
PRESTIGE MARKETING INTERNATIONAL LIMITED FINANCIAL STATEMENTS
Company Directory as at March 31, 1996....................................... 16
Directors' Report for the year ended March 31, 1996.......................... 17
Auditor's Report............................................................. 18
Statement of Financial Position as at March 31, 1996 and 1995................ 19
Statement of Movements in Equity for the years ended March 31, 1996 and
1995........................................................................ 20
Statement of Financial Performance for the years ended March 31, 1996
and 1995.................................................................... 21
Statement of Cash Flows for the years ended March 31, 1996 and 1995.......... 22
Notes to the Financial Statements............................................ 23
SUZANNE PAUL HOLDINGS PTY LIMITED GROUP SPECIAL PURPOSE COMBINED
FINANCIAL STATEMENTS
Report of Independent Auditors............................................... 26
Combined Balance Sheets as of March 31, 1996 and June 30, 1995............... 27
Combined Statements of Operations for the nine months ended March 31,
1996 and year ended June 30, 1995........................................... 28
Combined Statements of Shareholders' Equity for the nine months ended
March 31, 1996 and year ended June 30, 1995................................. 29
Combined Statements of Cash Flows for the nine months ended March 31,
1996 and year ended June 30, 1995........................................... 30
Notes to the Combined Financial Statements................................... 31
</TABLE>
-3-
<PAGE>
PRESTIGE MARKETING LIMITED
COMPANY DIRECTORY
AS AT 31 MARCH 1996
<TABLE>
<C> <S> <C>
NATURE OF BUSINESS Direct Response TV Marketing
REGISTERED OFFICE 531 Great South Road
Penrose
AUCKLAND
DIRECTORS P E Meier
S Barnes
SECRETARY P E Meier
AUDITORS Ernst & Young
AUCKLAND
BANKERS ASB Bank
Commercial Division
AUCKLAND
SOLICITORS Shanahan & Co.
AUCKLAND
BUSINESS LOCATION AUCKLAND
SHAREHOLDERS P E Meier 1 ordinary
Prestige Marketing Holdings Ltd 99 ordinary
------------
100 ordinary
============
</TABLE>
-4-
<PAGE>
PRESTIGE MARKETING LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 1996
<TABLE>
<CAPTION>
$NZ
-----------
<S> <C>
Operating surplus for the year $ 3,789,006
Retained earnings at 1 April 1995 2,293,352
-----------
Leaving available for appropriation 6,082,358
Proposed dividend --
-----------
Leaving retained earnings at 31 March 1996 of 6,082,358
-----------
The directors recommend that no dividend be paid.
It is not proposed to make any transfer to reserves.
The state of the company's affairs at 31 March 1996 was:
Assets totalled 9,747,385
-----------
These were financed by
Shareholders funds of 6,082,458
Liabilities of 3,664,927
-----------
$ 9,747,385
===========
</TABLE>
The company is in the business of direct response TV marketing. The nature of
the company's business has not changed during the year under review.
As required by section 199T of the Companies Act 1955 we disclose the following
information:
Directors' interests: There were no transactions entered into between the di-
rectors and the company.
Use of company information: The Board received no notices during the year from
directors requesting to use company information received in their capacity as
directors which would not have been otherwise available to them.
Share Dealing: No director acquired or disposed of any interest in shares in
the company during the year.
Remuneration and other benefits: Directors remuneration paid during the year or
due and payable is as follows:
<TABLE>
<CAPTION>
$NZ
-----------------
1996 1995
-------- --------
<S> <C> <C>
P E Meier $471,268 $643,768
S Barnes 370,380 532,980
</TABLE>
For and on behalf of the Board
Paul E. Meier /s/
- ---------------------------- Director 24-5-96 Date
Susan Barnes /s/
- ---------------------------- Director 24-5-96 Date
-5-
<PAGE>
AUDITOR'S REPORT
To the Shareholders of Prestige Marketing Limited
We have audited the financial statements on pages 7 to 10. The financial
statements provide information about the past financial performance of the com-
pany and its financial position as at 31 March 1995 and 31 March 1996. This in-
formation is stated in accordance with the accounting policies set out on pages
11 and 12.
Directors' Responsibilities
The directors are responsible for the preparation of financial statements which
comply with generally accepted accounting practice and give a true and fair
view of the financial position of the company as at 31 March 1995 and 31 March
1996 and of the results of its operations and cash flows for the years ended on
those dates.
Auditor's Responsibilities
It is our responsibility to express an independent opinion on the financial
statements presented by the directors and report our opinion to you.
Basis of Opinion
An audit includes examining, on a test basis, evidence relevant to the amounts
and disclosures in the financial statements. It also includes assessing:
. the significant estimates and judgements made by the directors in the prepa-
ration of the financial statements; and
. whether the accounting policies are appropriate to the company's circum-
stances, consistently applied and adequately disclosed.
We conducted our audit in accordance with generally accepted auditing standards
in New Zealand. We planned and performed our audit so as to obtain all the in-
formation and explanations which we considered necessary in order to provide us
with sufficient evidence to give reasonable assurance that the financial state-
ments are free from material misstatements, whether caused by fraud or error.
In forming our opinion we also evaluated the overall adequacy of the presenta-
tion of information in the financial statements.
Other than in our capacity as auditor we have no relationship with, or interest
in, the company.
Unqualified Opinions
We have obtained all the information and explanations we have required.
In our opinion:
. proper accounting records have been kept by the company so far as appears
from our examination of those records; and
. the financial statements on pages 7 to 10:
--comply with generally accepted accounting practice; and
--give a true and fair view of the financial position of the company as at
31 March 1995 and 31 March 1996 and the results of its operations and cash
flows for the years ended on those dates.
Our audit was completed on 24 May 1996 and our unqualified opinions are ex-
pressed as at that date.
Ernst & Young
Auckland, New Zealand
-6-
<PAGE>
PRESTIGE MARKETING LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 1996
<TABLE>
<CAPTION>
$NZ
--------------------------
NOTE 1996 1995
---- ---------- ----------
<S> <C> <C> <C>
CURRENT ASSETS
Cash on hand 663 791
Bank 873,243 387,361
Accounts receivable--trade 3,328,972 2,198,697
Prepayments 68,354 23,350
Intercompany receivables 10 1,248,968 522,753
Inventories 2 3,064,325 1,507,941
---------- ----------
8,584,525 4,640,893
Goodwill 27,542 --
Fixed Assets 3 1,135,318 544,940
---------- ----------
TOTAL ASSETS $9,747,385 $5,185,833
========== ==========
CURRENT LIABILITIES
Accounts payable--trade 1,001,114 1,100,865
Accruals 618,520 351,554
Revenue in advance 46,722 25,722
Intercompany payables 10 344,535 43,890
GST payable 206,940 93,201
Provision for taxation 835,168 398,978
Shareholders' current accounts 5 611,928 878,171
---------- ----------
3,664,927 2,892,381
SHAREHOLDERS EQUITY
Issued capital 6 100 100
Retained earnings 6,082,358 2,293,352
---------- ----------
6,082,458 2,293,452
---------- ----------
TOTAL FUNDS EMPLOYED $9,747,385 $5,185,833
========== ==========
</TABLE>
For and on behalf of the Board
Paul E. Meier /s/ Director
Susan Barnes /s/ Director
24-5-96 Date 24-5-96 Date
The accompanying notes form part of these financial statements.
-7-
<PAGE>
PRESTIGE MARKETING LIMITED
STATEMENT OF MOVEMENTS IN EQUITY
FOR THE YEAR ENDED 31 MARCH 1996
<TABLE>
<CAPTION>
$NZ
---------------------
1996 1995
---------- ----------
<S> <C> <C>
Equity at 1 April 2,293,452 865,003
Operating surplus for period 3,789,006 1,428,449
---------- ----------
Equity at 31 March $6,082,458 $2,293,452
========== ==========
</TABLE>
The accompanying notes form part of these financial statements.
-8-
<PAGE>
PRESTIGE MARKETING LIMITED
STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 31 MARCH 1996
<TABLE>
<CAPTION>
$NZ
----------------------------
NOTE 1996 1995
---- ----------- -----------
<S> <C> <C> <C>
Operating Revenue 7 25,556,214 17,698,686
Cost of sales 8,095,966 7,616,938
----------- -----------
Gross profit 17,460,248 10,081,748
Expenses 8 11,550,196 7,648,974
----------- -----------
Operating surplus before taxation 5,910,052 2,432,774
Taxation expense 4 2,121,046 1,004,325
----------- -----------
Net surplus after taxation $ 3,789,006 $ 1,428,449
=========== ===========
</TABLE>
The accompanying notes form part of these financial statements.
-9-
<PAGE>
PRESTIGE MARKETING LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 1996
<TABLE>
<CAPTION>
$NZ
-----------------------------
NOTE 1996 1995
---- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Receipts from customers 21,136,644 15,364,864
Interest received 63,271 34,439
----------- -----------
21,199,915 15,399,303
----------- -----------
Cash was disbursed to:
Payments to suppliers and employees 16,464,983 13,185,073
Income tax paid 1,684,856 633,825
Interest paid 49,742 862
----------- -----------
18,199,581 13,819,760
----------- -----------
Net cash inflow from operating activities 12 3,000,334 1,579,543
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was applied to:
Purchase of fixed assets 854,175 429,602
Increase in loans and advances 569,915 500,000
Purchase of goodwill 31,249 --
----------- -----------
1,455,339 929,602
----------- -----------
Net cash outflow from investing activities (1,455,339) ( 929,602)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was applied to:
Advances on shareholders current accounts 1,059,241 355,558
----------- -----------
Net cash outflow from financing activities (1,059,241) ( 355,558)
----------- -----------
Net increase in cash held 485,754 294,383
Add opening cash brought forward 388,152 93,769
----------- -----------
Ending cash carried forward $ 873,906 $ 388,152
=========== ===========
</TABLE>
The accompanying notes form part of these financial statements.
-10-
<PAGE>
PRESTIGE MARKETING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 1996
1. STATEMENT OF ACCOUNTING POLICIES
Reporting Entity
Prestige Marketing Limited is a private company registered under the Companies
Act 1955.
Prestige Marketing Limited is a reporting entity for purposes of the Financial
Reporting Act 1993. The financial statements of Prestige Marketing Limited
have been prepared in accordance with the Financial Reporting Act 1993.
Measurement Base
The accounting principles recognised as appropriate for the measurement and
reporting of earnings and financial position on a historical cost basis are
followed by the company.
Specific Accounting Policies
The following specific accounting policies which materially affect the mea-
surement of financial performance and financial position have been applied:
. Accounts receivable are stated at their estimated realisable value.
. Inventories are stated at the lower of cost, determined on a first-in
first-out basis, and net realisable value.
. Fixed assets are stated at cost less aggregate depreciation. Depreciation
has been calculated using the maximum rates permitted by the Income Tax Act
1976.
<TABLE>
<S> <C>
Motor vehicles 20%-26% DV
Fixtures and fittings 9.5%-25% DV
Office equipment 20%-40% DV
Plant 9.5%-50% DV
</TABLE>
. Goodwill represents the excess of the purchase consideration over the fair
value of net tangible and identifiable assets acquired at the time of ac-
quisition of a business or an equity interest in a subsidiary, in-substance
subsidiary or associate.
Goodwill is amortised by the straight line method over the period during
which benefits are expected to be received. This is a maximum of 5 years.
. Operating lease payments, where the lessors effectively retain substan-
tially all the risks and benefits of ownership of the leased items, are in-
cluded in the determination of the operating profit in equal instalments
over the lease term.
. Transactions in foreign currencies are converted at the New Zealand rate of
exchange ruling at the date of receipt or payment for the transaction. At
balance date foreign monetary assets and liabilities are translated at the
closing rate and variations arising from these translations are included in
the Statement of Financial Performance.
The income tax expense charged to the statement of financial performance
includes both the current year's provision and the income tax effects of
timing differences calculated using the liability method.
Tax effect accounting is applied on a comprehensive basis to all timing
differences. A debit balance in the deferred tax account, arising from tim-
ing differences or income tax benefits from income tax losses, is only
recognised if there is virtual certainty of realisation.
. The financial statements have been prepared on a GST exclusive basis.
. The company qualifies for differential reporting as it is not publicly ac-
countable and there is no separation between the owners and the governing
body. The company has applied all available differential reporting exemp-
tions except for the exemption in respect of FRS-10 Statement of Cash Flows
and SSAP-12 Accounting for Income Tax.
-11-
<PAGE>
PRESTIGE MARKETING LIMITED
NOTES TO THE FINANCIAL STATEMENTS--CONTINUED
Changes in Accounting Policies
There have been no changes in accounting policies. All policies have been ap-
plied on bases consistent with those used in previous years.
2. INVENTORY
<TABLE>
<CAPTION>
$NZ
---------------------
1996 1995
---------- ----------
<S> <C> <C>
Goods in transit 903,127 250,924
Inventory 2,161,198 1,257,017
---------- ----------
$3,064,325 $1,507,941
========== ==========
</TABLE>
3. FIXED ASSETS
<TABLE>
<CAPTION>
$NZ
------------------------------
1996
AGGREG
COST DEPREC BOOK VALUE
---------- -------- ----------
<S> <C> <C> <C>
Motor vehicles 237,829 76,360 161,469
Fixtures & fittings 94,487 23,010 71,477
Office equipment 602,360 179,147 423,213
Plant 523,138 261,522 261,616
Capital Work in Progress 217,543 -- 217,543
---------- -------- ----------
$1,675,357 $540,039 $1,135,318
========== ======== ==========
<CAPTION>
$NZ
------------------------------
1995
AGGREG
COST DEPREC BOOK VALUE
---------- -------- ----------
<S> <C> <C> <C>
Motor vehicles 182,852 45,596 137,256
Fixtures & fittings 51,285 14,705 36,580
Office equipment 238,704 83,785 154,919
Plant 356,555 140,370 216,185
Capital Work in Progress -- -- --
---------- -------- ----------
$ 829,396 $284,456 $ 544,940
========== ======== ==========
</TABLE>
4. TAXATION
<TABLE>
<CAPTION>
$NZ
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Net profit before tax 5,910,052 2,432,774
Add back
Timing differences not recognised 402,907 424,393
Permanent differences 22,002 5,277
---------- ----------
Net taxable income $6,334,961 $2,862,444
========== ==========
Taxation charge at 33% 2,090,537 944,607
Prior year tax adjustment (117) --
Additional tax 30,626 59,718
---------- ----------
Taxation expense $2,121,046 $1,004,325
========== ==========
</TABLE>
-12-
<PAGE>
PRESTIGE MARKETING LIMITED
NOTES TO THE FINANCIAL STATEMENTS--CONTINUED
Accumulated tax effect of timing differences not recognised amount to
$NZ273,009 asset (1995: $NZ140,050 asset).
<TABLE>
<CAPTION>
$NZ
---------------------
1996 1995
---------- ----------
<S> <C> <C>
Imputation credit account
Opening balance 1,007,892 402,545
Payments to Inland Revenue 1,694,460 594,000
RWT credits attached to interest income 19,434 11,347
---------- ----------
Closing balance $2,721,786 $1,007,892
========== ==========
</TABLE>
5. SHAREHOLDERS' CURRENT ACCOUNTS
Balances at year end:
<TABLE>
<CAPTION>
$NZ
-----------------
1996 1995
-------- --------
<S> <C> <C>
P E Meier 311,722 524,466
S Barnes 300,206 353,705
-------- --------
Total amount owing to shareholders $611,928 $878,171
======== ========
</TABLE>
6. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
$NZ
---------
1996 1995
---- ----
<S> <C> <C>
Authorised capital--100 ordinary shares of $1 each $100 $100
==== ====
Issued and paid up capital--100 ordinary shares of $1 each $100 $100
==== ====
</TABLE>
7. OPERATING REVENUE
<TABLE>
<CAPTION>
$NZ
-----------------------
1996 1995
----------- -----------
<S> <C> <C>
Sales 22,376,497 17,047,884
Interest received 63,271 34,439
Foreign currency gains 15,028 1,341
Gain on sale of fixed assets 3,726 --
Other income 3,097,692 615,022
----------- -----------
$25,556,214 $17,698,686
=========== ===========
</TABLE>
8. EXPENSES
Operating surplus was arrived at after charging the following expenses:
<TABLE>
<CAPTION>
$NZ
----------------------
1996 1995
----------- ----------
<S> <C> <C>
Depreciation 267,253 141,222
Bad and doubtful debt expense 235,777 117,529
Interest expense 49,742 862
Loss on disposal of assets -- 3,481
Rental and operating lease expenses 172,452 116,372
Amortisation of goodwill 3,707 --
Donations 5,606 --
Other expenses 10,815,659 7,269,508
----------- ----------
$11,550,196 $7,648,974
=========== ==========
</TABLE>
-13-
<PAGE>
PRESTIGE MARKETING LIMITED
NOTES TO THE FINANCIAL STATEMENTS--CONTINUED
9. DIRECTORS' REMUNERATION
The total value of Directors' remuneration including non-monetary benefits was
$NZ841,648 (1995: $NZ1,176,748).
10. RELATED PARTIES
During the year Prestige Marketing Limited had the following transactions with
related parties:
----------------------------------------------------------------
<TABLE>
<CAPTION>
RELATED PARTY RELATIONSHIP TYPE OF TRANSACTION
------------- ------------ -------------------
<S> <C> <C>
Prestige Marketing Holdings Ltd Parent Company Advances
Prestige Marketing International Limited Sister Company License Fees
Suzanne Paul Pty Australia Limited Common Shareholders Export Sales
P E Meier Ultimate Shareholder Salary, Directors fee
S Barnes Ultimate Shareholder Salary, Directors fee
</TABLE>
11. LEASE AND CAPITAL COMMITMENTS
The company has no lease and capital commitments.
12. RECONCILIATION OF NET SURPLUS AFTER TAXATION WITH CASH INFLOW FROM
OPERATING ACTIVITIES
<TABLE>
<CAPTION>
$NZ
------------------------
1996 1995
----------- -----------
<S> <C> <C>
Reported surplus after taxation 3,789,006 1,428,449
Add/(less) non-cash items:
Depreciation 267,523 141,222
Loss/(Gain) on sale of fixed assets (3,726) 3,481
Amortisation of goodwill 3,707 --
----------- -----------
267,504 144,703
Add/(less) items classified as investing activities
Intercompany advance 569,915 500,000
Add/(less) items classified as financing activities
Advances on shareholders current accounts 1,059,241 355,558
Movement in working capital:
Increase in debtors (1,130,275) (1,685,989)
Increase in other current assets (726,215) (522,753)
Increase in prepayments (45,004) (13,165)
Increase in inventory (1,556,384) (713,338)
Increase in taxation payable 436,190 370,500
Increase in trade creditors (99,751) 462,516
Increase in accrued liabilities 494,906 360,728
Increase in other current liabilities (58,799) 892,334
----------- -----------
(2,685,332) (849,167)
----------- -----------
Net cash inflow from operating activities $ 3,000,334 $ 1,579,543
=========== ===========
</TABLE>
-14-
<PAGE>
PRESTIGE MARKETING LIMITED
NOTES TO THE FINANCIAL STATEMENTS--CONCLUDED
13. INVESTMENT IN ASSOCIATE
Prestige Marketing Limited has a 50% investment in Quantum Prestige Limited.
Quantum Prestige Limited is in the business of direct response TV marketing.
The shares are unpaid at 31 March 1996. The company has a balance date of 31
March and has an operating surplus after tax of $NZ nil for the year ended 31
March 1996.
14. CONTINGENT LIABILITIES
Prestige Marketing Limited is acting as a guarantor of a $NZ 1,850,000 loan for
Prestige Marketing Holdings Limited.
15. DIFFERENCES BETWEEN NEW ZEALAND GENERALLY ACCEPTED ACCOUNTING PRACTICE ("NZ
GAAP") AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("US GAAP").
The financial statements have been prepared in accordance with the NZ GAAP. The
accounting policies of the company also comply with US GAAP as at 31 March 1995
and 31 March 1996 and therefore the financial results would not require amend-
ment if the financial statements were to be prepared in accordance with US
GAAP.
-15-
<PAGE>
PRESTIGE MARKETING INTERNATIONAL LIMITED
COMPANY DIRECTORY
AS AT 31 MARCH 1996
<TABLE>
<S> <C>
</TABLE>
NATURE OF BUSINESS International Marketing
REGISTERED OFFICE 531 Great South Road
Penrose
AUCKLAND
DIRECTORS P E Meier
S Barnes
SECRETARY P E Meier
AUDITORS Ernst & Young
AUCKLAND
BANKERS ASB Bank
Commercial Division
AUCKLAND
SOLICITORS Shanahan & Co.
AUCKLAND
BUSINESS LOCATION AUCKLAND
SHAREHOLDERS Prestige Marketing Holdings Ltd
1,000 ordinary
---
1,000 ordinary
---
---
-16-
<PAGE>
PRESTIGE MARKETING INTERNATIONAL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 1996
The Board of Directors present their Annual Report including financial state-
ments of the company for the year ended 31 March 1996.
As required by section 211 of the Companies Act 1993 we disclose the following
information:
NATURE OF BUSINESS: The company is in the business of international marketing.
The nature of the company's business has not changed during the year under re-
view.
DIRECTORS' INTERESTS: There were no transactions entered into between the di-
rectors and the company.
REMUNERATION AND OTHER BENEFITS: No remuneration was paid to the directors dur-
ing the year.
AUDIT FEES: No audit fees were payable to any person.
DONATIONS: No donations were made by the company during the year.
DIRECTORS: P E Meier and S Barnes held office as directors during the year. No
other person held the office of director at any time during the year.
EMPLOYEE REMUNERATION: No employee received remuneration and any other benefits
of more than $NZ100,000 during the year.
For and on behalf of the Board
Paul E. Meier /s/ Director 24-5-96
Date
Susan Barnes /s/ Director 24-5-96
Date
-17-
<PAGE>
AUDITOR'S REPORT
To the Shareholders of Prestige Marketing International Limited
We have audited the financial statements on pages 19 to 22. The financial
statements provide information about the past financial performance of the com-
pany and its financial position as at 31 March 1995 and 31 March 1996. This in-
formation is stated in accordance with the accounting policies set out on page
23.
Directors' Responsibilities
The directors are responsible for the preparation of financial statements which
comply with generally accepted accounting practice and give a true and fair
view of the financial position of the company as at 31 March 1995 and 31 March
1996 and of the results of its operations and cash flows for the years ended on
those dates.
Auditor's Responsibilities
It is our responsibility to express an independent opinion on the financial
statements presented by the directors and report our opinion to you.
Basis of Opinion
An audit includes examining, on a test basis, evidence relevant to the amounts
and disclosures in the financial statements. It also includes assessing:
. the significant estimates and judgements made by the directors in the prepa-
ration of the financial statements; and
. whether the accounting policies are appropriate to the company's circum-
stances, consistently applied and adequately disclosed.
We conducted our audit in accordance with generally accepted auditing standards
in New Zealand. We planned and performed our audit so as to obtain all the in-
formation and explanations which we considered necessary in order to provide us
with sufficient evidence to give reasonable assurance that the financial state-
ments are free from material misstatements, whether caused by fraud or error.
In forming our opinion we also evaluated the overall adequacy of the presenta-
tion of information in the financial statements.
Other than in our capacity as auditor we have no relationship with, or interest
in, the company.
Unqualified Opinions
We have obtained all the information and explanations we have required.
In our opinion:
. proper accounting records have been kept by the company so far as appears
from our examination of those records; and
. the financial statements on pages 19 to 22:
--comply with generally accepted accounting practice; and
--give a true and fair view of the financial position of the company as at
31 March 1995 and 31 March 1996 and the results of its operations and cash
flows for the years ended on those dates.
Our audit was completed on 24 May 1996 and our unqualified opinions are ex-
pressed as at that date.
Ernst & Young
Auckland, New Zealand
-18-
<PAGE>
PRESTIGE MARKETING INTERNATIONAL LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 1996
<TABLE>
<CAPTION>
$NZ
------------------------
NOTE 1996 1995
---- ---------- --------
CURRENT ASSETS
<S> <C> <C> <C>
Bank 290,076 5,268
Accounts receivable--trade 451,251 90,780
GST receivable 104,781 29,644
Intercompany receivables 6 816,889 10,000
---------- --------
TOTAL ASSETS $1,662,997 $135,692
---------- --------
CURRENT LIABILITIES
<CAPTION>
Accruals 74,678 75,263
<S> <C> <C> <C>
Intercompany payables 6 179,053 22,753
Provision for taxation 88,511 --
---------- --------
342,242 98,016
SHAREHOLDERS EQUITY
Issued capital 3 10,000 10,000
Retained earnings 1,310,755 27,676
---------- --------
1,320,755 37,676
---------- --------
TOTAL FUNDS EMPLOYED $1,662,997 $135,692
========== ========
</TABLE>
For and on behalf of the Board
Paul E. Meier /s/ Susan Barnes /s/
Director
Director
24-5-96 24-5-96
Date
Date
The accompanying notes form part of these financial statements.
-19-
<PAGE>
PRESTIGE MARKETING INTERNATIONAL LIMITED
STATEMENT OF MOVEMENTS IN EQUITY
FOR THE YEAR ENDED 31 MARCH 1996
<TABLE>
<CAPTION>
$NZ
------------------
1996 1995
---------- -------
<S> <C> <C>
Equity at 1 April 37,676 10,000
Operating surplus for period 1,283,079 27,676
---------- -------
Equity at 31 March $1,320,755 $37,676
========== =======
</TABLE>
The accompanying notes form part of these financial statements.
-20-
<PAGE>
PRESTIGE MARKETING INTERNATIONAL LIMITED
STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 31 MARCH 1996
<TABLE>
<CAPTION>
$NZ
------------------------
NOTE 1996 1995
---- ---------- --------
<S> <C> <C> <C>
Operating Revenue 4 2,823,230 374,598
Expenses 5 908,173 272,244
---------- --------
Operating surplus before taxation 1,915,057 102,354
Taxation expense 2 631,978 74,678
---------- --------
Net surplus after taxation $1,283,079 $ 27,676
========== ========
</TABLE>
The accompanying notes form part of these financial statements.
-21-
<PAGE>
PRESTIGE MARKETING INTERNATIONAL LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 1996
<TABLE>
<CAPTION>
$NZ
------------------------
NOTE 1996 1995
---- ---------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Receipts from customers 1,575,490 244,174
Interest received 5,243 --
---------- --------
1,580,733 244,174
---------- --------
Cash was disbursed to:
Payments to suppliers and employees 750,564 174,228
Income tax paid 543,467 74,678
Interest paid 1,894 --
---------- --------
1,295,925 248,906
---------- --------
Net cash inflow(outflow) from operating activities 8 284,808 (4,732)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was provided from:
Proceeds from issue of shares -- 10,000
---------- --------
Net cash inflow from financing activities -- 10,000
---------- --------
Net increase in cash held 284,808 5,268
Add opening cash brought forward 5,268 --
---------- --------
Ending cash carried forward $ 290,076 $ 5,268
========== ========
</TABLE>
The accompanying notes form part of these financial statements.
-22-
<PAGE>
PRESTIGE MARKETING INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 1996
1. STATEMENT OF ACCOUNTING POLICIES
Reporting Entity
Prestige Marketing International Limited is a company registered under the Com-
panies Act 1993.
Prestige Marketing International Limited is a reporting entity for purposes of
the Financial Reporting Act 1993. The financial statements of Prestige Market-
ing International Limited have been prepared in accordance with the Financial
Reporting Act 1993.
Measurement Base
The accounting principles recognised as appropriate for the measurement and re-
porting of earnings and financial position on a historical cost basis are fol-
lowed by the company.
Specific Accounting Policies
The following specific accounting policies which materially affect the measure-
ment of financial performance and financial position have been applied:
. Accounts receivable are stated at their estimated realisable value.
. Transactions in foreign currencies are converted at the New Zealand rate of
exchange ruling at the date of receipt or payment for the transaction. At
balance date foreign monetary assets and liabilities are translated at the
closing rate and variations arising from these translations are included in
the Statement of Financial Performance.
. The income tax expense charged to the statement of financial performance in-
cludes both the current year's provision and the income tax effects of tim-
ing differences calculated using the liability method.
Tax effect accounting is applied on a comprehensive basis to all timing
differences. A debit balance in the deferred tax account, arising from tim-
ing differences or income tax benefits from income tax losses, is only
recognised if there is virtual certainty of realisation.
. The financial statements have been prepared on a GST exclusive basis.
. The company qualifies for differential reporting as it is not publicly ac-
countable and there is no separation between the owners and the governing
body. The company has applied all available differential reporting exemp-
tions except for the exemption in respect of FRS-10 Statement of Cash Flows
and SSAP-12 Accounting for Income Tax.
Changes in Accounting Policies
There have been no changes in accounting policies. All policies have been ap-
plied on bases consistent with those used in previous years.
2. TAXATION
<TABLE>
<CAPTION>
$NZ
-------------------
1996 1995
---------- --------
<S> <C> <C>
Net profit before tax 1,915,057 102,354
Add back
Permanent differences -- 585
---------- --------
Net taxable income $1,915,057 $102,939
========== ========
Taxation charge at 33% 631,969 33,970
Additional tax 9 40,708
---------- --------
Taxation expense $ 631,978 $ 74,678
========== ========
IMPUTATION CREDIT ACCOUNT
Opening balance -- --
Payments to Inland Revenue 453,982 --
RWT credits attached to interest income 1,716 --
---------- --------
Closing balance $ 455,698 $ --
========== ========
</TABLE>
-23-
<PAGE>
PRESTIGE MARKETING INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS--CONTINUED
3. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
$NZ
---------------
1996 1995
------- -------
<S> <C> <C>
Authorised capital--1,000 ordinary shares $10,000 $10,000
======= =======
Issued and paid up capital--1,000 ordinary shares $10,000 $10,000
======= =======
</TABLE>
4. OPERATING REVENUE
<TABLE>
<CAPTION>
$NZ
-------------------
1996 1995
---------- --------
<S> <C> <C>
Commission 2,562,826 374,598
Interest received 5,243 --
Other income 255,161 --
---------- --------
$2,823,230 $374,598
========== ========
</TABLE>
5. EXPENSES
Operating surplus was arrived at after charging the following expenses:
<TABLE>
<CAPTION>
$NZ
-----------------
1996 1995
-------- --------
<S> <C> <C>
Interest expense 1,894 --
Other expenses 906,279 272,244
-------- --------
$908,173 $272,244
======== ========
</TABLE>
6. RELATED PARTIES
During the year Prestige Marketing International Limited had the following
transactions with related parties:
---------------------------------------------------------
<TABLE>
<CAPTION>
RELATED PARTY RELATIONSHIP TYPE OF TRANSACTION
------------- ------------ -------------------
<S> <C> <C>
Prestige Marketing Holdings Ltd Parent Company Advances
Prestige Marketing Limited Sister Company License Fees
Suzanne Paul Pty Australia Limited Common Shareholders Commission
</TABLE>
7. LEASE AND CAPITAL COMMITMENTS
The company has no lease and capital commitments.
8. RECONCILIATION OF NET SURPLUS AFTER TAXATION WITH CASH INFLOW (OUTFLOW) FROM
OPERATING ACTIVITIES
<TABLE>
<CAPTION>
$NZ
-------------------
1996 1995
--------- --------
<S> <C> <C>
Reported surplus after taxation 1,283,079 27,676
Movement in working capital:
Increase in debtors (360,471) (90,780)
Increase in other current assets (882,026) (39,644)
Increase in taxation payable 88,511 --
Increase/(decrease) in accrued liabilities (585) 75,263
Increase in other current liabilities 156,300 22,753
--------- --------
(998,271) (32,408)
--------- --------
Net cash inflow/(outflow) from operating activities $ 284,808 $ (4,732)
========= ========
</TABLE>
-24-
<PAGE>
PRESTIGE MARKETING INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS--CONCLUDED
9. CONTINGENT LIABILITIES
The company has no contingent liabilities.
10. DIFFERENCES BETWEEN NEW ZEALAND GENERALLY ACCEPTED ACCOUNTING PRACTICE ("NZ
GAAP") AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("US
GAAP").
The financial statements have been prepared in accordance with the NZ GAAP. The
accounting policies of the company also comply with US GAAP as at 31 March 1995
and 31 March 1996 and therefore the financial results would not require amend-
ment if the financial statements were to be prepared in accordance with US
GAAP.
-25-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
National Media Corporation
This report is issued at the request of National Media Corporation in connec-
tion with their acquisition of the Suzanne Paul Holdings Pty Limited Group of
companies in Australia. The special purpose financial statements have been pre-
pared on the basis of Accounting Policies outlined in Note 1 and do not include
all the disclosures needed under Australian requirements.
We have audited the accompanying combined balance sheets of Suzanne Paul Hold-
ings Pty Limited Group as of March 31, 1996 and June 30, 1995, and the related
statements of operations, cash flows, and shareholders' equity for the nine
months ended March 31, 1996 and the year ended June 30, 1995.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of mate-
rial misstatement. An audit includes examining, on a test basis, evidence sup-
porting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by the management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined balance sheets of Suzanne Paul
Holdings Pty Limited Group at March 31, 1996 and June 30, 1995, and the com-
bined results of its operations and its cash flows for the nine months ended
March 31, 1996 and the year ended June 30, 1995 in conformity with generally
accepted accounting principles.
Ernst & Young
Sydney, Australia
June 7, 1996
-26-
<PAGE>
SUZANNE PAUL HOLDINGS PTY LIMITED GROUP
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
---------- ----------
MARCH 31, JUNE 30,
1996 1995
$A $A
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $1,017,069 $ 713,150
Accounts receivable (net) 4,166,985 2,195,327
Inventories 2,270,024 872,013
Prepaid expenses and other current assets 1,246,263 410,509
Due by related party 229,425 --
---------- ----------
Total current assets 8,929,766 4,190,999
Property and equipment (net) 600,301 536,995
Intangible assets (net) 2,578 3,437
Deferred income taxes 237,378 135,178
---------- ----------
TOTAL ASSETS $9,770,023 $4,866,609
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 628,488 $ 490,552
Accrued expenses 269,373 88,074
Due to related parties 1,109,730 703,883
Income tax payable 1,870,993 819,646
---------- ----------
Total current liabilities 3,878,584 2,102,155
Shareholders' equity:
Ordinary shares, $A1 par value, issued 1,001 1,001 1,001
Retained earnings 5,890,438 2,763,453
---------- ----------
Total shareholders' equity 5,891,439 2,764,454
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $9,770,023 $4,866,609
========== ==========
</TABLE>
See accompanying notes to combined financial statements.
-27-
<PAGE>
SUZANNE PAUL HOLDINGS PTY LIMITED GROUP
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
----------- -----------
9 MONTHS YEAR
ENDED ENDED
MARCH 31, JUNE 30,
1996 1995
$A $A
----------- -----------
<S> <C> <C>
Revenues:
Product sales $21,667,815 $12,446,370
Other revenues 100,598 56,687
----------- -----------
Net revenues 21,768,413 12,503,057
Operating costs and expenses:
Direct costs 4,138,249 2,012,520
Selling, general, and administrative 9,477,507 5,601,028
Interest expense 3,255,669 2,693,794
----------- -----------
Total operating costs and expenses 16,871,425 10,307,342
----------- -----------
Income before income taxes 4,896,988 2,195,715
Income taxes 1,770,003 723,893
----------- -----------
Net income $ 3,126,985 $ 1,471,822
=========== ===========
</TABLE>
See accompanying notes to combined financial statements.
-28-
<PAGE>
SUZANNE PAUL HOLDINGS PTY LIMITED GROUP
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
---------------------
9 MONTHS
ENDED YEAR ENDED
MARCH 31, JUNE 30,
1996 1995
$A $A
---------- ----------
<S> <C> <C>
Common stock (of Suzanne Paul Holdings Pty Ltd)
Beginning balance $ 1,001 $ 1,001
---------- ----------
Ending balance 1,001 1,001
Retained earnings:
Beginning balance 2,763,453 1,291,631
Net income 3,126,985 1,471,822
---------- ----------
Ending balance 5,890,438 2,763,453
---------- ----------
TOTAL SHAREHOLDERS' EQUITY $5,891,439 $2,764,454
========== ==========
</TABLE>
See accompanying notes to combined financial statements.
-29-
<PAGE>
SUZANNE PAUL HOLDINGS PTY LIMITED GROUP
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
----------- -----------
9 MONTHS
ENDED YEAR ENDED
MARCH 31, JUNE 30,
1996 1995
$A $A
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,126,985 $ 1,471,822
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 126,509 88,526
Increase in:
Accounts receivable, net (1,971,658) (1,771,315)
Inventories (1,398,011) (589,954)
Deferred costs (102,200) (100,618)
Other current assets (835,754) (124,852)
Increase in:
Accrued expenses 137,936 36,961
Income taxes payable 181,299 357,648
Other 1,051,347 757,207
Accounts payable 176,422 323,063
----------- -----------
Net cash provided by operating activities 492,875 448,488
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (188,956) (501,210)
----------- -----------
Net cash used in investing activities (188,956) (501,210)
----------- -----------
Net increase (decrease) in cash and cash equiva-
lents 303,919 (52,722)
Cash and cash equivalents at beginning of year 713,150 765,872
----------- -----------
Cash and cash equivalents at end of year $ 1,017,069 $ 713,150
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Taxes on income $ 819,646 $ 461,998
=========== ===========
</TABLE>
See accompanying notes to combined financial statements.
-30-
<PAGE>
SUZANNE PAUL HOLDINGS PTY LIMITED GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
MARCH 31, 1996
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Suzanne Paul Holdings Pty Limited is engaged in the direct marketing of con-
sumer products principally through television media by the operating companies,
Suzanne Paul Australia Pty Ltd. And Telemall Shopping Pty Ltd.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
These combined financial statements are a pro forma amalgamation of Suzanne
Paul Holdings Pty Ltd, Suzanne Paul (Australia) Pty Ltd, and Telemall Shopping
Pty Ltd. with disregard to present ownership as it is intended that all three
companies in the "group" be acquired by National Media Corporation, a U.S.
listed company.
Basis of Accounting
The financial statements have been prepared in accordance with the historic
cost convention and going concern principle.
Adjustments to Conform to Accounting Principles Generally Accepted in the
United States
The historical records of the three companies are kept in accordance with gen-
erally accepted accounting principles in Australia and in local currency. These
combined financial statements have been prepared in conformity with accounting
principles generally accepted in the United States and do not differ from those
kept for statutory purposes in Australia.
Reserve for Returned Merchandise
It is the Company's policy to refund unconditionally the total price of mer-
chandise returned within 30 days. The Company provides an allowance, based upon
experience, for returned merchandise. The allowance for returns was $A351,000
and $A234,000 at March 31, 1996 and June 30, 1995, respectively.
Cash and Cash Equivalents
For the purposes of the statements of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less when pur-
chased to be cash equivalents.
Accounts Receivable
The allowance for doubtful accounts was $A257,000 and $A130,000 at March 31,
1996 and June 30, 1995, respectively.
Inventories
Inventories consist principally of products purchased for resale, and are
stated at the lower of cost (determined by the first-in, first-out method) or
market.
Property and Equipment and Depreciation and Amortization
Property and equipment is stated at cost. Depreciation and amortization are
provided using the reducing balance sheet method based on the estimated useful
lives of the assets.
Income Taxes
The Company uses the liability method of accounting for income taxes. Under the
liability method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.
Joint Ventures
Suzanne Paul Holdings Pty Ltd (SPH) has a 50% interest in the assets, liabili-
ties and output of a joint venture company being incorporated. The other joint
venture partner is Quantum International, a wholly owned subsidiary
-31-
<PAGE>
SUZANNE PAUL HOLDINGS PTY LIMITED GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--CONTINUED
of National Media Corporation. The joint venture made no contribution to the
results for the period at March 31, 1996. The joint venture will be wound up if
the group is acquired by National Media Corporation.
Goodwill
Goodwill represents the excess of the purchase consideration over the fair
value of identifiable net assets acquired at the time of acquisition of a busi-
ness. Goodwill is amortized by the straight-line method over the period during
which benefits are expected to be received. This is taken as being 5 years. Am-
ortization was $A859 and $A1,145 the nine month period ended March 31, 1996 and
the year ended June 30, 1995, respectively.
Advertising Costs
All advertising costs are expensed as incurred. The total amount charged to ad-
vertising expense was $A3,873,000 and $A2,013,000 for the nine months ended
March 31, 1996 and the year ended June 30, 1995, respectively.
2. ACCRUED EXPENSES
Accrued expenses include the following:
<TABLE>
<CAPTION>
--------- --------
MARCH 31, JUNE 30,
1996 1995
$A $A
--------- --------
<S> <C> <C>
Fringe benefits tax $ 30,000 $ --
Sales tax -- 3,927
Superannuation 70,434 11,602
Holiday pay 37,659 27,726
Employee taxes 43,374 43,042
Withholding tax 87,906 1,777
-------- -------
$269,373 $88,074
======== =======
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
--------- --------
MARCH 31, JUNE 30,
1996 1995
$A $A
--------- --------
<S> <C> <C>
Furniture, fixtures, and office equipment $779,087 $590,133
Motor vehicles 108,000 108,000
-------- --------
887,087 698,133
Less accumulated depreciation 286,786 161,138
-------- --------
Total $600,301 $536,995
======== ========
</TABLE>
Depreciation expense for property and equipment was $A125,648 and $A87,381 for
the nine months ended March 31, 1996 and the year ended June 30, 1995, respec-
tively.
-32-
<PAGE>
SUZANNE PAUL HOLDINGS PTY LIMITED GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--CONTINUED
4. INCOME TAX
<TABLE>
<CAPTION>
---------- ----------
1996 1995
$A $A
---------- ----------
<S> <C> <C>
(A)INCOME TAX EXPENSE $4,896,988 $2,195,715
Income tax prima facie payable on reported
operating profit at 36% and 33%, respectively 1,762,916 724,586
Tax effect of permanent differences:
Goodwill amortization 309 378
Non tax deductible costs 6,778 (1,071)
---------- ----------
Charge to profit and loss account $1,770,003 $ 723,893
(B)INCOME TAX PAYABLE
Charge to property and loss account as above.
Increase (decrease) in amount payable due to
timing
differences, comprising:
--Increase in allowance for doubtful accounts $ 45,720 $ 42,900
--Increase in allowance for returned
merchandise 42,120 55,110
--Increase in allowance for employee
entitlements 2,350 (2,257)
--Allowance for fringe benefits tax 10,800 --
---------- ----------
Estimated liability on current period's profit $1,870,993 $ 819,646
========== ==========
(C)DEFERRED INCOME TAX BENEFIT (FUTURE INCOME
TAX BENEFIT)
Balance at beginning of period $ 135,178 $ 34,560
Transfer for current year resulting from
timing differences 102,200 100,618
---------- ----------
Balance at end of period $ 237,378 $ 135,178
========== ==========
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
The Company rents warehouse and office space under various operating leases
which expire September 1997. Future minimum lease payments (exclusive of real
estate taxes and other operating expenditures) as of March 31, 1996 under
noncancellable operating leases with initial or remaining terms of one year or
more are as follows for the year ending March 31:
<TABLE>
<CAPTION>
--------
$A
--------
<S> <C>
1997 $249,892
1998 71,946
--------
$321,838
========
</TABLE>
6. PENSION PLAN
As the group has no pension plan of its own under Australian statutory require-
ments, for every employee, the Company must remit to the Government up to 5% of
gross salary to a maximum amount, for a Superannuation Guarantee Levy. Once the
employee reaches the age of 65, the Government will provide a pension payment.
Superannuation payments in respect of this levy were $A79,273 and $A61,367 for
the nine month period ended March 31, 1996 and the year ended June 30, 1995,
respectively.
7. SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates in Australia and is engaged in the direct marketing of
products principally through television.
-33-
<PAGE>
SUZANNE PAUL HOLDINGS PTY LIMITED GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--CONCLUDED
8. LITIGATION
Action regarding "Super Slicer"
In December 1995, an application was lodged via the Federal Court of Australia
to restrain K-Tel International (Australia) Pty Limited from selling, advertis-
ing, or distributing in Australia a household utensil known as "super slicer."
Action by Telemall MOH Pty Ltd
In September 1995, the Company received communication seeking to restrain it
from using the name Telemall Shopping as it is alleged that the name Telemall
Shopping confuses the public with the name Telemall MOH Pty Ltd used by a South
Australian company.
9. RELATED PARTY TRANSACTIONS
The following related party transactions occurred during the financial period.
The following transactions are with companies that have a common shareholding
to the Suzanne Paul Group:
Nine months ended March 31, 1996
. Royalties are due to Prestige International to the amount of $A773,000. The
royalty agreement was made under normal commercial terms and conditions.
. An amount of $A229,425 is due from Prestige Marketing. The balance is for
management fees and programming fees. These fees are based on normal commer-
cial terms and conditions.
. A loan was obtained from Tancot Pty Ltd, a company wholly owned by Alan J J
Meier. The balance outstanding is $A414,029. No repayment terms have been
agreed and no interest has been paid or is due.
. A directors fee for $A54,077 was paid to Alan J J Meier. No other director
received any benefits.
. A management fee of $A150,000 was paid to Tancot Pty Ltd in respect of serv-
ices provided by Alan J J Meier. The transaction was made under normal com-
mercial terms and conditions.
Year ended June 30, 1995
. An amount of $A71,946 is payable to Prestige Marketing for management fees
and royalties.
. A directors fee for $A69,712 was paid to Alan J J Meier. No other director
received any benefits.
. Management fees and consulting fees for $A314,767 were paid to Tancot Pty
Ltd in respect of services provided by Alan J J Meier. The consulting fee
and the management fee for $A218,386 remain unpaid at June 30, 1995.
-34-
<PAGE>
(b) Pro Forma Financial Information.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following Pro Forma Consolidated Balance Sheet (unaudited) at March 31, 1996
and Pro Forma Consolidated Statement of Income (unaudited) for the 12 months
ended March 31, 1996 give pro forma effect to the acquisitions of
DirectAmerica Corporation ("DirectAmerica")(solely for Pro Forma Statement of
Income data), Positive Response Television, Inc.("Positive Response"), Prestige
and Suzanne Paul (the "Acquisitions") as if such transactions occurred as of
April 1, 1995 for the Pro Forma Consolidated Statement of Income and as of March
31, 1996 for the Pro Forma Consolidated Balance Sheet. The Pro Forma
Consolidated Financial Statements do not give effect to any synergies or costs
savings which may result from the Acquisitions, including potential cost savings
resulting from (i) integrating Positive Response's fulfillment operations with
those of the Company, (ii) discounts available from increases in the volume of
media time purchased and (iii) the elimination of duplicative costs as a result
of Positive Response no longer being a public company.
The pro forma information is based on (i) the historical consolidated financial
statements of the Company, (ii) the historical combined financial statements of
DirectAmerica, (iii) the historical consolidated financial statements of
Positive Response, (iv) a combination of the historical financial statements of
Prestige included herein and (v) the historical combined financial statements of
Suzanne Paul included herein, giving effect to the Acquisitions under the
purchase method of accounting and the assumptions and adjustments described in
the accompanying notes to the Pro Forma Consolidated Financial Statements. The
allocation of the aggregate purchase price for the Acquisitions, together with
the liabilities assumed pursuant thereto, to the net assets acquired pursuant
to the Acquisitions has been based on management's preliminary estimates of the
fair value of such assets and liabilities. The final allocation may differ from
these estimates. The purchase price for the Acquisitions does not include
contingent consideration which may be required to be paid in connection with the
DirectAmerica, Prestige and Suzanne Paul acquisitions, but does include the
shares of Common Stock issued into escrow which may be payable in connection
with the Positive Response acquisition.
The pro forma information does not purport to be indicative of the combined re-
sults of operations or financial position that would have been reported had
these transactions taken place as of April 1, 1995, with respect to the Pro
Forma Consolidated Statements of Income data, or as of March 31, 1996, with re-
spect to the Pro Forma Consolidated Balance Sheet data, or future results of
operations or financial position of the Company. The Pro Forma Consolidated Fi-
nancial Statements should be read in conjunction with the Company's historical
consolidated financial statements and the notes thereto, the historical fi-
nancial statements and notes thereto of DirectAmerica and Positive Response and
the historical financial statements and notes thereto of Prestige and Suzanne
Paul included elsewhere herein.
-35-
<PAGE>
Pro Forma Consolidated Statement of Income (unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
Year Ended March 31, 1996
Historical
----------------------------------------------------
Adjustments
National Direct Positive Suzanne for
Media America Response Prestige(1) Paul (2,3) Acquisitions (4) Pro Forma
---------- ------- -------- ----------- ---------- ---------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Dollars in thousands, except per
share data
Revenues:
Product sales... $ 285,676 $ -- $43,362 $17,097 $19,330 $ -- $ 365,465
Royalties....... 5,597 1,485 1,971 1,701 -- (3,268)(5) 7,486
Production
income......... -- 692 -- -- -- (270)(5) 422
Sales
commissions and
other revenues. 1,334 8 173 -- 1 -- 1,516
---------- ------ ------- ------- ------- ------- ----------
Net revenues.... 292,607 2,185 45,506 18,798 19,331 (3,538) 374,889
Operating costs
and expenses:
Media purchases. 86,518 -- 23,437 2,822 3,585 -- 116,362
Direct costs ... 151,198 1,266 20,934 8,361 9,295 (3,380)(5) 187,674
Selling, general
and (100)(6)
administrative. 33,772 1,011 6,029 2,430 2,314 2,060 (7) 47,516
Interest income. -- -- (36) (11) (73) -- (120)
Interest
expense........ 1,015 -- -- -- -- 811 (8) 1,826
---------- ------ ------- ------- ------- ------- ----------
Total operating
costs and
expenses....... 272,503 2,277 50,364 13,602 15,121 (609) 353,258
---------- ------ ------- ------- ------- ------- ----------
Income (loss)
before income
taxes.......... 20,104 (92) (4,858) 5,196 4,210 (2,929) 21,631
Income taxes.... 3,525 18 (1,648) 1,827 1,504 381 (9) 5,607
---------- ------ ------- ------- ------- ------- ----------
Net income
(loss)......... $ 16,579 $ (110) $(3,210) $ 3,369 $ 2,706 $(3,310) $ 16,024
========== ====== ======= ======= ======= ======= ==========
Income per share
Primary......... $ 0.74 $ 0.64 (10)
========== ==========
Fully-diluted... $ 0.71 $ 0.61 (10)
========== ==========
Weighted average
number of common
and common
equivalent
shares
outstanding
Primary......... 23,175,900 26,114,138 (10)
========== ==========
Fully-diluted... 23,287,600 26,225,838 (10)
========== ==========
</TABLE>
- ---------
(1) Amounts included for Prestige have been translated from New Zealand dollars
to U.S. dollars at the approximate average exchange rate during the year
ended March 31, 1996 (US$1.0 = NZ$1.506).
(2) Amounts included for Suzanne Paul have been translated from Australian dol-
lars to U.S. dollars at the approximate average exchange rate during the
year ended March 31, 1996 (US$1.0 = A$1.336).
(3) Historically, Suzanne Paul's fiscal year end is June 30. Fourth quarter net
revenues for the year ended June 30, 1995 were 33.6% of Suzanne Paul's to-
tal net revenues for the year ended June 30, 1995. As such, 33.6% of each
fiscal 1995 statement of income item was added to the corresponding item
for the 9 month period ended March 31, 1996 for the purpose of determining
Suzanne Paul's historical statement of income for the year ended March 31,
1996.
(4) Represents the pro forma adjustments related to the DirectAmerica, Positive
Response, Prestige and Suzanne Paul acquisitions.
(5) Reflects the elimination of (i) royalty and production revenue generated by
DirectAmerica and Positive Response and the related expense incurred by the
Company from infomercials produced by DirectAmerica and Positive Response
for the Company and (ii) royalty and production revenue generated by Pres-
tige and the related expense incurred by Suzanne Paul under an existing
royalty and production agreement between them.
(6) Reflects the reduction in base salary of a major DirectAmerica shareholder
under his new employment agreement with the Company.
-36-
<PAGE>
(7) Reflects the amortization of goodwill in connection with the Acquisitions,
which will be amortized over 20 years from the date of the relevant Acqui-
sition.
(8) Reflects the interest expense associated with the note payable of $2.8 mil-
lion maturing on December 5, 1996 and the borrowings under the Company's
revolving credit facility to fund the cash portion of the purchase price
and the $4.6 million dividend paid in connection with the Prestige and Su-
zanne Paul acquisitions.
(9) Reflects the reduced tax benefit resulting from the application of the
Company's lower effective tax rate for the period to Positive Response's
losses and also reflects the increased tax benefit received as a result of
the interest expense incurred in connection with the Prestige and Suzanne
Paul acquisitions.
(10) Pro forma net income per share is computed as follows (in thousands,
except per share amounts):
<TABLE>
<CAPTION>
Fully-
Primary Diluted
---------- ----------
<S> <C> <C>
Company's weighted average shares and common equivalent
shares outstanding: 23,175,900 23,287,600
Assumed issuance of shares for the Acquisitions:
DirectAmerica (additional shares for period prior to
acquisition date (October 25, 1995)).................... 313,586 313,586
Positive Response........................................ 1,836,773 1,836,773
Prestige................................................. 706,651 706,651
Suzanne Paul............................................. 81,228 81,228
---------- ----------
Pro forma weighted average shares........................ 26,114,138 26,225,838
========== ==========
Pro forma net income..................................... $ 16,024 $ 16,024
Addback to net income under the "if converted" method.... 570 --
---------- ----------
Pro forma net income for the Acquisitions................ $ 16,594 $ 16,024
========== ==========
Pro forma net income per share........................... $ 0.64 $ 0.61
========== ==========
</TABLE>
-37-
<PAGE>
<TABLE>
<CAPTION> PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
--------------------------------------------------------------------
AT MARCH 31, 1996
HISTORICAL
-------------------------------------
ADJUSTMENTS
NATIONAL POSITIVE SUZANNE FOR
MEDIA RESPONSE PRESTIGE(1) PAUL(2) ACQUISITIONS(3) PRO FORMA
-------- -------- ----------- ------- --------------- ----------
Dollars in thousands
<S> <C> <C> <C> <C> <C> <C>
Assets
Current Assets:
Cash and cash
equivalents............ $ 18,405 $ 2,487 $ 792 $ 797 $ 375(4) $ 22,856
Accounts receivable,
net.................... 32,051 5,469 3,857 3,441 (2,644)(4,5,6) 42,174
Inventories............. 22,605 2,022 2,086 2,563 (400)(6) 28,876
Prepaid expenses and
other.................. 19,323 7,265 65 189 (1,000)(6) 25,842
-------- ------- ------- ------- ------- --------
Total current assets.... 92,384 17,243 6,800 6,990 (3,669) 119,748
Property and equipment,
net.................... 6,954 618 773 470 -- 8,815
Other assets............ 2,907 676 -- 186 (762)(6) 3,007
Goodwill and
intangibles, net....... 14,303 -- 19 2 35,410 (6) 49,734
-------- ------- ------- ------- ------- --------
Total assets............ $116,548 $18,537 $ 7,592 $ 7,648 $30,979 $181,304
======== ======= ======= ======= ======= ========
Liabilities and
Shareholders' Equity
Current Liabilities:
Notes payable to bank... $ -- $ 1,578 $ -- $ -- $ -- $ 1,578
Accounts payable........ 20,412 1,329 681 492 -- 22,914
Accrued expenses........ 26,510 3,366 396 211 775 (5,6) 31,258
Sellers' note........... -- -- -- -- 2,800 (6) 2,800
Current portion of long-
term debt and capital
lease obligations...... 876 25 -- -- -- 901
Other................... 5,864 401 1,059 2,332 (502)(4,5) 9,154
-------- ------- ------- ------- ------- --------
Total current
liabilities............ 53,662 6,699 2,136 3,035 3,073 68,605
Long-term debt and
capital lease
obligations............ 4,054 85 -- -- 9,139 (7) 13,278
Other liabilities....... 2,370 -- -- -- -- 2,370
Shareholder current
account................ -- -- 417 -- (417)(4) --
-------- ------- ------- ------- ------- --------
Total liabilities....... 60,086 6,784 2,553 3,035 11,795 84,253
Shareholders' equity.... 56,462 11,753 5,039 4,613 19,184 (6) 97,051
-------- ------- ------- ------- ------- --------
Total liabilities and
shareholders' equity... $116,548 $18,537 $ 7,592 $ 7,648 $30,979 $181,304
======== ======= ======= ======= ======= ========
</TABLE>
- ---------
(1) Amounts included for Prestige have been translated from New Zealand dollars
to U.S. dollars at the approximate exchange rate in effect as of March 31,
1996 (US$1.0 = NZ$1.4688).
(2) Amounts included for Suzanne Paul have been translated from Australian dol-
lars to U.S. dollars at the approximate exchange rate in effect as of March
31, 1996 (US$1.0 = A$1.2774).
(3) Reflects the pro forma adjustments related to the Positive Response, Pres-
tige and Suzanne Paul acquisitions.
(4) Reflects the settlement of advances between the prior shareholders of Pres-
tige and Suzanne Paul and the respective acquired companies.
(5) Reflects the elimination of intercompany balances.
(6) Reflects the excess of the purchase price for the Positive Response, Pres-
tige and Suzanne Paul acquisitions over the net assets acquired under the
purchase method of accounting. The purchase price allocation for Positive
Response, Prestige and Suzanne Paul are based on management's preliminary
estimates of the fair value of assets acquired and liabilities assumed. The
consideration for each of the acquisitions is as follows: Positive Response:
reflects issuance of 1,836,773 shares of the Company's Common Stock, 211,146
of which were issued into escrow and may be payable under certain
circumstances, valued at $25.9 million. Prestige: reflects issuance of
706,651 shares of the Company's Common Stock valued at $13.2 million and
payment of approximately $4.2 million in cash. Suzanne Paul Holdings:
reflects issuance of 81,228 shares of the Company's Common Stock valued at
$1.5 million and a note payable of $2.8 million maturing on December 5,
1996. The Company satisfied a dividend payable to the former shareholders
of Suzanne Paul in the amount of $4.6 million, which was funded by the
Company with borrowings under the Company's revolving credit facility .
(7) Reflects borrowings under the Company's revolving credit facility required
to fund the cash portion of the purchase price and related dividend payable
in connection with the Prestige and Suzanne Paul acquisitions.
<PAGE>
(c) Exhibits.
--------
2.1 Acquisition Agreement, dated of May 29, 1996, by and among
National Media Corporation, Paul Meier, Susan Barnes and Prestige
Marketing Holdings Limited.
2.2 Acquisition Agreement, dated of May 30, 1996, by and among
National Media Corporation, Paul Meier, Susan Barnes, Alan Meier
and Tancot Pty Limited.
23.1 Consent of Ernst & Young with respect to the financial
statements of Prestige Marketing Limited.
23.2 Consent of Ernst & Young with respect to the financial statements
of Prestige Marketing International Limited.
23.3 Consent of Ernst & Young with respect to the financial statements
of Suzanne Paul Holdings Pty Limited Group.
99.1 Employment Agreement, dated as of July 2, 1996, by and between
Prestige Marketing Limited and Paul Meier.
99.2 Employment Agreement, dated as of July 2, 1996, by and between
Prestige Marketing Limited and Susan Barnes.
99.3 Employment Agreement, dated as of July 3, 1996, by and between
Suzanne Paul (Australia) Pty Limited and Alan Meier.
99.4 Press release, dated July 8, 1996.
-39-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL MEDIA CORPORATION
(Registrant)
Date: July 12, 1996 By: /s/ James M. Gallagher
-------------- ----------------------------
Name: James M. Gallagher
Title: Vice President and
Chief Financial Officer
-40-
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No.
- -----------
2.1 Acquisition Agreement, dated of May 29, 1996, by and among National
Media Corporation, Paul Meier, Susan Barnes and Prestige Marketing
Holdings Limited.
2.2 Acquisition Agreement, dated of May 30, 1996, by and among National
Media Corporation, Paul Meier, Susan Barnes, Alan Meier and Tancot Pty
Limited.
23.1 Consent of Ernst & Young with respect to the financial statements of
Prestige Marketing Limited.
23.2 Consent of Ernst & Young with respect to the financial statements of
Prestige Marketing International Limited.
23.3 Consent of Ernst & Young with respect to the financial statements of
Suzanne Paul Holdings Pty Limited Group.
99.1 Employment Agreement, dated as of July 2, 1996, by and between
Prestige Marketing Limited and Paul Meier.
99.2 Employment Agreement, dated as of July 2, 1996, by and between
Prestige Marketing Limited and Susan Barnes.
99.3 Employment Agreement, dated as of July 3, 1996, by and between Suzanne
Paul (Australia) Pty Limited and Alan Meier.
99.4 Press release, dated July 8, 1996.
-41-
<PAGE>
EXHIBIT 2.1
ACQUISITION AGREEMENT
BY AND AMONG
NATIONAL MEDIA CORPORATION,
PAUL MEIER, SUSAN BARNES AND
PRESTIGE MARKETING HOLDINGS LIMITED
DATED AS OF MAY 29, 1996
A PORTION OF THE PURCHASE PRICE PAYABLE HEREUNDER CONSISTS OF SHARES OF
NATIONAL MEDIA CORPORATION COMMON STOCK. SUCH COMMON STOCK HAS NOT BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") AND ARE BEING
OFFERED PURSUANT TO ONE OR MORE EXEMPTIONS FROM REGISTRATION UNDER THE
SECURITIES ACT, INCLUDING A SAFE HARBOR EXEMPTION FROM REGISTRATION UNDER
REGULATION S ("REGULATION S") PROMULGATED UNDER THE SECURITIES ACT. SUCH SHARES
OF COMMON STOCK MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED
STATES OR TO U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S) UNLESS SUCH
SHARES ARE REGISTERED UNDER THE SECURITIES ACT OR SUCH OFFERS, SALES AND
TRANSFERS ARE MADE PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1......................................................................1
Section 1.1 Acquisition of Stock..............................1
Section 1.2 Directors and Officers............................1
Section 1.3 Consideration for Sale of Shares..................1
Section 1.4 Taking of Necessary Action: Further Action........3
Section 1.5 Material Adverse Effect: Ordinary Course of
Business..........................................3
Section 1.6 Tax Consequences..................................3
ARTICLE 2......................................................................3
Section 2.1 Organization and Qualification; Subsidiaries......4
Section 2.2 Organizational Documents..........................4
Section 2.3 Capitalization....................................4
Section 2.4 Authority Relative to this Agreement..............4
Section 2.5 No Conflict: Required Filings and Consents........5
Section 2.6 Compliance........................................6
Section 2.7 Financial Statements..............................6
Section 2.8 Absence of Certain Changes or Events..............6
Section 2.9 No Undisclosed Liabilities and Commitments........7
Section 2.10 [Intentionally Omitted]...........................7
Section 2.11 Absence of Litigation.............................7
Section 2.12 Employee Benefit Plans, Employment Agreements.....7
Section 2.13 Labor Matters.....................................8
Section 2.14 [Intentionally omitted]...........................8
Section 2.15 Restrictions on Business Activities...............8
Section 2.16 Title to Property.................................8
Section 2.17 Taxes.............................................9
Section 2.18 Environmental Matters............................10
Section 2.19 Brokers..........................................11
Section 2.20 Full Disclosure..................................11
Section 2.21 Intellectual Property............................11
Section 2.22 Interested Party Transactions....................13
Section 2.23 Insurance........................................13
(i)
<PAGE>
TABLE OF CONTENTS (Continued)
Page
Section 2.24 Investment Purpose...............................13
Section 2.25 Reliance on Exemptions...........................14
Section 2.26 Information......................................14
Section 2.27 Offshore Transaction.............................14
Section 2.28 [Intentionally omitted]..........................14
Section 2.29 No Scheme to Evade Registration..................14
Section 2.30 Legend on Securities.............................14
ARTICLE 3.....................................................................14
Section 3.1 Organization and Qualification...................15
Section 3.2 Authority Relative to this Agreement.............15
Section 3.3 No Conflict; Required Filings and Consents.......15
Section 3.4 Certificate of Incorporation and By-Laws.........16
Section 3.5 Capitalization...................................16
Section 3.6 Compliance; Permits..............................16
Section 3.7 SEC Filings; Financial Statements................17
Section 3.8 Absence of Certain Changes or Events.............18
Section 3.9 Restrictions on Business Activities..............18
Section 3.10 Title to Property................................18
Section 3.11 Full Disclosure..................................18
Section 3.12 No Undisclosed Liabilities.......................19
Section 3.13 Absence of Litigation............................19
Section 3.14 Insurance........................................19
Section 3.15 [Intentionally Omitted]..........................19
Section 3.16 Taxes............................................19
Section 3.17 Brokers..........................................20
Section 3.18 No Stockholder' Vote.............................20
Section 3.19 Employee Benefit Plans...........................20
Section 3.20 Regulation S Matters.............................21
ARTICLE 4.....................................................................22
Section 4.1 Conduct of Business by the Companies Pending
the Acquisition..................................22
Section 4.2 No Solicitation or Sale of Share Capital or
Business Assets..................................24
Section 4.3 Conduct of Business by Parent Pending the
Acquisition......................................25
Section 4.4 Transfer of Assets...............................25
ARTICLE 5.....................................................................26
Section 5.1 [Intentionally Omitted]..........................26
(ii)
<PAGE>
TABLE OF CONTENTS (Continued)
Page
Section 5.2 Access to Information............................26
Section 5.3 Consents; Approvals..............................26
Section 5.4 Notification of Certain Matters..................26
Section 5.5 Further Action...................................26
Section 5.6 Public Announcements.............................26
Section 5.7 Listing of Parent Common Stock...................27
Section 5.8 Conveyance Taxes.................................27
ARTICLE 6.....................................................................27
Section 6.1 Conditions to Obligation of Each Party...........27
Section 6.2 Additional Conditions to Obligations of Parent...28
Section 6.3 Additional Conditions to Obligation of the
Holders..........................................30
ARTICLE 7.....................................................................31
Section 7.1 Termination......................................31
Section 7.2 Effect of Termination............................32
Section 7.3 Fees and Expenses................................32
ARTICLE 8.....................................................................32
Section 8.1 Survival.........................................32
Section 8.2 Indemnification..................................33
Section 8.3 Conditions of Indemnification for Third Party
Claims...........................................33
Section 8.4 Payment of Claims................................34
Section 8.5 Set-Off..........................................34
Section 8.6 Limitation of Liability..........................34
ARTICLE 9.....................................................................35
Section 9.1 Disclosure Schedules.............................35
Section 9.2 Notices..........................................35
Section 9.3 Certain Definitions..............................36
Section 9.4 Amendment........................................37
Section 9.5 Waiver...........................................37
Section 9.6 Headings.........................................37
Section 9.7 Severability.....................................37
Section 9.8 Entire Agreement.................................37
Section 9.9 Assignment.......................................38
Section 9.10 Parties In Interest..............................38
Section 9.11 Failure or Indulgence Not Waiver, Remedies
Cumulative.......................................38
(iii)
<PAGE>
TABLE OF CONTENTS (Continued)
Page
Section 9.12 Governing Law....................................38
Section 9.13 Counterparts.....................................38
Section 9.14 Joint Participation..............................38
Section 9.15 Exhibits and Schedules...........................38
ARTICLE 10....................................................................38
Section 10.1 Software Rights..................................38
Section 10.2 Waiver of Claims by Companies Against Holders....39
Section 10.3 Removal of Guarantees............................39
(iv)
<PAGE>
ARTICLE 1.
Section 1.1 Acquisition of Stock.
--------------------
(a) At the Effective Time (as defined below), and subject to and
upon the terms and conditions of this Agreement, Holdings shall sell, transfer
and assign all of the issued and outstanding share capital of International and
Holdings and PM shall sell, transfer and assign all of the issued and
outstanding share capital of Marketing (collectively, the "New Zealand Shares")
to National Media or its assignee. Such sale and transfer shall be made in
exchange for the consideration described in Section 1.3 below.
(b) Subject to the satisfaction or waiver of the conditions set
forth in Article 6 hereof, the consummation of the sale and transfer of the New
Zealand Shares will take place on or before July 1, 1996, at the offices of
Hesketh Henry, 2 Kitchener Street, Auckland, New Zealand or such place or places
as shall be agreed by the parties hereto (the date of the consummation of the
purchase and sale of the New Zealand Shares is hereinafter referred to as the
"Effective Time").
Section 1.2 Directors and Officers . Concurrent with the Effective Time, the
-----------------------
boards of directors of each of the Companies shall be elected by National Media;
provided, however, that such boards of directors shall each consist of seven (7)
persons and shall include PM, SB and Alan Meier on each board;
Section 1.3 Consideration for Sale of Shares.
--------------------------------
(a) In exchange for the New Zealand Shares, at the Effective Time,
National Media shall deliver to or for the benefit of Holdings (as described
below) the following:
(i) Cash in the amount of US $4,234,574. At the Effective Time,
National Media shall pay or apply such cash: First, to any amounts payable by
Holdings to Marketing or International; and Second, to Holdings.
(ii) 706,651 shares of National Media common stock, plus an
amount equal to all dividends and other distributions or rights which would have
been payable or issuable with respect to such shares of common stock from April
30, 1996 until the Effective Time if such shares of Common Stock were
outstanding during such period.
(b) The shares of National Media Common Stock to be delivered to
Holdings pursuant to (a) above shall hereinafter be referred to as the "NM
Shares".
(c) In addition to the foregoing consideration:
(i) if the consolidated "After Tax Net Income" (as hereinafter
defined) of the Companies for the twelve (12) month period ending March 31, 1997
(the "1997 Fiscal Year") equals or exceeds US$3,925,200, then an additional
amount on account of the purchase price shall be payable
<PAGE>
hereunder in an amount equal to two and one-half (2.5) times the amount by which
such consolidated After Tax Net Income of the Companies for the 1997 Fiscal Year
exceeds US$3,271,000, but in no event shall the aggregate additional amount on
account of the purchase price payable pursuant to this Section 1.3(c) pertaining
to the 1997 Fiscal Year exceed US$1,635,500.
(ii) If the consolidated average After Tax Net Income of the
Companies for the twelve (12) month period ending March 31, 1998 (the "1998
Fiscal Year") and the 1997 Fiscal Year equals or exceeds US$3 ),925,200, then an
additional amount on account of the purchase price shall be payable pursuant to
this Section 1.3(c) in an amount equal to US$3,271,000, less any amount
previously paid relating to the 1997 Fiscal Year as calculated pursuant to (i)
above.
The currency exchange ratio to be utilized to convert the Companies'
After Tax Net Income from New Zealand dollars to US dollars shall be the average
foreign exchange rate during the entire applicable fiscal year (as determined in
connection with the audited Parent's and the Companies' financial statements).
Any such additional purchase price sh all be payable (i) as soon as
practicable following the audit of the Companies' financial statements for each
of the 1997 and 1998 Fiscal Years ; and (ii) solely in shares of National Media
common stock valued for purposes hereof at its prior twenty trading day average
closing price on the New York Stock Exchange as of March 31, 1997 and 1998
respectively. The Shareholders shall also be entitled to an amount equal to all
dividends and other distributions or rights which would have been payable or
issuable with respect to such shares of common stock between March 31, 1997 or
1998, as applicable, and the actual issuance of such shares to the Shareholders.
No interest shall accrue or be payable with respect to the Additional Purchase
Price payable hereunder (including, without limitation, any amounts payable in
lieu of dividends or distributions pursuant to the immediately preceding
sentence).
For purposes hereof, "After Tax Net Income" shall be defined as follows:
Net income, after payment/satisfaction of, or accrual for, all applicable
taxes, etc., determined in accordance with NZGAAP (as hereinafter defined),
applied on a basis consistent with the audit of the periods ended March 31,
1996. Parent and the other parties hereto agree that Parent shall not negatively
impact the calculation of After Tax Net Income by causing the Companies to incur
any expenses or expenditures which do not directly relate to the operation of
their respective businesses and which are consistent with the Companies'
ordinary course of business as carried on prior to the Effective Time, with such
adjustments thereto as are necessitated to take into account any requirements of
law or regulation applicable to the Companies. Notwithstanding the foregoing,
Parent shall have the ability to charge to the Companies intercompany charges
which are reasonable and which reflect actual value given. In any event, the
costs of the audit of the Companies' financial statements for the periods ended
March 31, 1996 shall not effect the calculation of After Tax Net Income for the
1997 or 1998 Fiscal Years.
2
<PAGE>
The Shareholders shall have the opportunity to comment upon the
calculation of After Tax Net Income for the subject periods. And if there is any
dispute between the Shareholders and Parent, it shall be resolved by an
independent person nominated by the President of the New Zealand Society of
Accountants.
Section 1.4 Taking of Necessary Action: Further Action . Each of the parties
-------------------------------------------
hereto in good faith will take, at or prior to the Effective Time, all such
commercially reasonable and lawful action as may be necessary or appropriate in
order to effectuate the transactions contemplated hereby in accordance with this
Agreement as promptly as possible. If, at any time after the Effective Time,
any such further action is necessary or desirable to carry out the purposes of
this Agreement and to vest National Media or its assignee or nominee with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the businesses being conducted by the Companies, the officers
and directors of the Companies are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and
necessary action.
Section 1.5 Material Adverse Effect: Ordinary Course of Business. When used
----------------------------------------------------
in connection with any of the Companies, or Parent or any of its subsidiaries,
as the case may be, the term "Material Adverse Effect", or any derivation
thereof, means any change or effect that, individually or when taken together
with all other such changes or effects that have occurred prior to the date of
determination of the occurrence of the. Material Adverse Effect, is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition, prospects or results of operations of
such Company or Parent and its subsidiaries, as the case may be, in each case
taken as a whole.
When used in connection with any of the Companies or Parent or any of its
subsidiaries, as the case may be, the term "ordinary course of business", or
derivations thereof, means the normal conduct of business consistent with past
practice except that no action which is contrary to law, order, rule or
regulation or otherwise contrary to commercial reasonableness shall be
considered to be in the ordinary course of business.
Section 1.6 Tax Consequences. The consideration to be paid for the New
----------------
Zealand Shares hereunder reflects the price that Parent would have paid even if
all such consideration had been payable hereunder at the Effective Time and does
not reflect any greater amount payable on account of the timing of the payment
of the any additional purchase price pursuant to section 1.3(c).
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ARTICLE 2
Representations and Warranties of the Holders
Each Holder hereby, jointly and severally, represents and warrants to
Parent (which representations and warranties shall be true and correct on the
date hereof and at the Effective Time, as follows:
Section 2.1 Organization and Qualification; Subsidiaries . Each Company is a
---------------------------------------------
corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority and is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, consents, certificates, approvals,
exemptions and orders (collectively "Approvals") necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to be so
organized and existing or to have such power, authority and Approvals would not
or is not reasonably likely to have a Material Adverse Effect. Each of the
Companies is in compliance with the terms of the Approvals, except where the
failure to so comply would not and is not reasonably likely to have a Material
Adverse Effect. There are no jurisdictions where, based upon the properties
owned, leased or operated by either of the Companies, or the nature of the
Companies' activities, either of the Companies is required to be licensed or
qualified. Neither Company directly or indirectly owns any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any equity or similar interest in any corporation, partnership, joint
venture or other business association, entity or person.
Section 2.2 Organizational Documents. Each Company has heretofore delivered
------------------------
to Parent complete and correct copies of its organizational documents, as
amended to date certified as such by PM. Each of such organizational documents
are in MI force and effect. Neither Company is in violation of any of the
provisions of its organizational documents, which would be likely to have a
Material Adverse Effect.
Section 2.3 Capitalization. The authorized share capital of Marketing
--------------
consists solely of one hundred (100) ordinary shares of NZ $1 and the authorized
share capital of International consists solely of ten thousand (10,000) ordinary
shares of NZ $1, all of which shares are issued and outstanding. All of the
issued and outstanding shares of Marketing and International are validly issued
and fully paid and owned beneficially by Holdings, free and clear of all
security interests, liens, claims, pledges, agreements, limitations charges or
other encumbrances of any nature whatsoever. There are no options, warrants or
other rights, agreements. arrangements or outstanding commitments of any
character relating to the issued or unissued share capital of any of the
Companies or obligating any of the Companies to issue or sell any share capital
of, or other equity interests in, any of the Companies (collectively, "Stock
Purchase Rights") and, except as set forth on Schedule 2.3 of the Company
Disclosure Schedule, none of the Companies has adopted or made any commitment to
adopt any plan for the issuance of any of its share capital or any Stock
Purchase Rights. There are no obligations, contingent or otherwise, of any
Company to repurchase, redeem
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or otherwise acquire any share capital of any of the Companies or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any person.
Section 2.4 Authority Relative to this Agreement. Holdings has all necessary
------------------------------------
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Holdings
and the consummation by Holdings of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Holdings are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Holdings and each other Holder
and, assuming the due authorization, execution and delivery by Parent,
constitutes the legal, valid and binding obligation of each Holder, enforceable
against each Holder in accordance with its terms, except as the enforceability
thereof may be limited by (i) the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies of
creditors generally, and (ii) the effect of general principles of equity,
whether enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought.
Section 2.5 No Conflict: Required Filings and Consents.
------------------------------------------
(a) Section 2.5(a) of that certain written disclosure schedule, dated
of even date herewith, delivered by the Companies to Parent (the "Company
Disclosure Schedule") includes a list of (i) all contracts to which either
Company is a party and which provides for aggregate payments, either to or from
a Company, of US$50,000 or more and (ii) all other agreements which are material
to the business, assets (including intangible assets) financial condition,
prospects or results of operations of either Company ((i) and (ii) being,
collectively, the "Material Contracts"). The Companies have delivered to Parent
true and correct copies of all written Material Contracts, (and a written
description of each oral Material Contract) as amended to date.
(b) Except as set forth in Section 2.5(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by each of the Holders
does not, and the performance of this Agreement by each of the Holders will not,
(i) conflict with or violate the organizational documents of Holdings or any of
the Companies, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Holdings or any of the Companies or any Holder
or by which any of the Companies or any such Holder or any of their respective
properties is bound or affected, or (iii) result in any breach of or constitute
a default (or an event that, with notice or lapse of time or both, would become
a default), or impair any of the Companies' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any Material Contract
or any agreement to which a Holder or any of the Companies is a party, or result
in the creation of a lien or encumbrance on any of the properties or assets of
any Holder or any of the Companies pursuant to, any note,
5
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bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which any Holder or any of the
Companies is a party or by which any Holder or any of the Companies or any of
their respective properties is bound or affected.
(c) Other than as set forth in Section 2.5(c) of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the Holders
does not, and the performance of this Agreement by the Holders will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign
except where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the transactions contemplated hereby, or otherwise prevent or
delay the Holders from performing their respective obligations under this
Agreement, or would not and is not reasonably likely to otherwise have a
Material Adverse Effect.
Section 2.6 Compliance.
----------
None of the Companies are in conflict with, or in default or violation
of, (i) any law, rule, regulation, order, writ, judgment or decree applicable to
it or by which it or any of its properties is bound or affected, including, but
not limited to, any consumer protection type laws in any jurisdiction where the
Companies air their infomercials and/or sell their products or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which it is a party or by which
it or any of its properties is bound or affected, except for any such conflicts,
defaults or violations which would not and is not reasonably likely to have a
Material Adverse Effect.
Section 2.7 Financial Statements. Each of the Companies has furnished to
--------------------
Parent its balance sheet as of each of March 31, 1996 and 1995 and the related
statements of income, stockholders' equity and cash flows for such Company for
the years ended March 31, 1995 and 1996. All such financial statements have been
prepared in accordance with New Zealand generally accepted accounting principles
consistently applied ("NZGAAP") and fairly present the position of each of the
Companies as of the respective dates of such balance sheets, respectively, and
the results of each of their operations for the years then ended. Except as set
forth in Section 2.7 of the Company Disclosure Schedule, since March 31, 1996,
there has not been any change in the assets, liabilities or financial condition
of either of the Companies from that reflected in the March 31, 1996 balance
sheets except for changes in the ordinary course of business which in the
aggregate have not had and are not reasonably likely to have a Material Adverse
Effect.
Section 2.8 Absence of Certain Changes or Events. Except as specifically
------------------------------------
acknowledged herein or otherwise set forth in Section 2.8 of the Company
Disclosure Schedule, since March 31, 1996 each of the Companies has conducted
its business in the ordinary course and there has not occurred: (i) any
amendments or changes in the organizational documents of any of the Companies;
(ii) any damage to, or destruction or loss of, any assets of any of the
Companies (whether or not covered by insurance) that had or is reasonably likely
to have a Material Adverse Effect; (iii) any material depletion of any assets of
any
6
<PAGE>
of the Companies; (iv) any change by any of the Companies in its accounting
methods, principles or practices; (v) any revaluation by any of the Companies of
any of its assets, including, without limitation, writing down the value of
capitalized inventory, or writing off notes or accounts receivable other than in
the ordinary course of business; (vi) any redemption or other acquisition of
share capital by any of the Companies or any declaration or payment of any
dividend or other distribution in cash, stock or property with respect to the
share capital of any of the Companies; (vii) any transfer of, or rights granted
under, any material leases, licenses, agreements, patents, trademarks, trade
names or copyrights other than those transferred or granted in the ordinary
course of business; (viii) any mortgage, debenture, charge, pledge, security
interest or imposition of lien or other encumbrance on any asset of any of the
Companies, except those that are immaterial and incurred in the ordinary course
of business; (ix) any early collection, at a discount or par, of any receivable
of any of the Companies; or (x) any event which has had or is reasonably likely
to have a Material Adverse Effect.
Section 2.9 No Undisclosed Liabilities and Commitments. Except as is
------------------------------------------
disclosed in the March 31, 1996 balance sheets referred to in Section 2.7 above
or in Section 2.9 of the Company Disclosure Schedule, none of the Companies has
any liabilities, obligations or commitments (absolute, accrued, contingent or
otherwise) except for liabilities arising in the ordinary course of business,
including but not limited to, accounts payable, accrued expenses and Taxes (as
defined in Section 2.17 hereof), incurred by either of the Companies after March
31, 1996. Those liabilities which (A) relate to occurrences after the Effective
Time; (B) are described in the preceding sentence or (C) are set forth on
Schedule 2.9 of the Company Disclosure Schedule are referred to herein as the
"Assumed Liabilities". As further clarification hereunder, the term "Assumed
Liabilities" shall not include (x) any Tax liability which is due and payable on
or prior to the Effective Time pursuant to any law, regulation or order (other
than as set forth in the immediately preceding sentence) or (y) any Tax
liability which otherwise relates to any period up to and including March 31,
1996 (except as indicated on the audited March 31, 1996 balance sheets of the
Companies).
Section 2.10 [Intentionally Omitted] .
Section 2.11 Absence of Litigation. Except as set forth in Section 2.11 of
---------------------
the Company Disclosure Schedule, there are no claims, actions, suits,
proceedings or investigations which, to the knowledge of any of the Companies or
any Holder, are pending or threatened against any of the Companies or any
properties or rights of any of the Companies, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign.
Section 2.12 Employee Benefit Plans, Employment Agreements.
---------------------------------------------
(a) There are no director or employee benefit plans, bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance or termination pay, medical or life insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement plans,
agreements or
7
<PAGE>
arrangements or other similar fringe or employee benefit plans, programs or
arrangements, or any current or former employment or executive compensation or
severance agreements, written or otherwise, for the benefit of, or relating to,
any current or former director or employee of any of the Companies or any trade
or business. (whether or not incorporated) which is a subsidiary or holding
company of any of the Companies or otherwise a related company of any of the
Companies (a "Company Act Affiliate") within the meaning of Section 2, Section
158 or Section 158A of the Companies Act of 1955 (as applicable), to which any
of the Companies or any Company Act Affiliate is a party, with respect to which
any of the Companies or any Company Act Affiliate has or could have any
obligation, as well as each plan with respect to which any of the Companies or
any Company Act Affiliate could incur liability if such plan has been or were
terminated (together, the "Employee Plans").
(b) Except as set forth in Section 2.12 of the Company Disclosure
Schedule, none of the Companies has granted, or adopted any plans providing for
the grant of, any option to purchase any share capital of any of the Companies.
(c) Each of the Companies has delivered to Parent true and correct
copies of the forms of agreements which it has with any of its employees. The
Companies have no agreements with consultants obligating them to make annual
cash payments in an amount exceeding NZ$10,000.
Section 2.13 Labor Matters. There are no disputes or controversies pending
-------------
or, to the knowledge of any of the Holders, threatened, between any of the
Companies and any of their respective employees or former employees, which
disputes or controversies have or are reasonably likely to have a Material
Adverse Effect and none of the Companies has any actual or contingent liability
to pay compensation for loss of office or employment to any ex-officer or ex-
employee of any of the Companies and there is no payment due in connection with
the redundancy of any employee; none of the Companies is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by such Company nor does any Holder know of any activities or
proceedings of any labor union to organize any such employees; and no Holder has
any knowledge of any proposed or existing strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of any of the
Companies.
Section 2.14 [Intentionally omitted].
Section 2.15 Restrictions on Business Activities. Except for this Agreement,
there is no material agreement, judgment, injunction, order or decree binding
upon any of the Companies which has or could reasonably be expected to have the
effect of prohibiting or impairing any material business practice of any of the
Companies, the acquisition of property by any of the Companies or the conduct of
business by any of the Companies as currently conducted or as proposed to be
conducted by the Companies.
Section 2.16 Title to Property. None of the Companies own any real property.
------------------
Section 2.16 of the Company Disclosure Statement sets forth a true and complete
list of all real property leased by any of the
8
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Companies, and the aggregate monthly rental or other fee payable under such
lease. Each Company has good, marketable and defensible title. to all of their
assets, free and clear of all liens, charges, debentures and encumbrances,
except liens for taxes not yet due and payable and such liens or other
imperfections of title, if any, as do not materially detract from the value of
or interfere with the present use of the property affected thereby or which
would not and are not reasonably likely to have a Material Adverse Effect; and
to the knowledge of the Holders, all leases pursuant to which any of the
Companies leases from others material amounts of real or personal property are
in good standing, valid and effective in accordance with their respective terms,
and there is not, to the knowledge of the Holders, under any of such leases, any
existing material default or event of default (or event which with notice or
lapse of time, or both, would constitute a material default and in respect of
which any of the Companies has not taken adequate steps to prevent such a
default from occurring) except where the lack of such good standing, validity
and effectiveness or the existence of such default or event of default would not
and is not reasonably likely to have a Material Adverse Effect. All the
facilities of each of the Companies are in good operating condition and repair,
except where the failure of such plants, structures and equipment to be in such
good operating condition and repair would not and is not reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect.
Section 2.17 Taxes.
-----
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
fees, levies, duties, tariffs, imposts and governmental impositions or charges
of any kind in the nature of (or similar to) taxes, payable to any national,
federal, state, provincial, local or foreign taxing authority, including
(without limitation) (i) income, franchise, profits, gross receipts, ad valorem,
net worth, value added, sales, use, service, real or personal property, special
assessments, share capital, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, fringe benefits,
superannuation guarantee levy, utility, severance, production, excise, stamp,
occupation, premiums, windfall profits, transfer and gains taxes and (ii)
interest, penalties, additional taxes and additions to taxes imposed with
respect thereto; and "Tax Returns" shall mean returns, reports and information
statements with respect to Taxes required to be filed with the New Zealand or
Australian taxing authorities or any other taxing authority, domestic or
foreign, including, without limitation, consolidated, combined and unitary tax
returns.
(b) Other than as disclosed in Section 2.17(b) of the Company
Disclosure Schedule (which Schedule sets forth each Tax Return not so filed and
the separate amount of each type of Tax payable to any taxing authority), each
of the Companies, and any consolidated, combined, unitary or aggregate group for
Tax purposes of which any of the Companies is or has been a member, has filed
all Tax Returns required to be filed by them or any of them on or prior to the
date hereof and will file on or prior to the Effective Time all such Tax Returns
required to be filed on or prior to the Effective Time, and have paid and
discharged (or will pay and discharge prior to the Effective Time) all Taxes
shown therein to be due and payable on or prior to such time or are otherwise
due to have been paid on an estimated basis and there are no other Taxes that
would be due if asserted by a taxing authority, except such as are being
contested in
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good faith by appropriate proceedings (to the extent that any such. proceedings
are required) or with respect to which a Company is maintaining on its March 31,
1996 balance sheet, in accordance with NZGAAP, reserves which are adequate for
their payment. No taxing authority or agency is now asserting or, to the best of
each Holder's knowledge, threatening to assert against any of the Companies any
deficiency or claim for additional Taxes other than additional Taxes with
respect to which a Company is maintaining on its March 31, 1996 balance sheet,
in accordance with NZGAAP, reserves which are adequate for their payment. To the
knowledge of the Holders, no Tax Return of any of the Companies is currently
being audited by any taxing authority. No material tax claim has become a lien
on any asset of any of the Companies and none of the Companies has granted any
waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax. None of the Companies are required to
include in income (i) any material items in respect of any change in accounting
principles or any deferred intercompany transactions, or (ii) any instalment
sale gain where, in each case, the inclusion in income would result in a tax
liability materially in excess of the reserves therefor.
(c) No power of attorney has been granted by any of the Companies
with respect to any matter relating to Taxes which is currently in force.
(d) Except as set forth in Section 2.17(d) of the Company Disclosure
Schedule, none of the Companies is a party to any agreement or arrangement
(written or oral) providing for the allocation or sharing of Taxes.
(e) Except as set forth in Section 2.17(e) of the Company Disclosure
Schedule, each Company has withheld from each payment made to any of their
respective past or present employees, officers or directors the amount of all
Taxes and other deductions required by law or regulation to be withheld
therefrom and paid the same to the proper tax or other receiving officers within
the time required by law or regulation.
(f) Each Company has remitted to the appropriate Tax authority when
required by law to do so all amounts collected by it on account of all retail
sales Tax.
(g) Except as disclosed in Section 2.17(g) of the Company Disclosure
Schedule, there has been no material debt to a third party of any of the
Companies which has been forgiven and which has given rise to (or is expected to
give rise to) "cancellation of indebtedness income".
Section 2.18 Environmental Matters.
---------------------
(a) Except in all cases, in the aggregate, as have not had and could
not reasonably be expected to have a Material Adverse Effect, each of the
Companies (and with respect to clause (iii) below, each Holder) (i) has obtained
all applicable permits, licenses and other authorizations which are required
under any national, federal, state, provincial or local laws relating to
pollution or protection of the
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environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic materials
or wastes into ambient air, surface water, ground water or land or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants or hazardous or
toxic materials or wastes by any of the Companies (or their respective agents);
(ii) is in compliance with all terms and conditions of such required permits,
licenses and authorization, and also is in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in such laws or contained in any
regulation, code, plan, order, decree, judgment, notice or demand letter issued,
entered, promulgated or approved thereunder; (iii) as of the date hereof, is not
aware of nor have received notice of any event, condition, circumstance,
activity, practice, incident, action or plan which is reasonably likely to
interfere with or prevent continued compliance with or which would give rise to
any common law or statutory liability, or otherwise form the basis of any claim,
action, suit or proceeding, based on or resulting from the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge or release into the environment, of any
pollutant, contaminant or hazardous or toxic material or waste by any of the
Companies (or any of their respective agents); (iv) have taken all actions
necessary under applicable requirements of any national, federal, state or local
laws, rules or regulations to register any products or materials required to be
registered by any of the Companies (or any of their respective agents)
thereunder; and (v) has complied with all applicable occupational safety and
health requirements of federal, state or local laws, miles or regulations
relating to the use of storage of any hazardous, toxic or carcinogenic
substances.
(b) Set forth in Section 2.18 of the Company Disclosure Schedule are
all known or suspected environmental conditions or problems at each site of
operation of any of the Companies, including but not limited to the presence of
asbestos (friable or encapsulated), transformers containing PCBs, radon and any
aboveground or underground storage tanks.
Section 2.19 Brokers. No broker, finder or investment banker is entitled to
-------
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any of the Companies or any of the Holders.
Section 2.20 Full Disclosure. No statement contained herein or in any
---------------
certificate or schedule furnished or to be furnished by any of the Companies or
any Holder to Parent in, or pursuant to the provisions of, this Agreement
contains or shall contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in the light of the
circumstances under which it was made. to make the statements herein or therein
not misleading.
Section 2.21 Intellectual Property.
---------------------
(a) Each of the Companies owns, or is licensed or otherwise possesses
legally sufficient rights to use, all patents, trademarks, trade names, service
marks, copyrights and any applications therefor,
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technology, know-how, computer software programs or applications and tangible or
intangible proprietary information or material that are used or proposed to be
used in the business of such Company as currently conducted in any material
respect, including, but not limited to, any such intellectual property utilized
in the context of any infomercials produced by or for the Companies. Section
2.21(a) of the Company Disclosure Schedule lists all current patents, registered
and material unregistered trademarks and service marks, registered and material
unregistered copyrights, trade names and any applications therefor owned by any
of the Companies (the "Company Intellectual Property Rights"), and specifies the
jurisdictions in which each such Company Intellectual Property Right has been
issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners. Section 2.21(a) of
the Company Disclosure Schedule lists (i) any. requests any of the Companies has
received to make any registration of the type referred to in the immediately
preceding sentence, including the identity of the requester and the item
requested to be so registered, and the jurisdiction for which such request has
been made; (ii) all material licenses, sublicenses and other agreements as to
which any of the Companies is a party and pursuant to which any person is
authorized to use any Company Intellectual Property Right, or any trade secret
material to any of the Companies, and includes the identity of all parties
thereto, a description of the nature and subject matter thereof, the applicable
royalty and the term, thereof, and (iii) all material licenses, sublicenses and
other agreements as to which either of the Companies is a party and pursuant to
which any of the Companies is authorized to use any intellectual property rights
("Third Party Intellectual Property Rights"), or other trade secret of a third
party in or as any product, and includes the identity of all parties thereto, a
description of the nature and subject matter thereof, the applicable royalty and
the term thereof.
(b) Except as set forth in Section 2.21(b) of the Company Disclosure
Schedule, none of the Companies are, nor will it be as a result of the execution
and delivery of this Agreement or the performance of the Holders' obligations
hereunder, in violation of any license, sublicense or agreement described in
Section 2.21 (a) of the Company Disclosure Schedule. No claims with respect to
the Company Intellectual Property Rights, any trade secret material to any of
the Companies, or Third Party Intellectual Property Rights to the extent arising
out of any use, reproduction or distribution of such Third Party Intellectual
Property Rights by or through any of the Companies, are currently pending or, to
the knowledge of any Holder are threatened by any person, nor does any Holder
know of any valid grounds for any bona fide claims (i) to the effect that the
manufacture, sale, licensing or use of any product (including all infomercials
produced by or for any of the Companies) as now used, sold or licensed or
proposed for use, sale or license by any of the Companies infringes on any
copyright, patent, trademark, service mark or trade secret; (ii) against the use
by any of the Companies of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software programs and
applications used in the business of any of the Companies as currently conducted
or as proposed to be conducted by any of the Companies; (iii) challenging the
ownership, validity or effectiveness of any of the Company Intellectual Property
Rights or other trade secret material to any of the Companies; or (iv)
challenging the license or legally enforceable right to use of the Third Party
Intellectual Property Rights.. To the knowledge of each Holder, all patents,
registered trademarks, trade names and copyrights held by each of the Companies
are valid and subsisting.
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Except as set forth in Section 2.21(b) of the Company Disclosure Schedule, to
the knowledge of each Holder, there is no material unauthorized use,
infringement or misappropriation of any of the Company Intellectual Property
Rights by any third party, including any employee or former employee of either
of the Companies.
(c) Except as set forth in Section 2.21(c) of the Company Disclosure
Schedule, none of the. Companies (nor does any Holder in the case of clause.
(ii) below) (i) has been sued or charged in writing as a defendant in any claim,
suit, action or proceeding which involves a claim or infringement of trade
secrets, any patents, trademarks, service marks, trade names or copyrights and
which has not been finally terminated prior to the date hereof or been informed
or notified by any third party that any of the Companies may be engaged in such
infringement or (ii) has knowledge of any infringement liability with respect
to, or infringement by, any of the Companies of any trade secret, patent,
trademark, service mark, trade names or copyright of another.
(d) None of the Companies are aware that any employee of any of the
Companies is obligated under any contract or contracts (including licenses,
agreements, covenants and other commitments of any nature), or is subject to any
order, writ, judgment, injunction, decree, determination or award of any court,
administrative agency or other tribunal, that restricts the employee's
activities on behalf of any of the Companies as presently conducted or interfere
with the use of such employee's best efforts to promote the interests of such
Company.
Section 2.22 Interested Party Transactions. Except as set forth in Section
-----------------------------
2.22 of the Company Disclosure Statement, no director, officer or employee of
any of the Companies and no Holder nor any relative or any affiliate of any of
the foregoing (i) has any pecuniary interest in, or receives any compensation
for services, from, any supplier, customer, licensor or licensee of either of
the Companies or in any other business enterprise with which any of the
Companies conducts business or with which any of the Companies is in competition
or (ii) is indebted to any of the Companies; provided, however, that the
foregoing representation does not apply to the ownership by any Holder of up to
two percent (2 %) of the outstanding equity securities of any company whose
stock is traded on a national securities exchange or quoted on a national
interdealer quotation system. Section 2.22 of the Company Disclosure Statement
sets forth all compensation or other distribution or remuneration, paid during
the last twelve months, by the Companies to any Holder and to all relatives and
affiliates of any Holder.
Section 2.23 Insurance. Section 2.23 of the Company Disclosure Schedule lists
---------
all insurance policies, including, but not limited to, producers' errors and
omissions polices, and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of each of the
Companies. There is no claim by any of the Companies pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. All premiums payable under all
such policies and bonds have been paid and each of the Companies is otherwise in
Ml compliance with the terms of such policies and bonds. None of the Companies
knows of any
13
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threatened termination of, or any threatened material premium increase with
respect to, any such policies. The insurance coverages maintained by the
Companies are consistent with prudent commercial practice.
Section 2.24 Investment Purpose. Each Holder is acquiring the shares of
------------------
National Media common stock issuable to such Holder (directly or indirectly)
pursuant to Section 1.3(a) and 1.3(c) hereof for its own account for investment
only and not with a present view towards the public sale or distribution
thereof, except pursuant to sales that are exempt from the registration
requirements of the Securities Act and/or sales registered under the Securities
Act. Each Holder understands that such Holder must bear the economic risk of
this investment indefinitely unless such common stock is registered pursuant to
the Securities Act and any applicable state securities laws, or an exemption
from such registration is available, and that Parent has no present intention of
registering any such common stock. No Holder has any present plan or intention
to sell such shares of National Media common stock in the United States or to a
U.S. person (as such term is defined in Rule 902(o) of Regulation S) at any
predetermined time, and has made no predetermined arrangements to sell such
common stock.
Section 2.25 Reliance on Exemptions. Each Holder understands that the
----------------------
National Media common stock issuable hereunder is being issued in reliance upon
Regulation S under the Securities Act and upon specific exemptions from the
registration requirements of state securities laws and that Parent is relying
upon the truth and accuracy of, and the Holders' compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Holders set forth herein in order to determine the availability of
Regulation S and such exemptions and the eligibility of the Holders to acquire
such shares of common stock.
Section 2.26 Information. Each Holder acknowledges that it has received a
-----------
copy of the Parent SEC Reports. The Holders and their advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of Parent which have been requested by the Holders or their advisors.
The Holders and their advisors, if any, have been afforded the opportunity to
ask questions of Parent and receive answers to any such inquiries regarding the
issuance of the Parent common stock hereunder and the information provided to
the Holders pursuant to this Agreement.
Section 2.27 Offshore Transaction. (i) None of the Holders is a "U.S. person"
--------------------
as that term is defined in Rule 902(o) of Regulation S; (ii) the National Media
common stock was not offered to any Holder in the United States and at the time
of execution of this Agreement and the time of any offer to any Holder to
acquire such shares of common stock, the Holders were. physically outside the
United States; (iii) the Holders are purchasing the National Media common stock
for their own accounts and not on behalf of or for the benefit of any U.S.
person and the sale and resale thereof have not been prearranged with any U.S.
person or buyer in the United States; (iv) each Holder agrees that all offers
and sales of such common stock prior to the expiration of the forty (40) day
period following the Effective Time shall not be made to U.S. persons or for the
account or benefit of U.S. persons and shall otherwise be made in compliance
with the provisions of Regulation S.
14
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Section 2.28 [Intentionally omitted].
Section 2.29 No Scheme to Evade Registration. The Holders' acquisition of the
-------------------------------
National Media common stock hereunder is not a transaction (or any element of a
series of transactions) that is part of a plan or scheme to evade the
registration provisions of the Securities Act.
Section 2.30 Legend on Securities. The Holders understand and acknowledge
--------------------
that the shares of Parent common stock issuable hereunder shall bear a legend to
the effect of the legend set forth on the cover page of this Agreement.
ARTICLE 3.
Representation and Warranties of Parent
Parent hereby represents and warrants to each Holder (which representations
and warranties shall be true and correct on the date hereof and at the Effective
Time) that:
Section 3.1 Organization and Qualification. Parent and each of its
------------------------------
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority and is in possession of all Approvals
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority and Approvals would not and is not reasonably likely to have a
Material Adverse Effect. Parent and each of its subsidiaries is duly qualified
or licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not and are not reasonably likely to
have a Material Adverse Effect.
Section 3.2 Authority Relative to this Agreement. Parent has all necessary
------------------------------------
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
the consummation by Parent of the transactions contemplated hereby (subject to
the satisfaction of the conditions to consummation set forth herein) have been
duly and validly authorized by all necessary corporate action on the part of
Parent and no other corporate proceedings on the part of Parent are necessary to
authorize this Agreement or to consummate the transactions so contemplated. The
Board of Directors of Parent has determined that it is advisable and in the best
interest of Parent's stockholders for Parent to enter into and perform this
Agreement. This Agreement has been duly and validly executed and delivered by
Parent and, assuming the due authorization, execution and delivery by each of
the Holders, constitutes
15
<PAGE>
a legal, valid and binding obligation of Parent, enforceable against it in
accordance with its terms, except as the enforceability thereof may be limited
by (i) the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect relating
to or affecting the rights and remedies of creditors generally, and (ii) the
effect of general principles of equity, whether enforcement is considered in a
proceeding in equity or at law, and the discretion of the court before which any
proceeding therefor may be brought.
Section 3.3 No Conflict; Required Filings and Consents.
------------------------------------------
(a) Except as set forth in Section 3.3 of that certain written
disclosure schedule, dated of even date herewith, delivered by Parent to the
Companies (the "Parent Disclosure Schedule"); the execution and delivery of this
Agreement by Parent does not, and the performance of this Agreement by Parent
shall not, (i) conflict with or violate the Certificate of Incorporation or By-
Laws of Parent, (ii) conflict with or vi late any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by which
its or their respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or impair Parent's rights or alter
the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any Material
Contract or any material agreement to which Parent is a party or result in the
creation of a lien or encumbrance on any of the properties or assets of Parent
or any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or any of its subsidiaries is a party
or by which Parent or any of its subsidiaries or its or any of their respective
properties are bound or affected, except in any such case for any such breaches,
defaults or other occurrences that would not and is not reasonably likely to
have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent will not
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except (i) of the Overseas Investment Commission of New Zealand and for
applicable requirements, if any, of the Securities Act and applicable New
Zealand or Australia securities laws and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the transactions
contemplated hereby, or otherwise prevent Parent from performing its obligations
under this Agreement, and would not and is not reasonably likely to have a
Material Adverse Effect.
Section 3.4 Certificate of Incorporation and By-Laws. Parent has heretofore
----------------------------------------
furnished to the Companies complete and correct copies of its Certificate of
Incorporation and By-Laws, as amended to date certified as such by Parent's
Secretary. Such Certificate of Incorporation and By-Laws are in full force and
effect. Parent is not in violation of any of the provisions of its Certificate
of Incorporation or By-Laws or equivalent organizational documents.
16
<PAGE>
Section 3.5 Capitalization. As of May 18, 1996, the authorized capital stock
--------------
of Parent consisted of (i) 50,000,000 shares of Parent Common Stock of which
19,484,438 shares were issued and outstanding, 686,710 shares were held in
treasury, 2,103,783 shares were reserved for issuance pursuant to outstanding
options under Parent's stock option plans, 6,099,552 shares were reserved for
future issuance pursuant to the exercise or conversion, as applicable, of other
options, warrants and other similar rights to acquire Parent Common Stock, and
1,270,000 shares were reserved for future issuance with respect to the
conversion of Parent's outstanding Series B Convertible Preferred Stock; and
(ii) 10,000,000 shares of preferred stock, $.01 par value per share ("Parent-
Preferred Stock"), 127,000 shares of Series B Convertible Preferred Stock of
which were issued and outstanding. The NM Shares will, upon issuance and
delivery hereunder, be duly authorized, validly issued, fully paid and non-
assessable. Parent has disclosed to Holdings any definitive plans it has as of
the date hereof to issue any additional material amounts of Parent Common Stock
prior to the Effective Time.
Section 3.6 Compliance; Permits.
-------------------
(a) Except as set forth in Section 3.6(a) of the Parent Disclosure
Schedule, neither Parent nor any of its subsidiaries is in conflict with, in
default with respect to or in violation of (i) any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its' subsidiaries or by which
its or any of their respective properties is bound or affected or (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries is or any
of their respective properties is bound or affected, except for any such
conflicts, defaults or violations which would not and are not reasonably Rely to
have a Material Adverse Effect.
(b) Parent and its' subsidiaries hold all material permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from governmental authorities which are material to the operation of the
business of Parent and its subsidiaries taken as a whole as it is now being
conducted (collectively, the "Parent Permits"). Parent and its subsidiaries are
in compliance with the terms of the Parent Permits, except where the failure to
so comply would not and is not reasonably likely to have a Material Adverse
Effect.
Section 3.7 SEC Filings; Financial Statements.
---------------------------------
(a) Parent has filed all forms, reports and documents required to be
filed with the SEC, and has heretofore made available to the Holders, in the
form filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal
years ended March 31, 1995 and 1994, and its quarterly reports on Form 10-Q for
the fiscal quarters ended June 30, September 30, and December 31, 1995, (ii) all
proxy statements relating to Parent's meetings of stockholders (whether annual
or special) held since March 31, 1995, (iii) all other reports or registration
statements filed by and on behalf of Parent with the SEC since March 31, 1995
and (iv) all amendments and supplements to all such reports and registration
statements filed with the SEC
17
<PAGE>
(collectively, the "Parent SEC Reports"). The Parent SEC Reports (i) were
prepared substantially in accordance with the requirements of the Securities Act
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the
case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Parent's subsidiaries is required to file any
forms, reports or other documents with the SEC, other than a Form 15 by Positive
Response Television, Inc. ("PRTV") to deregister its shares under the Securities
Act.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports has been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents the consolidated financial position of Parent and its subsidiaries at
and as. of the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring year-
end adjustments which were not or will not be material in amount.
(c) There are no amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements, documents
or other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
Section 3.8 Absence of Certain Changes or Events. Except as set forth in
------------------------------------
Section 3.8 of the Parent Disclosure Schedule, since March 31, 1996 and except
for those transactions undertaken in connection with Parent's acquisition of
PRTV, Parent has conducted its business in the ordinary course and there has not
occurred: (i) any Material Adverse Effect; (ii) any amendments or changes in
the Certificate of Incorporation or By-Laws of Parent; (iii) any damages to,
destruction or loss of any assets of the Parent (whether or not covered by
insurance) that could have a Material Adverse Effect; (iv) any revaluation by
Parent of any of its assets, including, without limitation, writing down the
value of capitalized inventory or writing off notes or accounts receivable other
than in the ordinary course of business; or (v) any other action or event that
would have required the consent of the Holders pursuant to Section 4.3 had such
action or event occurred after the date of this Agreement.
Section 3.9 Restrictions on Business Activities. Except for this Agreement,
-----------------------------------
as set forth in Section 3.9 of the Parent Disclosure Schedule and/or other
commercially reasonable situations, there is no existing material agreement,
judgment, injunction, order or decree binding upon Parent or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Parent or any of
its subsidiaries, any acquisition of property by Parent or any of its
18
<PAGE>
subsidiaries or the conduct of business by Parent or any of its subsidiaries as
currently conducted or as proposed to be conducted by Parent.
Section 3.10 Title to Property. Except as set forth in its financial
-----------------
statements or Section 3.10 of the Parent Disclosure Schedule, Parent and each of
its subsidiaries have good, marketable and defensible title to all of their
properties and assets, free and clear of all liens, charges and encumbrances
except liens for taxes not yet due and payable and such liens or other
imperfections of title, if any, as do not materially detract from the value of
or interfere with the present use of the property affected thereby or which
would not and are not reasonably likely to have a Material Adverse Effect; and,
to Parent's knowledge, all leases pursuant to which Parent or any of its
subsidiaries lease from others material amounts of real or personal property are
in good standing, are valid and effective in accordance with their respective
terms, and there is not, to the knowledge of Parent, under any of such leases,
any existing material default or event of default (or event which, with notice
or lapse of time, or both, would constitute a material default and in respect of
which Parent or such subsidiary has not taken adequate steps to prevent such a
default from occurring) except where the lack of such good standing, validity
and effectiveness, or the existence of such default or event of default would
not and is not reasonably likely to have a Material Adverse Effect.
Section 3.11 Full Disclosure. No statement contained herein or in any
---------------
certificate or schedule furnished or to be furnished by Parent to any Holder in,
or pursuant to the provisions of, this Agreement contains or will contain any
untrue statement of a material fact or omits or shall omit to state any material
fact necessary, in the light of the circumstances under which it was made, to
make the statements herein or therein not misleading.
Section 3.12 No Undisclosed Liabilities. Except as is disclosed in Section
--------------------------
3.12 of the Parent Disclosure Schedule or the Parent SEC Reports, neither Parent
nor any of its subsidiaries has any liabilities (absolute, accrued, contingent
or otherwise) which are, in the aggregate, material to the business, operations
or financial condition of Parent and its subsidiaries taken as a whole, except
liabilities (i) adequately provided for in Parent's balance sheet (including any
related notes thereto) as of March 31, 1996, (ii) incurred in the ordinary
course of business and not required under GAAP to be reflected on such balance
sheet, or (iii) incurred since the date of such balance sheet in the ordinary
course of business which would not be expected to have a. Material Adverse
Effect, and liabilities incurred in connection with this Agreement.
Section 3.13 Absence of Litigation. Except as set forth in Section 3.13 of
---------------------
the Parent Disclosure Schedule or as reflected in the Parent SEC Reports, there
are no claims, actions, suits, proceedings or investigations pending or, to the
knowledge of Parent, threatened against Parent or any of its subsidiaries, or
any properties or rights of Parent or any of its subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign, that individually could have a Material Adverse Effect.
19
<PAGE>
Section 3.14 Insurance. Parent and its subsidiaries maintain directors' and
---------
officers' liability, fire and casualty, general liability, business
interruption, product liability and sprinkler and water damage insurance that
Parent believes to be reasonably prudent for its business.
Section 3.15 [Intentionally Omitted].
Section 3.16 Taxes. Other than as disclosed on Section 3.16 of the Parent
-----
Disclosure Schedule, Parent and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which Parent or any of
its subsidiaries is or has been a member, have filed all United States federal
income Tax Returns and all other material Tax Returns required to be filed by
them or any of them, and have paid and discharged all Taxes shown therein to be
due and there are not other Taxes that would be due if asserted by a taxing
authority, except such as are being contested in good faith by appropriate
proceedings (to the extent that any such proceedings are required) or with
respect to which Parent is maintaining reserves in accordance with GAAP in its
financial statements to the extent currently required which are in all material
respects adequate for their payment, except, in each instance, to the extent the
failure to do so would not and is not reasonably likely to have a Material
Adverse Effect. Neither the IRS nor any other taxing authority or agency is now
asserting or, to the best of Parent's knowledge, threatening to assert against
Parent or any of its subsidiaries any deficiency or claim for additional Taxes
other than additional Taxes with respect to which Parent is maintaining reserves
in accordance with GAAP in its financial statements which are in all material
respects adequate for their payment, except, in each instance, to the extent
that the failure to do so would not and is not reasonably likely to have a
Material Adverse Effect. Except as set forth in Section 3.16 of the Parent
Disclosure Schedule, no Tax Return of either Parent or any of its subsidiaries
is currently being audited by any taxing authority except as would not and is
not reasonably likely to have a Material Adverse Effect. Except as set forth in
Section 3.16 of the Parent Disclosure Schedule, no material tax claim has become
a lien on any assets of Parent or any subsidiary thereof and neither Parent nor
any of its subsidiaries has, except as would not and is not reasonably likely to
have a Material Adverse Effect, granted any waiver of any statute of limitations
with respect to, or any extension of a period for the assessment of, any Tax.
Section 3.17 Brokers. No broker, finder or investment banker is entitled to
-------
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent.
Section 3.18 No Stockholder Vote. No vote of the stockholders of Parent is
-------------------
necessary to approve the issuance of the National Media Shares.
Section 3.19 Employee Benefit Plans.
----------------------
(a) Section 3.19 of the Parent Disclosure Schedule lists all employee
benefit plans (as defined in Section 3(3) of ERISA), regardless of whether ERISA
is applicable thereto, all other bonus, stock
20
<PAGE>
option, stock purchase, incentive, deferred compensation, supplemental
retirement, medical or life insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plans and other similar fringe benefit
plans or programs, written or otherwise, for the benefit of, or relating to, any
current employee of Parent or any trade or business (whether or not
incorporated) which is a member of a controlled group which includes Parent or
which is under common control with Parent (an "ERISA Affiliate of Parent")
within the meaning of Section 414 of the Code, to which or an ERISA Affiliate of
Parent is a party, with respect to which Parent or an ERISA Affiliate of Parent
has or could have any obligation, as well as each plan with respect to which
Parent or an ERISA Affiliate of Parent could incur liability if such plan has
been or were terminated (together, the "Parent Employee Plans"), and a true and
correct copy of each such written Parent Employee Plan has been delivered to the
Companies.
(b) Except as set forth in Section 3.19 of the Parent Disclosure
Schedule, (i) none of the Parent Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person and none of the Parent
Employee Plans is a "multiemployer plan" as such term is defined in Section
3(37) of ERISA; (ii) there has been no transaction or failure to act with
respect to any Parent Employee Plan, which could result in any material
liability of Parent; (iii) all Parent Employee Plans are in compliance in all
material respects with the requirements prescribed by any and all statutes,
orders, or governmental rules and regulations currently in effect with respect
thereto, and Parent has performed all material obligations required to be
performed by it under, is not in any material respect in default under or
violation of, and has no knowledge of any default or violation by any other
party to, any of the Parent Employee Plans except as to which such non-
compliance, nonperformance or default would not result and is not reasonably
likely to result in a Material Adverse Effect; (iv) each Parent Employee Plan
intended to qualify under Section 401(a) of the Code is the subject of a
favorable determination letter from the IRS, and nothing has occurred which may
reasonably be expected to impair such determination; (v) all contributions
required to be made to any Parent Employee Plan, pursuant to the terms of the
Parent Employee Plan or any collective bargaining agreement, have been made on
or before their due dates and a reasonable amount has been accrued for
contributions to each Parent Employee Plan for the current plan years; (vi) with
respect to each Parent Employee Plan, no "reportable event" within the meaning
of Section 4043 of ERISA (excluding any such event for which the thirty (30) day
notice requirement has been waived under the regulations to Section-4043 of
ERISA) nor any event described in Sections 4062, 4063 and 4041 of ERISA has
occurred; and (vii) neither Parent nor any ERISA Affiliate of Parent has
incurred, nor reasonably expects to incur, any liability under Title IV of
ERISA.
(c) Each Parent Employee Plan that is required or intended to be
qualified under applicable law or registered or approved by a governmental
agency or authority, has been so qualified, registered or approved by the
appropriate governmental agency or authority, and nothing has occurred since the
date of the last qualification, registration or approval to adversely affect, or
cause the appropriate governmental. agency or authority to revoke, such
qualification, registration or approval.
21
<PAGE>
(d) All contributions (including premiums) required by law or
contract to have been made or approved by Parent under or with respect to Parent
Employee Plans have been paid or accrued by Parent. Except as disclosed in
Section 3.19(d) of the Parent Disclosure Schedule, without limiting the
foregoing, there are no material unfunded liabilities under any Parent Employee
Plan.
(e) There are no pending or, to the knowledge of Parent, threatened
investigations, litigation or other enforcement actions against Parent with
respect to any of the Parent Employee Plans.
(f) There are no actions, suits or claims pending or, to the best
knowledge of Parent, threatened by former or present employees of Parent (or
their beneficiaries) with respect to Parent Employee Plans or the assets or
fiduciaries thereof (other than routine claims for benefits).
(g) No condition or event has occurred with respect to the Parent
Employee Plans which has or could reasonably be expected to result in a material
liability to Parent.
Section 3.20 Regulation S Matters. Neither Parent nor any person acting for
--------------------
Parent has conducted any "directed selling efforts" in the United States, as
such term is defined in Rule 902 of Regulation S, which in general, means any
activity undertaken for the purpose of, or that could reasonably be expected to
have the effect of, conditioning the market in the United States for any of the
Parent common stock issuable hereunder.
Parent's offer and sale of its Common Stock hereunder is not a
transaction (or an element of a series of transactions) that is part of a plan
or scheme to evade the registration provisions of the Securities Act. Assuming
the accuracy of the representations and warranties of the Holders in Sections
2.24 through 2.30 of this Agreement, the offer and sale of Common Stock to the
Holders pursuant to this Agreement will be deemed to occur outside the United
States within the meaning of Rule 901 of Regulation S under the Securities Act
and therefore need not be registered under the Securities Act.
ARTICLE 4.
Conduct of Business Pending the Acquisition
Section 4.1 Conduct of Business by the Companies Pending the Acquisition.
------------------------------------------------------------
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, each Holder
covenants and agrees that, unless otherwise specifically provided in this
Agreement (including in Section 4.1 of the Company Disclosure Schedule) or
unless Parent shall otherwise agree in writing, the Holders shall cause each of
the Companies to conduct its business only in, and shall cause each of the
Companies not to take any action except in, the ordinary course of business.
Each Holder agrees to cause each of the Companies to use reasonable commercial
efforts to (i) preserve substantially
22
<PAGE>
intact its business, organization, (ii) pay its trade payables and other
liabilities in accordance with their terms as they became due, (iii) collect its
receivables and other claims in full in accordance with their terms, as they
become due, (iv) keep available the services of each of its present officers,
employees and consultants (except for those employees and consultants whose
services are terminated in the ordinary course of business), (v) take all
reasonable action in the ordinary course of business necessary to prevent the
loss, cancellation, abandonment forfeiture or expiration of any Company
Intellectual Property, and (vi) preserve each of its present relationships with
customers, suppliers and other persons with which such Company has significant
business relations. By way of amplification and not limitation, except as
contemplated by this Agreement (including in Section 4.1 of the Company
Disclosure Schedule), neither of the Companies shall, during the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, directly or indirectly do, or propose to
do, any of the following without the prior written consent of Parent:
(a) amend or otherwise change its organizational documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of any class
of its share capital , or any options, warrants, convertible securities or other
rights of any kind (including stock purchase rights) to acquire any of its share
capital, or any other ownership interest (including, without limitation, any
phantom interest) of any of the Companies;
(c) sell, lease, assign, transfer, pledge, dispose of or encumber any
of its assets (whether real, personal or intellectual property) (except for (i)
sales of assets in the ordinary course of business; (ii) dispositions of
obsolete or worthless assets; and (iii) the sale of PM's and SB's Company owned
cars to each of them for cash consideration not less than their book value);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its share capital, (ii) split, combine or reclassify any of
its share capital or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its share
capital or (iii) amend the terms of, repurchase, redeem or otherwise acquire for
value, any of its securities, or propose to do any of the foregoing;
(e) sell, transfer, license, sublicense or otherwise dispose of any
Company Intellectual Property Rights, or amend or modify any existing agreements
with respect to any Company Intellectual Property Rights or Third Party
Intellectual Property Rights, other than nonexclusive licenses in the ordinary
course of business;
(f) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof; (ii) incur any indebtedness for borrowed money or representing the
deferred purchase price of any property or assets or issue debt securities
23
<PAGE>
or assume, guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans or advances to
or investments in any person, except in the ordinary course of business; (iii)
create, incur, assume or suffer to exist, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind or nature upon its property or
assets, income or profits, whether now owned or hereafter acquired, not
including liens operating by reason of law or title retention in the ordinary
course of business; (iv) assume, guarantee, endorse or otherwise in anyway be or
become responsible or liable for, directly or indirectly, any material
contingent obligation; (v) enter into or amend any contract or agreement other
than in the ordinary course of business; (vi) other than in the ordinary course
of business (including, but not limited to, leasehold improvements), authorize
any capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of $10,000 for the Companies, taken as a whole; (vii) enter
into any agreement or become liable under any agreement for the lease, hire or
use of any real or, other than in the ordinary course of business, personal
property; or (viii) other than in the ordinary course of business, enter into or
amend any contract, agreement, commitment or arrangement to effect any of the
matters prohibited by this Section 4.1(f);
(g) increase the compensation payable or to become payable to any of
their officers or employees or (except in an arms' length transaction in the
ordinary course of business) grant any severance or termination pay to, or enter
into any employment or severance agreement with, any director, officer or other
employee of any of the Companies, or establish, adopt, enter into or amend any
Employee Plan;
(h) take any action, other than as required by NZGAAP or otherwise
agreed to by Parent, to change accounting policies or procedures (including,
without limitation, procedures with respect to revenue recognition, payments of
accounts payable and collection of accounts receivable);
(i) make any material Tax election inconsistent with past practices
or settle or compromise any material, national, federal, state, local or foreign
tax liability or agree to an extension of a statute of limitations for any
assessment of any Tax, except to the extent the amount of any such settlement
has been reserved for on the March 31, 1996 balance sheet of such Company;
(j) pay, discharge or satisfy any principal of any debt with a
maturity of more than one year, for borrowed money or for the deferred purchase
price of property or services, except at the stated maturity of such debt or as
required by mandatory prepayment provisions relating thereto (subject to any
subordination provisions applicable thereto); or amend any provision pertaining
to the subordination or the terms of payment of any debt;
(k) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) other than
debt with a maturity of more than one year for borrowed money or for the
deferred purchase price of property or services, other than the payment,
discharge or satisfaction in the ordinary course of business of liabilities
reflected or reserved against on the March 31, 1996 balance sheet of such
Company or incurred in the ordinary course of business;
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(l) liquidate or dissolve itself (or suffer any liquidation or
dissolution); or
(m) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through (l) above, or any action which
would make any of the representations or warranties contained in Article 2 of
this Agreement untrue or incorrect or prevent any Company from performing or
cause any Company not to perform its covenants hereunder or result in any of the
conditions to the consummation of the transactions set forth herein not being
satisfied.
Section 4.2 No Solicitation or Sale of Share Capital or Business Assets.
-----------------------------------------------------------
(a) Each Holder agrees that neither it nor any of the Companies'
respective officers or directors shall, and each Holder shall direct and use
their best efforts to cause the employees, agents, directors and representatives
of each Company and of each Holder (including, without limitation, any attorney
or accountant retained by any of them) not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making of any proposals or offers
(including, without limitation, any proposals or offers to stockholders of any
Company) with respect to a merger, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, any Company or a change in composition of a majority
of directors on the Board of Directors of any Company (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal") or engage in
any negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal.
(b) Each Holder shall immediately notify Parent after receipt of any
Acquisition Proposal or any request for information relating to any of the
Companies in connection with an Acquisition Proposal or for access to the
properties, books or records of any of the Companies by any person or entity
that informs such Company or such Holder that it is considering making, or has
made, an Acquisition Proposal. Such notice to Parent shall be made orally and in
writing and shall indicate in detail and with specificity the identity of the
offeror and the terms and conditions of such proposal, inquiry or contact.
(c) Each Holder shall ensure that each Companies' officers, directors
and employees, and each Holder's advisors and representatives are aware of the
restrictions described in this Section, and shall be responsible for any breach
of this Section 4.2 by such officers, directors, employees, advisors or
representatives.
(d) No Holder shall sell, transfer, pledge or otherwise dispose of
any of his shares or any rights therein prior to the Effective Time or earlier
termination of this Agreement other than for transfers to other Holder(s).
25
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Section 4.3 Conduct of Business by Parent Pending the Acquisition. During the
-----------------------------------------------------
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Parent covenants and agrees
that, unless both Companies shall otherwise agree in writing, other than actions
taken by Parent or its subsidiaries in contemplation of the Acquisition, Parent
shall not directly or indirectly do, or propose to take or agree in writing or
otherwise to take any action which would prevent Parent from performing or cause
Parent not to perform its obligations hereunder.
Section 4.4 Transfer of Assets.
------------------
(a) PM and SB shall cause Holdings to transfer to International
and/or Marketing, without any consideration being paid, at or prior to the
Effective Time, any assets (including, without limitation, all Company
Intellectual Property Rights, Third Party Intellectual Property Rights and other
contractual rights) presently held in the name of Holdings, which assets are
utilized in the conduct of the business of International and/or Marketing.
Notwithstanding the foregoing, the building (and any capital improvements made
thereto prior to April 1, 1996) out of which Marketing and International conduct
their business in Auckland shall remain the property of Holdings.
(b) Prior to the Effective Time, each of PM and SB shall acquire from
Marketing/International, their Company cars for cash consideration not less than
their book value, to be agreed upon with National Media.
ARTICLE 5.
Additional Covenants
Section 5.1 [Intentionally Omitted].
Section 5.2 Access to Information. Each Company and each Holder shall afford
---------------------
to the officers, employees, accountants, counsel and other representatives of
Parent, reasonable access, during the period prior to the Effective Time, to all
of each Companies' properties, books, contracts, commitments and records and,
during such period, each Holder shall cause each Company to furnish promptly to
Parent all information concerning its business, properties and personnel as
Parent may reasonably request, and each Holder shall cause each Company to make
available to Parent the appropriate individuals (including attorneys,
accountants and other professionals) for discussion of its business, properties
and personnel as Parent may reasonably request. Parent acknowledges and agrees
that all such information shall be maintained in strict confidence and may not
be used for any purpose other than to facilitate the transactions contemplated
hereby.
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Section 5.3 Consents; Approvals. Each Company, each Holder and Parent shall
-------------------
each use their best efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States and
foreign governmental and regulatory rulings and approvals), and each Company,
each Holder and Parent shall make all filings (including, without limitation,
all filings with United States and foreign governmental or regulatory agencies)
required in connection with the authorization, execution and delivery of this
Agreement by the Companies, the Holders and Parent and the consummation by them
of the transactions contemplated hereby.
Section 5.4 Notification of Certain Matters. Each Holder shall give prompt
-------------------------------
notice to Parent, and Parent shall give prompt notice to the Holders of (i) the
occurrence, or nonoccurrence, of any event the occurrence, or non-occurrence, of
which would be Rely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate, and (ii) any failure of such Holder or
Parent, as the case may be, materially to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it or him/her
hereunder; provided, however, that the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
Section 5.5 Further Action. Upon the terms and subject to the conditions
--------------
hereof, each of the parties hereto in good faith shall use all commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary filings, and to
otherwise satisfy or cause to be satisfied all conditions precedent to its
obligations under this Agreement.
Section 5.6 Public Announcements. Parent shall not, without the prior consent
--------------------
of the Holders, issue any press release or otherwise make any public statements
with respect to this Agreement except to the extent advisable under the federal
securities laws (which determination shall be made in consultation with Parent's
counsel) and the Holders shall not issue any such press release or make any such
public statement without the prior consent of Parent.
Section 5.7 Listing of Parent Common Stock. Parent shall cause the National
------------------------------
Media Shares to be issuable hereunder to be approved for listing on the New York
Stock Exchange as soon as practicable after the Effective Time.
Section 5.8 Conveyance Taxes. Parent, the Companies and the Holders shall
----------------
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Effective
Time.
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ARTICLE 6.
Conditions to the Consummation of this Agreement
Section 6.1 Conditions to Obligation of Each Party. The respective
--------------------------------------
obligations of each party to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Effective Time of the following conditions:
(a) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the transactions contemplated by
this Agreement shall be in effect, nor shall any proceeding brought by any
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending;
and there shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the transactions
contemplated by this Agreement, which makes the consummation of such
transactions illegal;
(b) Each of PM and SB shall have entered into a five (5) year
employment agreement substantially on the terms contained in the form of
employment agreement for such Holder attached as Exhibit A or Exhibit B, as the
case may be; and
(c) Marketing and Holdings shall have entered into a lease (the
"Lease") concerning the Auckland premises on the terms contained in the form of
lease attached as Exhibit C hereto.
Section 6.2 Additional Conditions to Obligations of Parent. The obligations
----------------------------------------------
of Parent to effect the transactions contemplated by this Agreement are also
subject to the satisfaction or waiver of the following conditions.
(a) Representations and Warranties. The representations and
warranties of each of the Holders contained in this Agreement (together with the
Company Disclosure Schedule) shall be true and correct in all respects on and as
of the Effective Time, except for (i) changes contemplated by this Agreement,
(ii) those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date) and (iii)
instances where the failure to be true and correct would not and is not
reasonably likely to have a Material Adverse Effect on the Companies, with the
same force and effect as if made on and as of the Effective Time, and Parent
shall have received a certificate to such effect signed by each Holder.
(b) Agreements and Covenants. Each Holder shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied
28
<PAGE>
with by him/her on or prior to the Effective Time, and Parent shall have
received a certificate to such effect signed by each Holder;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required or advisable (in Parent's discretion) to be
obtained, and an filings required to be made, by the Holders or the Companies
for the authorization, execution and delivery of this Agreement and the
consummation by them of the transactions contemplated hereby shall have been
obtained or made by the Holders or the Companies. At the Effective Time,
Holdings shall deliver to Parent copies of the resolutions adopted by the
shareholders and board of directors approving the transfer of the New Zealand
Shares and the other transactions contemplated hereby, certified by the
Secretary of such company as being in full force and effect and not modified in
any manner whatsoever;
(d) Governmental Actions. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any governmental
authority or administrative agency before any governmental authority,
administrative agency or court of competent jurisdiction, in either case,
seeking to prohibit or limit Parent from exercising all material rights and
privileges pertaining to its ownership of the Companies or the ownership or
operation by Parent or any of its subsidiaries of all or a material portion of
the business or assets of Parent or any of its subsidiaries, or seeking to
compel Parent or any of its subsidiaries to dispose of or hold separate all or
any material portion of the business or assets of Parent or any of its
subsidiaries, as a result of the transactions contemplated by this Agreement;
(e) Material Adverse Change. Since the date of this Agreement, there
shall have been no change, occurrence or circumstance affecting the business,
results of operations, financial, condition or prospects of any of the Companies
having or reasonably likely to have a Material Adverse Effect;
(f) Legal Opinion. Parent shall have received an opinion, dated the
Effective Date, from counsel to each of the Companies, in form reasonably
satisfactory to Parent;
(g) Consent. Parent shall have received the consent of Meridian Bank
and the Overseas Investment Commission of New Zealand to the transactions
contemplated by this Agreement and such consent shall not be conditioned upon
the performance by Parent or any of its subsidiaries of any material act or
obligation;
(h) Intentionally Omitted.
(i) Other Certificates. The Companies and the Holders shall have
furnished Parent such other certificates and documents as Parent shall have
reasonably requested and are customary in transactions of this type;
29
<PAGE>
(j) Employment Matters. All unliquidated claims which may arise
under, and/or all material ambiguities contained in, any agreement any of the
Companies may have with any of its employees or consultants (the determination
of whether any such unliquidated claim or ambiguity exists is to be made by
Parent in its reasonable discretion) shall be clarified and satisfied to the
reasonable satisfaction of Parent, and no such clarification shall result in any
additional material obligation on the part of any of the Companies or Parent;
(k) National Media shall have received, from an investment banking
firm of its choice, an opinion to the effect that the terms of the transactions
contemplated by the Agreement are fair to the shareholders of National Media
from a financial point of view; and
(l) Holdings shall change its name to remove any mention of the word
"Prestige";
(m) Any guarantee or security by Marketing or International of any
obligation of Holdings, PM or SB existing as of the Effective Time shall have
been removed or released;
(n) The Companies shall pay to Holdings, PM and SB at the Effective
Time any amounts indicated in the March 31, 1996 audited financial statements of
the Companies as owing to any of them, other than any amounts previously paid;
(o) SB, PM and Holdings shall pay to the Companies at the Effective
Time any amounts indicated in the March 31, 1996 audited financial statements of
the Companies as being owed, other than any amounts previously paid;
(p) Any amounts payable by Marketing or International as of the
Effective Time (whether due and owing as of such date or in the future) to or
for the benefit of Holdings, PM, SB or any related entity(ies) of theirs, other
than amounts incurred in the ordinary course of business (such as wages and
salaries) which were not reflected on the audited financial statements of
Marketing or International for the periods ended March 31, 1993 shall be deemed
extinguished and released without any payment being made thereon;
(q) At the Effective Time, Holdings, SB and PM shall repay to
Marketing or International an amount equal to any cash payments made to or for
the benefit of any of the foregoing or their related entities (including,
without limitation, any dividends), other than in the ordinary course of
business (such as wages and salaries), by Marketing or International between
March 31, 1996 and the Effective time.
Section 6.3 Additional Conditions to Obligation of the Holders. The
--------------------------------------------------
obligation of each of the Holders to effect the transactions contemplated by
this Agreement is also Subject to the satisfaction or waiver of the following
conditions:
30
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(a) Representations and Warranties. The representations and
warranties of Parent contained in this Agreement (together with the Parent
Disclosure Schedule) shall be true and correct in all respects on and as of the
Effective Time, except for (i) changes contemplated by this Agreement, (ii)
those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date) and (iii)
instances where the failure to be true and correct would not and is not
reasonably likely to have a Material Adverse Effect on Parent, with the same
force and effect as if made on and as of the Effective Time, and the Holders
shall have received a certificate to such effect signed by an officer of Parent;
(b) Agreements and Covenants. Parent shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time, and the Holders shall have received a certificate to such effect signed by
an officer of Parent;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by Parent for the authorization, execution and delivery of this Agreement
and the consummation by them of the transactions contemplated hereby shall have
been obtained without any material condition or contingency or made by Parent.
At the Effective Time, Parent shall deliver to the Holders copies of the
resolutions adopted by Parent approving the transactions contemplated by this
Agreement certified by the Secretary of Parent, as being in full force and
effect and not modified in any material manner whatsoever;
(d) Material Adverse Change. Since the date of this Agreement, there
shall have been no change, occurrence or circumstance in the business, results
of operations or financial condition of Parent having or reasonably likely to
have a Material Adverse Effect; and
(e) Legal Opinion. The Holders shall have received an opinion, dated
the Effective Date, from Klehr, Harrison,. Harvey, Branzburg & Ellers, counsel
to Parent, that; (i) upon delivery of the National Media Shares in accordance
with the terms of this Agreement, such Shares will be duly authorized, validly
issued, fully paid and nonassessable; (ii) the issuance of Common Stock to the
Holders under the Agreement has obtained all approvals required under the
federal securities laws, the General Corporation Law of the State of Delaware,
and the rules of the New York Stock Exchange; (iii) the offer and sale of Common
Stock to the Holders pursuant to the Agreement will be deemed to occur outside
the United States within the meaning of Rule 901 of Regulation S under the
Securities Act and therefore need not be registered under the Securities Act;
(iv) Parent is validly existing and in good standing under the laws of the State
of Delaware.
(f) National Media Share Certificates. Parent shall have tendered for
delivery to each Holder certificates representing the appropriate number of NM
Shares.
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ARTICLE 7
Termination
Section 7.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Effective Time:
(a) by mutual written consent duty authorized by the Board of
Directors of Parent and the Holders; or
(b) by either Parent or the Holders, as a group, if the transactions
contemplated by this Agreement shall not have been consummated by July 15, 1996
(provided that the right to terminate this Agreement under this Section 7.1 (b)
shall not be available to any party whose failure to fulfil any obligation under
this Agreement has been the, in full or in part, cause of or resulted in, in
full or in part, the failure of the transactions contemplated by this Agreement
to occur on or before such date); or
(c) by Parent or the Holders, as a group, if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a non-appealable final order, decree or ruling or taken any
other action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement; or
(d) by Parent or the Holders, as a group, upon a breach of any
representation, warranty, covenant or agreement on the part of any Holder (in
the case of a termination by Parent) or Parent (in the case of a termination by
the Holders), respectively, set forth in this Agreement or if any representation
or warranty of any Holder or Parent, respectively, shall have become untrue, in
either case, such that the conditions set forth in Section 6.2(a) or 6.2(b), or
Section 6.3(a) or 6.3(b), would not be satisfied (a "Terminating Breach");
provided that, if such Terminating Breach is curable prior to the expiration of
30 days from its occurrence (but in no event later than July 15, 1996) by Parent
or such Company, as the case may be, through the exercise of its reasonable best
efforts and for so long as Parent or such Holder, as the case may be, continues
to exercise such reasonable best efforts, neither the Holders nor Parent,
respectively, may terminate this Agreement under this Section 7.1(d) unless such
30-day period expires without such Terminating Breach having been cured.
Section 7.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement pursuant to Section 7. 1, this Agreement shall forthwith become null
and void and there shall be no liability on the part of any party hereto or any
of its affiliates, directors, officers or stockholders except (i) as set forth
in Section 7.3, Article 8 and Section 9.8 hereof, and (ii) nothing herein shall
relieve any party from liability for any wilful breach hereof.
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Section 7.3 Fees and Expenses. Except as set forth in this Section 7.3, all
-----------------
fees and expenses incurred by the Holders or Parent in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses. The Companies shall not bear the Holders costs in
---
connection herewith. Notwithstanding the foregoing, Parent acknowledges that
the Companies shall be solely responsible for all costs and expenses incurred by
the Companies and the Holders for the preparation and negotiation of the Lease.
ARTICLE 8.
Survival of Representations and Warranties; Indemnification
Section 8.1 Survival. All statements contained in any certificate or other
--------
instrument delivered by or on behalf of the Holders or Parent pursuant to this
Agreement or in connection with the transactions contemplated by this Agreement
shall be considered representations and warranties by such Holder or Parent with
the same force and effect as if contained in this Agreement. All
representations, warranties, covenants and agreements by the Holders or Parent
shall survive the Effective Time for a period of two years after the Effective
Time (provided that the representations, warranties, covenants and agreements
contained in Sections 2.9 and 2.17 and this Article 8 (including, without
limitation, Section 8.2(a)(ii)) in so far as they relate to any Tax shall
survive for so long as the Inland Revenue Department is entitled to investigate
the affairs of the Companies for the period(s) up to the Effective Time
notwithstanding any investigation at any time by or on behalf of any party to
which such representation or warranty was given, and shall not be considered
waived by the consummation of the transactions contemplated by this Agreement
with knowledge of any breach or misrepresentation by any of the parties hereto.
Notwithstanding the foregoing, if Parent proceeds with consummation of the
transactions contemplated by this Agreement despite its specific knowledge of
the breach as of the Effective Time of the representations and warranties of the
Holders set forth in Section 2.8(ii) or (iii) hereof, such Section 2.8(ii)
and/or (iii) representation and warranty shall not be deemed to survive the
Effective Time.
Section 8.2 Indemnification.
---------------
(a) Each of the Holders shall jointly and severally indemnify and
hold harmless Parent and the Companies against all loss, liability, damage or
expense (including reasonable fees and expenses of counsel in any matter,
whether involving a third party or between the indemnifying or indemnified
parties) Parent may suffer, sustain or become subject to as a result of (i) any
breach by such Holder of any of its or his representations, warranties,
covenants or other agreements contained in this Agreement, (whether or not
Parent had knowledge, at or prior to the Effective Time, of the breach), (ii)
the failure by the Holders to cause the Companies to pay, perform or discharge
prior to the Effective Time any Company Liabilities (other than the Assumed
Liabilities), (iii) any liability or obligation arising prior to the Effective
Time, or after the Effective Time as a result of events occurring prior to the
Effective Time, from or in
33
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connection with the violation of any national, federal, state or local statute,
rule or regulation, decree or ordinance applicable to any of the Companies, or
(iv) any actions on the part of the Holders or the Companies taken in
contemplation of this Agreement or the transactions referred to herein which
result in any Taxes which are in excess of any Taxes which would have been
applicable to the Companies or the transactions had such actions not been taken
(except to the extent provision therefor has been made on the Companies' March
31, 1996 balance sheets).
(b) Parent shall indemnify and hold harness each Holder against all
loss, liability, damage or expense (including reasonable fees and expenses of
counsel in any matter, whether involving a third party or between the
indemnifying and indemnified parties) such Holder may suffer, sustain or become
subject to as a result of any breach of any warranties, covenants or other
agreements contained in this Agreement or any misrepresentation by Parent, or as
a result of any of Parent's representations or warranties not being true and
correct as of the Effective Time (whether or not such Holder had knowledge,
prior to the Effective Time, of the misrepresentation or breach of warranty).
(c) Each party acknowledges that reliance shall not be an element of
any claim by the other for breach of warranty or misrepresentation under this
Agreement.
Section 8.3 Conditions of Indemnification for Third Party Claims. The
----------------------------------------------------
obligations and liabilities of the parties under this Agreement with respect to,
relating to, caused (in whole or in part) by or arising out of claims of third
parties (individually, a "Third Party Claim" and collectively "Third Party
Claims") including, without limitation, any national, federal, state or local
taxing authorities, shall be subject to the following terms and conditions:
(a) The party entitled to be indemnified hereunder (the "Indemnified
Party") shall give the party obligated to provide the indemnity (the
"Indemnifying Party") prompt notice of any Third Party Claim, and, provided that
the Indemnifying Party acknowledges in writing its obligation to indemnify in
accordance with the terms and subject to the limitations on such party's
obligation to indemnify contained in this Agreement with respect to that claim
(or part of that claim), the Indemnifying Party may undertake the defense of
that claim by representatives chosen by it and reasonably acceptable to the
Indemnified Party. Any such notice of a Third Party Claim shall identify with
reasonable specificity the basis for the Third Party Claim, the facts giving
rise to the Third Party Claim, and the amount of the Third Party Claim (or, if
such amount is not yet known, a reasonable estimate of the amount of the Third
Party Claim). The Indemnified party shall make available to the Indemnifying
Party, copies of all relevant documents and records in its possession.
(b) If the Indemnifying Party, within ten (10) business days after
receiving notice of any such Third Party Claim with such information as is
reasonably necessary to enable the Indemnifying Party to make a decision with
respect thereto, fails to assume the defense in accordance with Section 8.3(a)
hereof,
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the Indemnified Party shall (upon further notice to the Indemnifying Party and
subject to Section 8.3(c) hereof) have the right to undertake the defense,
compromise or settlement of the Third Party Claim.
(c) Anything in this Section 8.3 to the contrary notwithstanding, (i)
the Indemnifying Party shall not, without the written consent of the Indemnified
Party, settle or compromise any Third Party Claim or consent to the entry of
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party an unconditional release
from all liability in respect of the Third Party Claim (unless it is clear from
the surrounding circumstances that the Indemnified Party will have no further
liability with respect to such Third Party Claim and the Indemnifying Party
confirms its obligation to indemnify the Indemnified Party if any further
liability does result); and (ii) if there is a reasonable probability that a
claim may materially and adversely affect the Indemnified Party other than as a
result of money damages or other money payments, the Indemnified Party shall
have the right, at its own cost and expense, to participate in the defense of
the Third Party Claim.
Section 8.4 Payment of Claims. Any party obligated to indemnify another party
-----------------
hereunder shall provide any amounts so payable to the Indemnified Party as such
amounts are incurred (subject to reasonable detail concerning same) by such
Indemnified Party.
Section 8.5 Set-Off. Any party (the "Entitled Party") entitled to
-------
indemnification from another party hereunder (the "Obligated Party") pursuant to
the terms of this Agreement shall have the right to set-off against any amounts
(cash or other) due and payable by such Entitled Party to the Obligated Party
under this Agreement or any other agreement(s) such Obligated Party may have
with the Entitled Party (including, without limitation, any employment
agreement) all amounts due and payable to the Entitled Party by the Obligated
Party under this Section 8.
Section 8.6 Limitation of Liability. Notwithstanding anything to the contrary
-----------------------
in this Article 8 or elsewhere in this Agreement, in the event of the Parent or
either of the Companies making any claim for indemnification against any of the
Holders pursuant to any of the provisions of this Agreement or otherwise in
connection with the sale of the New Zealand Shares to National Media (for the
purposes of this Section 8.6, a "claim"), the following provisions shall apply
in addition to those set forth above:
(a) The total liability of the Holders in respect of all such claims
shall not exceed an amount equal to the value as of the Effective Time of the
consideration to be provided by National Media under this Agreement.
(b) The liability of the Holders in respect of a claim relating to a
liability incurred, or owing, by a Company shall, in the absence of fraud on the
part of any of the Holders in relation to such liability and/or the non-
disclosure thereof to National Media, not exceed the amount of that liability,
notwithstanding the basis upon which the consideration for the New Zealand
shares has been calculated.
35
<PAGE>
(c) To the extent that the total amount of all claims does not exceed
US$300,000, the liability of the Holders to indemnify the Parent or relevant
Company, as the case may be, shall be limited to 50% of the amount of the
aggregate claims up to $300,000.00 and for 100% thereafter, subject to the other
provisions of this Article 8.
(d) If a claim arises in relation to any matter in respect of which
the relevant Company is indemnified under any policy of insurance (or would have
been so entitled had any insurance policy in force at the Effective Time not
been canceled or altered at the express insistence of National Media) the
liability of the Holders in respect of such claim shall be limited to such
amount (if any) as is not (or would not have been) indemnified by such
insurance.
(e) If a claim arises due to any amount provided for present or
future taxes in the financial statements of either of the Companies at March 31,
1996 being inadequate, the Holders shall not be liable in respect of such claim
to the extent that the deficiency results from an error by Ernst & Young in
calculation of the amount provided unless the error was caused by incorrect
information provided by either of the Companies.
ARTICLE 9.
General Provisions
Section 9.1 Disclosure Schedules. Any disclosure made with reference to one
--------------------
or more sections of the Company Disclosure Schedule or the Parent Disclosure
Schedule shall be deemed disclosed with respect to each other section therein as
to which such disclosure is relevant provided such relevance is reasonably
apparent.
Section 9.2 Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered personally, three (3) days after
dispatch by recognized expedited courier (provided delivery is confirmed by the
carrier) and upon transmission by telecopy, confirmed received, to the parties
at the following addresses (or at such other address for a party as shall be
specified by like changes of address):
(a) If to Parent:
National Media Corporation
1700 Walnut Street, 9th Floor
Philadelphia, PA 19103
Telecopier No.: (215) 772-5013
Attention: Brian J. Sisko, Vice President/Corporate Development
36
<PAGE>
With a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102
Telecopier No.: (215) 568-6603
Attention: Stephen T. Burdumy, Esq.
(b) If to a Holder:
c/o Prestige Marketing International Limited
531 Great South Road
Penrose, Auckland, New Zealand
Telecopier No.: 64-9-525-7710
With a copy to:
Russell McVeagh Mckenzie Bartleet & Co.
The Shortland Centre
51-53 Shortland Street
P.O. Box 8
Auckland 1, New Zealand
Telecopier No.: 0-9-377-1849
Attention: John 0. Lusk
Section 9.3 Certain Definitions. For purposes of this Agreement, the term:
-------------------
(a) "affiliates" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person, including, without limitation, any
partnership or joint venture in which either of the Companies (either alone, or
through or together with any other subsidiary) has, directly or indirectly, an
interest of 10 percent or more;
(b) "business day" means any day other than a day on which banks in
New York, New York or Auckland, New Zealand are required or authorized to be
closed.
(c) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3)) of the Exchange Act); and
37
<PAGE>
(d) "subsidiary" or "subsidiaries" of any of the Companies, Parent or
any other person means any corporation, partnership, joint venture or other
legal entity of which a Company, Parent or such other person, as the case may be
(either alone or through or together with any other subsidiary), owns, directly
or indirectly, more than 50% of the stock or other equity interests the holders
of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
Section 9.4 Amendment. This Agreement may be amended by each of the Holders
---------
and Parent, in writing, at any time prior to the Effective Time.
Section 9.5 Waiver. At any time prior to the Effective Time, any party
------
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the party or parties to be bound
thereby.
Section 9.6 Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.7 Severability. If any term or other provision of this Agreement is
------------
held to be invalid, illegal or incapable of being enforced under any rule of law
or public policy by a court of competent jurisdiction, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby
are fulfilled to the extent possible.
Section 9.8 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties and supersedes all prior agreements and undertakings both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein, is not
intended to confer upon any other person any rights or remedies hereunder.
Notwithstanding the foregoing, the parties hereto acknowledge that the terms and
provisions of that certain Confidentiality Agreement dated January 15, 1996 (the
"Confidentiality Agreement") shall survive the execution of this Agreement and
continue in full force and effect. Each Holder hereto agrees to comply with all
terms of the Confidentiality Agreement as if he were named a party therein.
38
<PAGE>
Section 9.9 Assignment. This Agreement shall not be assigned by operation of
----------
law or otherwise, except that Parent may assign all or any of their rights
hereunder to any affiliate provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
Section 9.10 Parties In Interest. This Agreement shall be binding upon and
-------------------
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
Section 9.11 Failure or Indulgence Not Waiver, Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
Section 9.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF NEW ZEALAND.
Section 9.13 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same Agreement.
Section 9.14 Joint Participation. Each of the Holders has participated in the
-------------------
drafting of this Agreement and expressly acknowledges such joint participation,
to avoid application of any rule construing contractual language against the
party which drafted the language.
Section 9.15 Exhibits and Schedules. All Exhibits and Disclosure Schedules
----------------------
attached hereto are delivered pursuant to this Agreement are incorporated by
reference into, and made a part of, this Agreement.
ARTICLE 10.
Other Provisions
Section 10.1 Software Rights. Marketing has created or caused to be created
---------------
certain computer software designed to assist the Companies carry out the
telemarketing, order taking, fulfilment, inventory management, media management,
customer service and other functions of the business of the Companies (the
"Software"). The Software has been created at the expense of and pursuant to the
direction of Marketing. All of the intellectual property rights to the Software,
including, but not limited to, any
39
<PAGE>
alterations, additions or improvements thereto made subsequent to the Effective
Time belong to Marketing and not the Holders. Notwithstanding the foregoing, if
the Companies cease doing business due to the bankruptcy or insolvency of the
Companies, the ownership of such software shall revert to PM and Alan Meier.
Section 10.2 Waiver of Claims by Companies Against Holders. Parent shall
---------------------------------------------
ensure that all times after the Effective Time no Company takes any action,
proceeding, claim or demand against any of the present or former officers of
that Company, or against the present or any former shareholder of that Company,
in respect of any act, omission, matter or thing arising prior to March 31, 1996
except insofar as such act, omission, matter or thing may give rise to claim
against any of the Holders under the express provisions of this Agreement.
Section 10.3 Removal of Guarantees. To the extent that, as of the Effective
---------------------
Time, PM and/or SB and/or Holdings are acting as guarantor or surety for any
obligation of the Companies, an effort shall be made to have such guarantees or
sureties removed, including, but not limited to, the giving by Parent of a
substitute guarantee, but in lieu thereof, Parent shall, after the Effective
Time, undertake to indemnify each or all of them concerning such guarantees or
suretyships.
40
<PAGE>
IN WITNESS WHEREOF, Parent and each Holder have caused this Agreement to be
executed as of the date first written above.
National Media Corporation
By: /s/ Mark P. Hershhorn
--------------------------------
Name: Mark P. Hershhorn
Title President and Chief Executive Officer
HOLDERS:
Prestige Marketing Holdings Limited
By: /s/ Paul E. Meier
-----------------------------------
Name: Paul E. Meier
Title:
/s/ Paul E. Meier
------------------------------------------------
Paul E. Meier
/s/ Susan Barnes
------------------------------------------------
Susan Barnes
41
<PAGE>
Exhibit 2.2
ACQUISITION AGREEMENT
BY AND AMONG
NATIONAL MEDIA CORPORATION,
PAUL MEIER, SUSAN BARNES, ALAN MEIER,
AND TANCOT PTY LIMITED
DATED AS OF MAY 30, 1996
A PORTION OF THE PURCHASE PRICE PAYABLE HEREUNDER CONSISTS OF SHARES OF NATIONAL
MEDIA CORPORATION COMMON STOCK. SUCH COMMON STOCK HAS NOT BEEN REGISTERED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") AND ARE BEING OFFERED PURSUANT
TO ONE OR MORE EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT, INCLUDING
A SAFE HARBOR EXEMPTION FROM REGISTRATION UNDER REGULATION S ("REGULATION S")
PROMULGATED UNDER THE SECURITIES ACT. SUCH SHARES OF COMMON STOCK MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO U.S. PERSONS
(AS SUCH TERM IS DEFINED IN REGULATION S) UNLESS SUCH SHARES ARE REGISTERED
UNDER THE SECURITIES ACT OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT
TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<C> <S> <C>
ARTICLE 1
1.1 Acquisition of Stock 2
1.2 Directors and Officers 2
1.3 Consideration for Sale of Shares 2
1.4 Taking of Necessary Action; Further Action 4
1.5 Material Adverse Effect; Ordinary Course of Business 4
1.6 Tax Consequences 4
ARTICLE 2
2.1 Organization and Qualification; Subsidiaries 4
2.2 Organizational Documents 5
2.3 Capitalization 5
2.4 Authority Relative to this Agreement 5
2.5 No Conflict; Required Filings and Consents 6
2.6 Compliance 7
2.7 Financial Statements 7
2.8 Absence of Certain Changes or Events 7
2.9 No Undisclosed Liabilities and Commitments 8
2.10 Intentionally Omitted
2.11 Absence of Litigation 8
2.12 Employee Benefit Plans; Employment Agreements 8
2.13 Labor Matters 9
2.14 Intentionally Omitted
2.15 Restrictions on Business Activities 9
2.16 Title to Property 9
2.17 Taxes 10
2.18 Environmental Matters 11
2.19 Brokers 12
2.20 Full Disclosure 12
2.21 Intellectual Property 12
2.22 Interested Party Transactions 14
2.23 Insurance 14
2.24 Investment Purpose 15
2.25 Reliance on Exemptions 15
</TABLE>
(i)
<PAGE>
2.26 Information 15
2.27 Offshore Transaction 15
2.28 Intentionally omitted
2.29 No Scheme to Evade Registration 15
2.30 Legend on Securities 16
ARTICLE 3
3.1 Organization and Qualification 16
3.2 Authority Relative to this Agreement 16
3.3 No Conflict; Required Filings and Consents 17
3.4 Certificate of Incorporation and By-laws 17
3.5 Capitalization 17
3.6 Compliance; Permits 18
3.7 SEC Filings; Financial Statements 18
3.8 Absence of Certain Changes or Events 19
3.9 Restrictions on Business Activities 19
3.10 Title to Property 19
3.11 Full Disclosure 20
3.12 No Undisclosed Liabilities 20
3.13 Absence of Litigation 20
3.14 Insurance 20
3.15 Intentionally Omitted
3.16 Taxes 20
3.17 Brokers 21
3.18 No Stockholder Vote 21
3.19 Employee Benefit Plans 21
3.20 No Directed Selling Efforts in Regard to this Transaction 22
ARTICLE 4
4.1 Conduct of Business by the Companies Pending the Acquisition 23
4.2 No Solicitation or Sale of Share Capital or Business
Assets 25
4.3 Conduct of Business by Parent Pending the Acquisition 26
4.4 Intentionally Omitted
ARTICLE 5
5.1 Intentionally Omitted
5.2 Access to Information 26
5.3 Consents; Approvals 26
5.4 Notification of Certain Matters 26
5.5 Further Action 27
5.6 Public Announcements 27
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
<C> <S> <C>
5.7 Listing of Parent Common Stock 27
5.8 Conveyance Taxes 27
ARTICLE 6
6.1 Conditions to the Consummation of this Agreement 27
6.2 Additional Conditions to Obligations of Parent 28
6.3 Additional Conditions to Obligations of the Holders 30
ARTICLE 7
7.1 Termination 31
7.2 Effect of Termination 32
7.3 Fees and Expenses 32
ARTICLE 8
8.1 Survival 32
8.2 Indemnification 33
8.3 Conditions of Indemnification for Third Party Claims 33
8.4 Payment of Claims 34
8.5 Set-Off 34
8.6 Limitation of Liability 34
ARTICLE 9
9.1 Disclosure Schedules 35
9.2 Notices 35
9.3 Certain Definitions 36
9.4 Amendment 37
9.5 Waiver 37
9.6 Headings 37
9.7 Severability 37
9.8 Entire Agreement 37
9.9 Assignment 37
9.10 Parties In Interest 38
9.11 Failure or Indulgence Not Waiver; Remedies Cumulative 38
9.12 Governing Law 38
9.13 Counterparts 38
9.14 Joint Participation 38
9.15 Exhibits and Schedules 38
ARTICLE 10
10.1 Software Rights 38
10.2 Certain Trademark Rights 38
10.3 Waiver of claims by Companies Against Holders 39
10.4 Removal of Guarantees 39
(iii)
</TABLE>
<PAGE>
ACQUISITION AGREEMENT
Acquisition Agreement, dated as of May 30, 1996 (this "Agreement"), by and
among National Media Corporation, a Delaware corporation ("Parent" or "National
Media"), Paul Meier, an individual residing in New Zealand ("PM"), Susan Barnes,
an individual residing in New Zealand ("SB"), Alan Meier, an individual residing
in Australia ("AM"), and Tancot Pty Limited (ACN 059 311 278), an Australian
corporation ("TPL").
PM, SB, AM and TPL are hereinafter sometimes collectively referred to as
the "Shareholders" or the "Holders".
WITNESSETH:
WHEREAS, PM, SB, AM and TPL collectively beneficially own all of the issued
and outstanding share capital of Suzanne Paul Holdings Pty Limited(ACN 003 168
474), an Australian corporation ("Holdings"), PM, SB, TPL and Holdings
collectively own all of the issued and outstanding share capital of Suzanne Paul
(Australia) Pty Limited (ACN 003 294 764), an Australian corporation ("SP
Australia");and Holdings owns all of the issued and outstanding capital stock of
Telemall Shopping Pty Ltd (ACN 071 703 878), an Australian corporation
("Telemall");
WHEREAS, Holdings, SP Australia and Telemall operate a direct
marketing/infomercial business out of Sydney, Australia and doing business
throughout Australia;
WHEREAS, National Media desires to acquire (i) all of the issued and
outstanding share capital of Holdings from PM, SB, AM and TPL and (ii) such of
the issued and outstanding capital stock of SP Australia owned by PM, SB and TPL
for the purpose of continuing the business being conducted by Holdings, Telemall
and SP Australia.
WHEREAS, the Board of Directors of National Media has determined that it is
advisable and in the best interests of its stockholders for National Media to
acquire such share capital of each of Holdings and SP Australia upon the terms
and subject to the conditions set forth herein; and
WHEREAS, as an inducement to National Media's willingness to enter into
this Agreement, each of PM, SB and AM is hereby agreeing to terminate his/her
existing employment agreement(s) with the Companies (as hereinafter defined) and
AM is agreeing to enter into a new five-year employment agreement in
substantially the form attached hereto as Exhibit A.
Holdings, SP Australia and Telemall are sometimes collectively referred to
as the "Companies".
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, National Media and the Shareholders hereby agree as follows:
-1-
<PAGE>
ARTICLE 1.
Section 1.1 Acquisition of Stock.
--------------------
(a) At the Effective Time (as defined below), and subject to and
upon the terms and conditions of this Agreement, the Shareholders shall sell,
transfer and assign or cause to be sold, transferred and assigned all of the
issued and outstanding share capital of Holdings and all of the capital stock of
SP Australia beneficially owned by them (the "Australian Shares") to National
Media or its assignee. Such sale and transfer shall be made in exchange for the
consideration described in Section 1.3 below.
(b) Subject to the satisfaction or waiver of the conditions set
forth in Article 6 hereof, the consummation of the sale and transfer of the
Australian Shares will take place on or before July 2, 1996, at the offices of
Gadens Ridgeway in Sydney, Australia or such place or places as shall be agreed
by the parties hereto (the date of the consummation of the purchase and sale of
the Australian Shares hereunder is hereinafter referred to as the "Effective
Time").
Section 1.3 Directors and Officers. Concurrent with the Effective Time,
----------------------
the boards of directors of each of the Companies shall be elected by National
Media; provided, however, that such boards of directors shall each consist of
seven (7) persons and shall include PM, SB and AM on each board;
Section 1.2 Consideration for Sale of Shares.
--------------------------------
(a) In exchange for the Australian Shares, at the Effective Time,
National Media shall deliver to the Shareholders, on a pro rata basis based on
their respective effective ownership interest in the Companies, as determined by
them, or for their benefit, as described below, the following:
(i) 81,228 shares of National Media common stock plus an
amount equal to all dividends and other distributions or rights which would have
been payable or issuable with respect to such shares of common stock from April
30, 1996 until the Effective Time if such shares of common stock were
outstanding during such period; and
(ii) a promissory note in the principal amount of
US$2,800,000, with interest at the rate of six (6%) percent per annum, payable
on or before December 5, 1996 (the "Promissory Note").
(b) The shares of National Media Common Stock to be delivered to
the Shareholders pursuant to (a) above shall hereinafter be referred to as the
"NM Shares".
(c) In addition to the foregoing consideration,
-2-
<PAGE>
(i) if the consolidated "After Tax Net Income" (as
hereinafter defined) of the Companies for the twelve (12) month period ending
March 31, 1997 ("the "1997 Fiscal Year") equals or exceeds US$2,074,800, then an
additional amount on account of the purchase price shall be payable hereunder in
an amount equal to two and one-half (2.5) times the amount by which the
Companies' consolidated After Tax Net Income for the 1997 Fiscal Year exceeds
US$1,729,000, but in no event shall the aggregate amount on account of the
additional purchase price payable pursuant to this Section 1.3(c) pertaining to
the 1997 Fiscal Year exceed US$864,500.
(ii) if the consolidated average After Tax Net Income of the
Companies for the twelve (12) month period ending March 31, 1998 (the "1998
Fiscal Year") and the 1997 Fiscal Year equals or exceeds US$2,074,800, then an
additional amount on account of the purchase price shall be payable pursuant to
this Section 1.3(c) in an amount equal to US$1,729,000, less any amount
previously paid relating to the 1997 Fiscal Year as calculated pursuant to (i)
above.
The allocation of such amount, if any, payable hereunder among the
Holders shall be on the same basis as the consideration paid pursuant to (a)
above. The currency exchange ratio to be utilized to convert the Companies'
After Tax Net Income from AUS$ to US$ shall be average foreign exchange rate
during the entire applicable fiscal year (as determined in connection with the
audit of Parents' and the Companies' financial statements.
Any such additional purchase price shall be payable (i) as soon as
practicable following the audit of the Companies' financial statements for each
of the 1997 and 1998 Fiscal Years; and (ii) solely in shares of National Media
common stock valued for purposes hereof at its prior twenty trading day average
closing price on the New York Stock Exchange as of March 31, 1997 and 1998
respectively. The Shareholders shall also be entitled to an amount equal to all
dividends and other distributions or rights which would have been payable or
issuable with respect to such shares of common stock between March 31, 1997 or
1998, as applicable, and the actual issuance of such shares to the Shareholders.
No interest shall accrue or be payable with respect to the additional purchase
price payable hereunder (including, without limitation, any amounts payable in
lieu of dividends or distributions pursuant to the immediately preceding
sentence).
For purposes hereof, "After Tax Net Income" shall be defined as
follows:
Net income, after payment/satisfaction of, or accrual for, all
applicable taxes, etc, determined in accordance with ASGAAP (as hereinafter
defined), applied on a basis consistent with the audit of the periods ended
March 31, 1996. Parent and the other parties hereto agree that Parent shall not
negatively impact the calculation of After Tax Net Income by causing the
Companies to incur any expenses or expenditures which do not directly relate to
the operation of their respective businesses and which are consistent with the
Companies' ordinary course of business, as carried on prior to the Effective
Time, with such adjustments thereto as are necessary to take into account any
requirement of law or regulation applicable to the Companies. Notwithstanding
the foregoing, Parent shall have the ability to charge to the Companies'
intercompany charges which are reasonable and which reflect actual value given.
In any event,
-3-
<PAGE>
the costs of the audit of the Companies' financial statements for the periods
ended March 31, 1996 shall not effect the calculation of After Tax Net Income
for the 1997 or 1998 Fiscal Years.
The Shareholders shall have the opportunity to comment upon the
calculation of After Tax Net Income for the subject periods. And if there is
any dispute between the Shareholders and Parent, it shall be resolved by an
independent person nominated by the President of the Law Society of New South
Wales.
Section 1.4 Taking of Necessary Action; Further Action. Each of the
------------------------------------------
parties hereto in good faith will take, at or prior to the Effective Time, all
such commercially reasonable and lawful action as may be necessary or
appropriate in order to effectuate the transactions contemplated hereby in
accordance with this Agreement as promptly as possible. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest National Media or its assignee or
nominee with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of the businesses being conducted by the
Companies, the officers and directors of the Companies are fully authorized in
the name of their respective corporations or otherwise to take, and will take,
all such lawful and necessary action.
Section 1.5 Material Adverse Effect; Ordinary Course of Business. When
----------------------------------------------------
used in connection with any of the Companies, or Parent or any of its
subsidiaries, as the case may be, the term "Material Adverse Effect", or any
derivation thereof, means any change or effect that, individually or when taken
together with all other such changes or effects that have occurred prior to the
date of determination of the occurrence of the Material Adverse Effect, is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition, prospects or results of operations of
such Company or Parent and its subsidiaries, as the case may be, in each case
taken as a whole.
When used in connection with any of the Companies or Parent or any of its
subsidiaries, as the case may be, the term "ordinary course of business", or
derivations thereof, means the normal conduct of business consistent with past
practice except that no action which is contrary to law, order, rule or
regulation or otherwise contrary to commercial reasonableness shall be
considered to be in the ordinary course of business.
Section 1.6 Tax Consequences. The consideration to be paid for the
-----------------
Australian Shares hereunder reflects the price that Parent would have paid even
if all such consideration had been payable hereunder at the Effective Time and
does not reflect any greater amount payable on account of the timing of the
payment of any additional purchase price.
-4-
<PAGE>
ARTICLE 2
Representations and Warranties of the Holders
Each Holder hereby, jointly and severally, represents and warrants to
Parent (which representations and warranties shall be true and correct on the
date hereof and at the Effective Time), as follows:
Section 2.1 Organization and Qualification; Subsidiaries. Each Company is
--------------------------------------------
a corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority and is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, consents, certificates, approvals,
exemptions and orders (collectively "Approvals") necessary to own, lease and
operate the properties it purports to own, operate or lease and to carry on its
business as it is now being conducted, except where the failure to be so
organized and existing or to have such power, authority and Approvals would not
or is not reasonably likely to have a Material Adverse Effect. Each of the
Companies is in compliance with the terms of the Approvals, except where the
failure to so comply would not and is not reasonably likely to have a Material
Adverse Effect. There are no jurisdictions where, based upon the properties
owned, leased or operated by any of the Companies, or the nature of the
Companies' activities, any of the Companies is required to be licensed or
qualified. Except for Holdings' ownership of share capital of each of SP
Australia and Telemall, none of the Companies directly or indirectly owns any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any equity or similar interest in any corporation,
partnership, joint venture or other business association, entity or person.
Section 2.2 Organizational Documents. Each Company has heretofore
------------------------
delivered to Parent complete and correct copies of its organizational documents,
as amended to date certified as such by AM. Each of such organizational
documents are in full force and effect. Neither Company is in violation of any
of the provisions of its organizational documents, which would be likely to have
a Material Adverse Effect.
Section 2.3 Capitalization. The authorized share capital of Holdings
--------------
consists solely of one hundred thousand (100,000) ordinary shares, AS $1, of
which one thousand and one (1,001) ordinary shares are issued and outstanding,
validly issued and fully paid. The authorized share capital of SP Australia
consists solely of one hundred thousand (100,000), ordinary shares, AS $1, of
which one thousand (1,000) A Shares and two hundred ninety-eight (298) ordinary
shares are issued and outstanding, validly issued and fully paid. The
authorized share capital of Telemall consists solely of one million (1,000,000)
AS $1, two (2) ordinary shares, of which are issued and outstanding, validly
issued and fully paid. All of the capital shares of Holdings are beneficially
owned by the Shareholders; all of the capital shares of SP Australia are owned
by Holdings, SB, PM and TPL; and all of the capital shares of Telemall are owned
by Holdings, in each case, free and clear of all security interests, liens,
claims, pledges, agreements, limitations charges or other encumbrances of any
nature whatsoever. There are no options, warrants or other rights, agreements,
arrangements or outstanding commitments of any character relating to the issued
or unissued share capital
-5-
<PAGE>
of any of the Companies or obligating any of the Companies to issue or sell any
share capital of, or other equity interests in, any of the Companies
(collectively, "Stock Purchase Rights") and, except as set forth on Schedule 2.3
of the Company Disclosure Schedule, none of the Companies has adopted or made
any commitment to adopt any plan for the issuance of any of its share capital or
any Stock Purchase Rights. There are no obligations, contingent or otherwise, of
any Company to repurchase, redeem or otherwise acquire any share capital of any
of the Companies or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any person.
Section 2.4 Authority Relative to this Agreement. TPL has all necessary
------------------------------------
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by TPL and
the consummation by TPL of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action and no other corporate
proceedings on the part of TPL are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by each Holder and, assuming the due
authorization, execution and delivery by Parent, constitutes the legal, valid
and binding obligation of each Holder, enforceable against each Holder in
accordance with its terms, except as the enforceability thereof may be limited
by (i) the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect relating
to or affecting the rights and remedies of creditors generally, and (ii) the
effect of general principles of equity, whether enforcement is considered in a
proceeding in equity or at law, and the discretion of the court before which any
proceeding therefor may be brought.
Section 2.5 No Conflict; Required Filings and Consents.
------------------------------------------
(a) Section 2.5(a) of that certain written disclosure schedule,
dated of even date herewith, delivered by the Companies to Parent (the "Company
Disclosure Schedule") includes a list of (i) all contracts to which any Company
is a party and which provides for aggregate payments, either to or from a
Company, of US$50,000 or more and (ii) all other agreements which are material
to the business, assets (including intangible assets), financial condition,
prospects or results of operations of any Company ((i) and (ii) being,
collectively, the "Material Contracts"). The Companies have delivered to Parent
true and correct copies of all written Material Contracts, (and a written
description of each oral Material Contract) as amended to date.
(b) Except as set forth in Section 2.5(b) of the Company
Disclosure Schedule, the execution and delivery of this Agreement by each of the
Holders does not, and the performance of this Agreement by each of the Holders
will not, (i) conflict with or violate the organizational documents of any of
the Companies, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to any of the Companies or any Holder or by which
any of the Companies or any such Holder or any of their respective properties is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event that, with notice or lapse of time or both, would become a default), or
impair any of the Companies' rights
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or alter the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
Material Contract or any agreement to which a Holder or any of the Companies is
a party, or result in the creation of a lien or encumbrance on any of the
properties or assets of any Holder or any of the Companies pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which any Holder or any of the
Companies is a party or by which any Holder or any of the Companies or any of
their respective properties is bound or affected.
(c) Other than as set forth in Section 2.5(c) of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the Holders
does not, and the performance of this Agreement by the Holders will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign
except where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the transactions contemplated hereby, or otherwise prevent or
delay the Holders from performing their respective obligations under this
Agreement, or would not and is not reasonably likely to otherwise have a
Material Adverse Effect.
Section 2.6 Compliance. None of the Companies are in conflict with, or in
----------
default or violation of, (i) any law, rule, regulation, order, writ, judgment or
decree applicable to it or by which it or any of its properties is bound or
affected, including, but not limited to, any consumer protection type laws in
any jurisdiction where the Companies air their infomercials and/or sell their
products (including, without limitation, the Australia Trade Practice Act of
1974, Fair Trading Act of 1987, FACTS Commercial Television Code of Practices,
Australia Bureau Casting Authority's Television Program Standards, the
Advertising Code of Australia and the Media Council of Australia Code) or (ii)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which it is a party or by
which it or any of its properties is bound or affected, except for any such
conflicts, defaults or violations which would not and is not reasonably likely
to have a Material Adverse Effect.
Section 2.7 Financial Statements. Each of the Companies has furnished to
--------------------
Parent its balance sheet as of each of March 31, 1996 and June 30, 1995 and the
related statements of income, stockholders' equity and cash flows for such
Company for the periods ended June 30, 1995 and March 31, 1996. All such
financial statements have been prepared in accordance with the Corporation Law
and Australian generally accepted accounting principles consistently applied
("ASGAAP") and fairly present the position of each of the Companies as of the
respective dates of such balance sheets, respectively, and the results of each
of their operations for the years then ended. Except as set forth in Section
2.7 of the Company Disclosure Schedule, since March 31, 1996, there has not been
any change in the assets, liabilities or financial condition of either of the
Companies from that reflected in the March 31, 1996 balance sheets except for
changes in the ordinary course of business which in the aggregate have not had
and are not reasonably likely to have a Material Adverse Effect.
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Section 2.8 Absence of Certain Changes or Events. Except as specifically
------------------------------------
acknowledged herein or otherwise set forth in Section 2.8 of the Company
Disclosure Schedule, since March 31, 1996 each of the Companies has conducted
its business in the ordinary course and there has not occurred: (i) any
amendments or changes in the organizational documents of any of the Companies;
(ii) any damage to, or destruction or loss of, any assets of any of the
Companies (whether or not covered by insurance) that had or is reasonably likely
to have a Material Adverse Effect; (iii) any material depletion of any assets of
any of the Companies; (iv) any change by any of the Companies in its accounting
methods, principles or practices; (v) any revaluation by any of the Companies of
any of its assets, including, without limitation, writing down the value of
capitalized inventory, or writing off notes or accounts receivable other than in
the ordinary course of business; (vi) any redemption or other acquisition of
share capital by any of the Companies or any declaration or payment of any
dividend or other distribution in cash, stock or property with respect to the
share capital of any of the Companies; (vii) any transfer of, or rights granted
under, any material leases, licenses, agreements, patents, trademarks, trade
names or copyrights other than those transferred or granted in the ordinary
course of business; (viii) any mortgage, debenture, charge, pledge, security
interest or imposition of lien or other encumbrance on any asset of any of the
Companies, except those that are immaterial and incurred in the ordinary course
of business; (ix) any early collection, at a discount or par, of any receivable
of any of the Companies; or (x) any event which has had or is reasonably likely
to have a Material Adverse Effect.
Section 2.9 No Undisclosed Liabilities and Commitments. Except as is
------------------------------------------
disclosed in the March 31, 1996 balance sheets referred to in Section 2.7 above
or in Section 2.9 of the Company Disclosure Schedule, none of the Companies has
any liabilities, obligations or commitments (absolute, accrued, contingent or
otherwise) except for such liabilities (i) arising in the ordinary course of
business and (ii) trade accounts payable (i.e., accounts payable, accrued
expenses) and Taxes (as defined in Section 2.17 hereof), incurred by either of
the Companies after March 31, 1996. Those liabilities which (A) relate to
occurrences after the Effective Time; (B) are described in the preceding
sentence or (C) are set forth on Schedule 2.9 of the Company Disclosure Schedule
are referred to herein as the "Assumed Liabilities". As further clarification
hereunder, the term "Assumed Liabilities" shall not include (x) any Tax
liability which is due and payable on or prior to the Effective Time pursuant to
any law, regulation or order (other than as set forth in the immediately
preceding sentence) or (y) any Tax liability which otherwise relates to any
period up to and including March 31, 1996 (except as indicated on the March 31,
1996 audited balance sheets of the Companies).
Section 2.10 [Intentionally Omitted]
Section 2.11 Absence of Litigation. Except as set forth in Section 2.11
---------------------
of the Company Disclosure Schedule, there are no claims, actions, suits,
proceedings or investigations which, to the knowledge of any of the Companies or
any Holder, are pending or threatened against any of the Companies or any
properties or rights of any of the Companies, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign.
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Section 2.12 Employee Benefit Plans; Employment Agreements.
---------------------------------------------
(a) There are no director or employee benefit plans, bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance or termination pay, medical or life insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement plans,
agreements or arrangements or other similar fringe or employee benefit plans,
programs or arrangements, or any current or former employment or executive
compensation or severance agreements, written or otherwise, for the benefit of,
or relating to, any current or former director or employee of any of the
Companies or any trade or business (whether or not incorporated) which is a
subsidiary or holding company of any of the Companies or otherwise a related
body corporate of any of the Companies (a "Company Act Affiliate") within the
meaning of Division 6 of Part 1.2 of the Corporation Law to which any of the
Companies or any Company Act Affiliate is a party, with respect to which any of
the Companies or any Company Act Affiliate has or could have any obligation, as
well as each plan with respect to which any of the Companies or any Company Act
Affiliate could incur liability if such plan has been or were terminated
(together, the "Employee Plans").
(b) Except as set forth in Section 2.12 of the Company Disclosure
Schedule, none of the Companies has granted, or adopted any plans providing for
the grant of, any option to purchase any share capital of any of the Companies.
(c) Each of the Companies has delivered to Parent (i) true and
correct copies of all agreements which it has with any of its employees; (ii)
true and correct copies of all agreements with consultants obligating it to make
annual cash payments in an amount exceeding A $10,000; (iii) a schedule listing
all of its employees who have executed a non-competition agreement with it, and
(iv) true and correct copies of all plans, programs, agreements and other
arrangements of such Company with or relating to its employees which contain
change in control provisions or prohibit assignment thereof by the Company
without consent.
Section 2.13 Labor Matters. There are no disputes or controversies pending
-------------
or, to the knowledge of any of the Holders, threatened, between any of the
Companies and any of their respective employees or former employees, which
disputes or controversies have or are reasonably likely to have a Material
Adverse Effect and none of the Companies has any actual or contingent liability
to pay compensation for loss of office or employment to any ex-officer or ex-
employee of any of the Companies and there is no payment due in connection with
the redundancy of any employee; none of the Companies is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by such Company nor does any Holder know of any activities or
proceedings of any labor union to organize any such employees; and no Holder has
any knowledge of any proposed or existing strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of any of the
Companies.
Section 2.14 [Intentionally Omitted]
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<PAGE>
Section 2.15 Restrictions on Business Activities. Except for this
-----------------------------------
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon any of the Companies which has or could reasonably be expected to
have the effect of prohibiting or impairing any material business practice of
any of the Companies, the acquisition of property by any of the Companies or the
conduct of business by any of the Companies as currently conducted or as
proposed to be conducted by the Companies.
Section 2.16 Title to Property. None of the Companies own any real
-----------------
property. Section 2.16 of the Company Disclosure Statement sets forth a true and
complete list of all real property leased by any of the Companies, and the
aggregate monthly rental or other fee payable under such lease. Each Company has
good, marketable and defensible title to all of their properties and assets,
free and clear of all liens, charges, debentures and encumbrances, except liens
for taxes not yet due and payable and such liens or other imperfections of
title, if any, as do not materially detract from the value of or interfere with
the present use of the property affected thereby or which would not and are not
reasonably likely to have a Material Adverse Effect; and to the knowledge of the
Holders, all leases pursuant to which any of the Companies leases from others
material amounts of real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, to the
knowledge of the Holders, under any of such leases, any existing material
default or event of default (or event which with notice or lapse of time, or
both, would constitute a material default and in respect of which any of the
Companies has not taken adequate steps to prevent such a default from occurring)
except where the lack of such good standing, validity and effectiveness or the
existence of such default or event of default would not and is not reasonably
likely to have a Material Adverse Effect. All the facilities of each of the
Companies are in good operating condition and repair, except where the failure
of such plants, structures and equipment to be in such good operating condition
and repair would not and is not reasonably likely to, individually or in the
aggregate, have a Material Adverse Effect.
Section 2.17 Taxes.
-----
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean
taxes, fees, levies, duties, tariffs, imposts and governmental impositions or
charges of any kind in the nature of (or similar to) taxes, payable to any
national, federal, state, provincial, local or foreign taxing authority,
including (without limitation) (i) income, franchise, profits, gross receipts,
ad valorem, net worth, value added, sales, use, service, real or personal
property, special assessments, share capital, license, payroll, withholding,
employment, social security, workers' compensation, unemployment compensation,
fringe benefits, superannuation guaranty levy, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes
and (ii) interest, penalties, additional taxes and additions to taxes imposed
with respect thereto; and "Tax Returns" shall mean returns, reports and
information statements with respect to Taxes required to be filed with the New
Zealand or Australian taxing authorities or any other taxing authority, domestic
or foreign, including, without limitation, consolidated, combined and unitary
tax returns.
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<PAGE>
(b) Other than as disclosed in Section 2.17(b) of the Company
Disclosure Schedule (which Schedule sets forth each Tax Return not so filed and
the separate amount of each type of Tax payable to any taxing authority), each
of the Companies, and any consolidated, combined, unitary or aggregate group for
Tax purposes of which any of the Companies is or has been a member, has filed
all Tax Returns required to be filed by them or any of them on or prior to the
date hereof and will file on or prior to the Effective Time all such Tax Returns
required to be filed on or prior to the Effective Time, and have paid and
discharged (or will pay and discharge prior to the Effective Time) all Taxes
shown therein to be due or are otherwise due to have been paid on an estimated
basis and there are no other Taxes that would be due and payable on or prior to
such time if asserted by a taxing authority, except such as are being contested
in good faith by appropriate proceedings (to the extent that any such
proceedings are required) or with respect to which a Company is maintaining on
its March 31, 1996 balance sheet, in accordance with the Corporation Law and
ASGAAP, reserves which are adequate for their payment. No taxing authority or
agency is now asserting or, to the best of each Holder's knowledge, threatening
to assert against any of the Companies any deficiency or claim for additional
Taxes other than additional Taxes with respect to which a Company is maintaining
on its March 31, 1996 balance sheet, in accordance with the Corporation Law and
ASGAAP, reserves which are adequate for their payment. To the knowledge of the
Holders, no Tax Return of any of the Companies is currently being audited by any
taxing authority. No material tax claim has become a lien on any asset of any
of the Companies and none of the Companies has granted any waiver of any statute
of limitations with respect to, or any extension of a period for the assessment
of, any Tax. None of the Companies are required to include in income (i) any
material items in respect of any change in accounting principles or any deferred
intercompany transactions, or (ii) any instalment sale gain where, in each case,
the inclusion in income would result in a tax liability materially in excess of
the reserves therefor.
(c) No power of attorney has been granted by any of the Companies
with respect to any matter relating to Taxes which is currently in force.
(d) Except as set forth in Section 2.17(d) of the Company
Disclosure Schedule, none of the Companies is a party to any agreement or
arrangement (written or oral) providing for the allocation or sharing of Taxes.
(e) Except as set forth in Section 2.17(e) of the Company
Disclosure Schedule, each Company has withheld from each payment made to any of
their respective past or present employees, officers or directors the amount of
all Taxes and other deductions required by law or regulation to be withheld
therefrom and paid the same to the proper tax or other receiving officers within
the time required by law or regulation.
(f) Each Company has remitted to the appropriate Tax authority
when required by law to do so all amounts collected by it on account of all
retail sales Tax.
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(g) Except as disclosed in Section 2.17(g) of the Company
Disclosure Schedule, there has been no material debt to a third party of any of
the Companies which has been forgiven and which has given rise to (or is
expected to give rise to) "cancellation of indebtedness income".
(h) All Tax Returns have been prepared in accordance with the
requirements of the Income Tax Assessment Act (1936) (the "Income Tax Act") and
(i) include full, accurate and true details of all income derived by each
Company from all sources both within and outside Australia for the periods to
which they relate, (ii) include full, complete and true disclosure of all
matters required by the Income Tax Act to be disclosed or otherwise relevant to
the proper determination of each Company's liability to Taxes, and (iii) do not
include any claim for any expenditure or allowance as a deduction against the
income of a Company or the Taxes payable by each Company which has not been
properly incurred by the Company in the course of earning the income of the
Company or which is of a capital or private nature or not otherwise allowable or
deductible against such income or Taxes in accordance with the Income Tax Act or
in accordance with the requirements of other relevant legislation;
(i) Each Company has at all times complied with the Income Tax
Act and all other Commonwealth, state, semi-government, municipal and foreign
revenue laws in relation to Taxes which are, or have been, of application to
each Company.
Section 2.18 Environmental Matters.
---------------------
(a) Except in all cases, in the aggregate, as have not had and
could not reasonably be expected to have a Material Adverse Effect, each of the
Companies (and with respect to clause (iii) below, each Holder) (i) has obtained
all applicable permits, licenses and other authorizations which are required
under any national, federal, state, provincial or local laws relating to
pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into ambient air, surface
water, ground water or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
by any of the Companies (or their respective agents); (ii) is in compliance with
all terms and conditions of such required permits, licenses and authorization,
and also is in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in such laws or contained in any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder; (iii) as of the date hereof, is not aware of nor have
received notice of any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance with or which would give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action, suit or
proceeding, based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste by any of the Companies (or
any of their respective agents); (iv) have taken all actions
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<PAGE>
necessary under applicable requirements of any national, federal, state or local
laws, rules or regulations to register any products or materials required to be
registered by any of the Companies (or any of their respective agents)
thereunder; and (v) has complied with all applicable occupational safety and
health requirements of federal, state or local laws, rules or regulations
relating to the use of storage of any hazardous, toxic or carcinogenic
substances.
(b) Set forth in Section 2.18 of the Company Disclosure Schedule
are all known or suspected environmental conditions or problems at each site of
operation of any of the Companies, including but not limited to the presence of
asbestos (friable or encapsulated), transformers containing PCBs, radon and any
aboveground or underground storage tanks.
Section 2.19 Brokers. No broker, finder or investment banker is entitled
-------
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any of the Companies or any of the Holders.
Section 2.20 Full Disclosure. No statement contained herein or in any
---------------
certificate or schedule furnished or to be furnished by any of the Companies or
any Holder to Parent in, or pursuant to the provisions of, this Agreement
contains or shall contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in the light of the
circumstances under which it was made, to make the statements herein or therein
not misleading.
Section 2.21 Intellectual Property.
---------------------
(a) Each of the Companies owns, or is licensed or otherwise
possesses legally sufficient rights to use, all patents, trademarks, trade
names, service marks, copyrights and any applications therefor, technology,
know-
how, computer software programs or applications and tangible or intangible
proprietary information or material that are used or proposed to be used in the
business of such Company as currently conducted in any material respect,
including, but not limited to, any such intellectual property utilized in the
context of any infomercials produced by or for the Companies. Section 2.21(a) of
the Company Disclosure Schedule lists all current patents, registered and
material unregistered trademarks and service marks, registered and material
unregistered copyrights, trade names and any applications therefor owned by any
of the Companies (the "Company Intellectual Property Rights"), and specifies the
jurisdictions in which each such Company Intellectual Property Right has been
issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners. Section 2.21(a) of
the Company Disclosure Schedule lists (i) any requests any of the Companies has
received to make any registration of the type referred to in the immediately
preceding sentence, including the identity of the requester and the item
requested to be so registered, and the jurisdiction for which such request has
been made; (ii) all material licenses, sublicenses and other agreements as to
which any of the Companies is a party and pursuant to which any person is
authorized to use any Company Intellectual Property Right, or any trade secret
material to any of the Companies, and
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includes the identity of all parties thereto, a description of the nature and
subject matter thereof, the applicable royalty and the term thereof; and (iii)
all material licenses, sublicenses and other agreements as to which either of
the Companies is a party and pursuant to which any of the Companies is
authorized to use any intellectual property rights ("Third Party Intellectual
Property Rights"), or other trade secret of a third party in or as any product,
and includes the identity of all parties thereto, a description of the nature
and subject matter thereof, the applicable royalty and the term thereof.
(b) Except as set forth in Section 2.21(b) of the Company
Disclosure Schedule, none of the Companies are, nor will it be as a result of
the execution and delivery of this Agreement or the performance of the Holders'
obligations hereunder, in violation of any license, sublicense or agreement
described in Section 2.21(a) of the Company Disclosure Schedule. No claims with
respect to the Company Intellectual Property Rights, any trade secret material
to any of the Companies, or Third Party Intellectual Property Rights to the
extent arising out of any use, reproduction or distribution of such Third Party
Intellectual Property Rights by or through any of the Companies, are currently
pending or, to the knowledge of any Holder are threatened by any person, nor
does any Holder know of any valid grounds for any bona fide claims (i) to the
effect that the manufacture, sale, licensing or use of any product (including
all infomercials produced by or for any of the Companies) as now used, sold or
licensed or proposed for use, sale or license by any of the Companies infringes
on any copyright, patent, trademark, service mark or trade secret; (ii) against
the use by any of the Companies of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software programs and
applications used in the business of any of the Companies as currently conducted
or as proposed to be conducted by any of the Companies; (iii) challenging the
ownership, validity or effectiveness of any of the Company Intellectual Property
Rights or other trade secret material to any of the Companies; or (iv)
challenging the license or legally enforceable right to use of the Third Party
Intellectual Property Rights. To the knowledge of each Holder, all patents,
registered trademarks, trade names and copyrights held by each of the Companies
are valid and subsisting. Except as set forth in Section 2.21(b) of the Company
Disclosure Schedule, to the knowledge of each Holder, there is no material
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property Rights by any third party, including any employee or
former employee of either of the Companies.
(c) Except as set forth in Section 2.21(c) of the Company
Disclosure Schedule, none of the Companies (nor does any Holder in the case of
clause (ii) below) (i) has been sued or charged in writing as a defendant in any
claim, suit, action or proceeding which involves a claim or infringement of
trade secrets, any patents, trademarks, service marks, trade names or copyrights
and which has not been finally terminated prior to the date hereof or been
informed or notified by any third party that any of the Companies may be engaged
in such infringement or (ii) has knowledge of any infringement liability with
respect to, or infringement by, any of the Companies of any trade secret,
patent, trademark, service mark, trade names or copyright of another.
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(d) None of the Companies are aware that any employee of any of
the Companies is obligated under any contract or contracts (including licenses,
agreements, covenants and other commitments of any nature), or is subject to any
order, writ, judgment, injunction, decree, determination or award of any court,
administrative agency or other tribunal, that restricts the employee's
activities on behalf of any of the Companies as presently conducted or interfere
with the use of such employee's best efforts to promote the interests of such
Company.
Section 2.22 Interested Party Transactions. Except as set forth in Section
-----------------------------
2.22 of the Company Disclosure Statement, no director, officer or employee of
any of the Companies and no Holder nor any relative or any affiliate of any of
the foregoing (i) has any pecuniary interest in, or receives any compensation
for services, from, any supplier, customer, licensor or licensee of either of
the Companies or in any other business enterprise with which any of the
Companies conducts business or with which any of the Companies is in competition
or (ii) is indebted to any of the Companies; provided, however, that the
foregoing representation does not apply to the ownership by any Holder of up to
two percent (2%) of the outstanding equity securities of any company whose stock
is traded on a national securities exchange or quoted on a national interdealer
quotation system. Section 2.22 of the Company Disclosure Statement sets forth
all compensation or other distribution or remuneration, paid during the last
twelve months, by the Companies to any Holder and to all relatives and
affiliates of any Holder.
Section 2.23 Insurance. Section 2.23 of the Company Disclosure Schedule
---------
lists all insurance policies, including, but not limited to, producers' errors
and omissions polices, and fidelity bonds covering the assets, business,
equipment, properties, operations, employees, officers and directors of each of
the Companies. There is no claim by any of the Companies pending under any of
such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums payable
under all such policies and bonds have been paid and each of the Companies is
otherwise in full compliance with the terms of such policies and bonds. None of
the Companies knows of any threatened termination of, or any threatened material
premium increase with respect to, any such policies. The insurance coverages
maintained by the Companies are consistent with prudent commercial practice.
Section 2.24 Investment Purpose. Each Holder is acquiring the shares of
------------------
National Media common stock issuable to such Holder (directly or indirectly)
pursuant to Section 1.3(a) and 1.3(c) hereof for its own account for investment
only and not with a present view towards the public sale or distribution
thereof, except pursuant to sales that are exempt from the registration
requirements of the Securities Act and/or sales registered under the Securities
Act. Each Holder understands that such Holder must bear the economic risk of
this investment indefinitely unless such common stock is registered pursuant to
the Securities Act and any applicable state securities laws, or an exemption
from such registration is available, and that Parent has no present intention of
registering any such common stock. No Holder has any present plan or intention
to sell such shares of National Media common stock in the United States or to a
U.S. person (as such term is defined in Rule 902(o) of Regulation S) at any
predetermined time, and has made no predetermined arrangements to sell such
common stock.
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<PAGE>
Section 2.25 Reliance on Exemptions. Each Holder understands that the
----------------------
National Media common stock issuable hereunder is being issued in reliance upon
Regulation S under the Securities Act and upon specific exemptions from the
registration requirements of state securities laws and that Parent is relying
upon the truth and accuracy of, and the Holders' compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Holders set forth herein in order to determine the availability of
Regulation S and such exemptions and the eligibility of the Holders to acquire
such shares of common stock.
Section 2.26 Information. Each Holder acknowledges that it has received a
-----------
copy of the Parent SEC Reports. The Holders and their advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of Parent which have been requested by the Holders or their advisors.
The Holders and their advisors, if any, have been afforded the opportunity to
ask questions of Parent and receive answers to any such inquiries regarding the
issuance of the Parent common stock hereunder and the information provided to
the Holders pursuant to this Agreement.
Section 2.27 Offshore Transaction. (i) None of the Holders is a "U.S.
--------------------
person" as that term is defined in Rule 902(o) of Regulation S; (ii) the
National Media common stock was not offered to any Holder in the United States
and at the time of execution of this Agreement and the time of any offer to any
Holder to acquire such shares of common stock, the Holders were physically
outside the United States; (iii) the Holders are purchasing the National Media
common stock for their own accounts and not on behalf of or for the benefit of
any U.S. person and the sale and resale thereof have not been prearranged with
any U.S. person or buyer in the United States; (iv) each Holder agrees that all
offers and sales of such common stock prior to the expiration of the forty (40)
day period following the Effective Time shall not be made to U.S. persons or for
the account or benefit of U.S. persons and shall otherwise be made in compliance
with the provisions of Regulation S.
Section 2.28 [Intentionally omitted]
Section 2.29 No Scheme to Evade Registration. The Holders' acquisition of
-------------------------------
the National Media common stock hereunder is not a transaction (or any element
of a series of transactions) that is part of a plan or scheme to evade the
registration provisions of the Securities Act.
Section 2.30 Legend on Securities. The Holders understand and acknowledge
--------------------
that the shares of Parent common stock issuable hereunder shall bear a legend to
the effect of the legend set forth on the cover page of this Agreement.
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<PAGE>
ARTICLE 3
Representation and Warranties of Parent
Parent hereby represents and warrants to each Holder (which representations
and warranties shall be true and correct on the date hereof and at the Effective
Time) that:
Section 3.1 Organization and Qualification. Parent and each of its
------------------------------
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority and is in possession of all Approvals
necessary to own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power, authority and Approvals would not and is not reasonably likely to have a
Material Adverse Effect. Parent and each of its subsidiaries is duly qualified
or licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not and are not reasonably likely to
have a Material Adverse Effect.
Section 3.2 Authority Relative to this Agreement. Parent has all
------------------------------------
necessary corporate power and authority to execute and deliver this Agreement
and the Promissory Note and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby (subject to the satisfaction of the conditions to
consummation set forth herein) have been duly and validly authorized by all
necessary corporate action on the part of Parent and no other corporate
proceedings on the part of Parent are necessary to authorize this Agreement or
to consummate the transactions so contemplated. The Board of Directors of Parent
has determined that it is advisable and in the best interest of Parent's
stockholders for Parent to enter into and perform this Agreement. This Agreement
has been duly and validly executed and delivered by Parent and, assuming the due
authorization, execution and delivery by each of the Holders, constitutes a
legal, valid and binding obligation of Parent, enforceable against it in
accordance with its terms, except as the enforceability thereof may be limited
by (i) the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect relating
to or affecting the rights and remedies of creditors generally, and (ii) the
effect of general principles of equity, whether enforcement is considered in a
proceeding in equity or at law, and the discretion of the court before which any
proceeding therefor may be brought.
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<PAGE>
Section 3.3 No Conflict; Required Filings and Consents.
------------------------------------------
(a) Except as set forth in Section 3.3 of that certain written
disclosure schedule, dated of even date herewith, delivered by Parent to the
Companies (the "Parent Disclosure Schedule"), the execution and delivery of this
Agreement by Parent does not, and the performance of this Agreement by Parent
shall not, (i) conflict with or violate the Certificate of Incorporation or By-
Laws of Parent, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by which
its or their respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or impair Parent's rights or alter
the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any Material
Contract or any material agreement to which Parent is a party or result in the
creation of a lien or encumbrance on any of the properties or assets of Parent
or any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or any of its subsidiaries is a party
or by which Parent or any of its subsidiaries or its or any of their respective
properties are bound or affected, except in any such case for any such breaches,
defaults or other occurrences that would not and is not reasonably likely to
have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent will
not require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except (i) of the Foreign Investment Review Board of Australia and for
applicable requirements, if any, of the Securities Act and applicable New
Zealand and Australia securities laws and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the transactions
contemplated hereby, or otherwise prevent Parent from performing its obligations
under this Agreement, and would not and is not reasonably likely to have a
Material Adverse Effect.
Section 3.4 Certificate of Incorporation and By-Laws. Parent has
----------------------------------------
heretofore furnished to the Companies complete and correct copies of its
Certificate of Incorporation and By-Laws, as amended to date certified as such
by Parent's Secretary. Such Certificate of Incorporation and By-Laws are in full
force and effect. Parent is not in violation of any of the provisions of its
Certificate of Incorporation or By-Laws or equivalent organizational documents.
Section 3.5 Capitalization. As of May 18, 1996, the authorized capital
--------------
stock of Parent consisted of (i) 50,000,000 shares of Parent Common Stock of
which 19,587,008 shares were issued and outstanding, 686,710 shares were held in
treasury, 2,103,783 shares were reserved for issuance pursuant to outstanding
options under Parent's stock option plans, 6,099,552 shares were reserved for
future issuance pursuant to the exercise or conversion, as applicable, of other
options, warrants and other similar rights to acquire Parent Common Stock, and
1,270,000 shares were reserved for future issuance with respect to the
conversion of Parent's outstanding Series B Convertible Preferred Stock; and
(ii) 10,000,000 shares of preferred stock, $.01
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<PAGE>
par value per share ("Parent Preferred Stock"), 127,000 shares of Series B
Convertible Preferred Stock of which were issued and outstanding. The NM Shares
will, upon issuance and delivery hereunder, be duly authorized, validly issued,
fully paid and non-assessable. Parent has disclosed to Holders any definitive
plans it has as of the date hereof to issue any additional material amounts of
National Media Common Stock prior to the Effective Time.
Section 3.6 Compliance; Permits.
-------------------
(a) Except as set forth in Section 3.6(a) of the Parent
Disclosure Schedule, neither Parent nor any of its subsidiaries is in conflict
with, in default with respect to or in violation of (i) any law, rule,
regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which its or any of their respective properties is bound or
affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or any of its subsidiaries is a party or by which Parent or any of its
subsidiaries is or any of their respective properties is bound or affected,
except for any such conflicts, defaults or violations which would not and are
not reasonably likely to have a Material Adverse Effect.
(b) Parent and its subsidiaries hold all material permits,
licenses, easements, variances, exemptions, consents, certificates, orders and
approvals from governmental authorities which are material to the operation of
the business of Parent and its subsidiaries taken as a whole as it is now being
conducted (collectively, the "Parent Permits"). Parent and its subsidiaries are
in compliance with the terms of the Parent Permits, except where the failure to
so comply would not and is not reasonably likely to have a Material Adverse
Effect.
Section 3.7 SEC Filings; Financial Statements.
---------------------------------
(a) Parent has filed all forms, reports and documents required to
be filed with the SEC, and has heretofore made available to the Holders, in the
form filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal
years ended March 31, 1995 and 1994, and its quarterly reports on Form 10-Q for
the fiscal quarters ended June 30, September 30, and December 31, 1995, (ii) all
proxy statements relating to Parent's meetings of stockholders (whether annual
or special) held since March 31, 1995, (iii) all other reports or registration
statements filed by and on behalf of Parent with the SEC since March 31, 1995
and (iv) all amendments and supplements to all such reports and registration
statements filed with the SEC (collectively, the "Parent SEC Reports"). The
Parent SEC Reports (i) were prepared substantially in accordance with the
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be, and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Parent's
subsidiaries is required to file any forms, reports or other documents with the
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<PAGE>
SEC, other than a Form 15 by Positive Response Television, Inc. ("PRTV") to
deregister its shares under the Securities Act.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Parent SEC Reports has
been prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents the consolidated financial position of Parent and its subsidiaries at
and as of the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring year-
end adjustments which were not or will not be material in amount.
(c) There are no amendments or modifications, which have not yet
been filed with the SEC but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by Parent with
the SEC pursuant to the Securities Act or the Exchange Act.
Section 3.8 Absence of Certain Changes or Events. Except as set forth in
------------------------------------
Section 3.8 of the Parent Disclosure Schedule, since March 31, 1996 and except
for those transactions undertaken in connection with Parent's acquisition of
PRTV, Parent has conducted its business in the ordinary course and there has not
occurred: (i) any Material Adverse Effect; (ii) any amendments or changes in
the Certificate of Incorporation or By-Laws of Parent; (iii) any damages to,
destruction or loss of any assets of the Parent (whether or not covered by
insurance) that could have a Material Adverse Effect; (iv) any revaluation by
Parent of any of its assets, including, without limitation, writing down the
value of capitalized inventory or writing off notes or accounts receivable other
than in the ordinary course of business; or (v) any other action or event that
would have required the consent of the Holders pursuant to Section 4.3 had such
action or event occurred after the date of this Agreement.
Section 3.9 Restrictions on Business Activities. Except for this
-----------------------------------
Agreement, as set forth in Section 3.9 of the Parent Disclosure Schedule and/or
other commercially reasonable situations, there is no existing material
agreement, judgment, injunction, order or decree binding upon Parent or any of
its subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Parent or any of
its subsidiaries, any acquisition of property by Parent or any of its
subsidiaries or the conduct of business by Parent or any of its subsidiaries as
currently conducted or as proposed to be conducted by Parent.
Section 3.10 Title to Property. Except as set forth in its financial
-----------------
statements or Section 3.10 of the Parent Disclosure Schedule, Parent and each of
its subsidiaries have good, marketable and defensible title to all of their
properties and assets, free and clear of all liens, charges and encumbrances
except liens for taxes not yet due and payable and such liens or other
imperfections of title, if any, as do not materially detract from the value of
or interfere with the present use of the property affected thereby or which
would
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<PAGE>
not and are not reasonably likely to have a Material Adverse Effect; and,
to Parent's knowledge, all leases pursuant to which Parent or any of its
subsidiaries lease from others material amounts of real or personal property are
in good standing, are valid and effective in accordance with their respective
terms, and there is not, to the knowledge of Parent, under any of such leases,
any existing material default or event of default (or event which, with notice
or lapse of time, or both, would constitute a material default and in respect of
which Parent or such subsidiary has not taken adequate steps to prevent such a
default from occurring) except where the lack of such good standing, validity
and effectiveness, or the existence of such default or event of default would
not and is not reasonably likely to have a Material Adverse Effect.
Section 3.11 Full Disclosure. No statement contained herein or in any
---------------
certificate or schedule furnished or to be furnished by Parent to any Holder in,
or pursuant to the provisions of, this Agreement contains or will contain any
untrue statement of a material fact or omits or shall omit to state any material
fact necessary, in the light of the circumstances under which it was made, to
make the statements herein or therein not misleading.
Section 3.12 No Undisclosed Liabilities. Except as is disclosed in Section
--------------------------
3.12 of the Parent Disclosure Schedule or the Parent SEC Reports, neither Parent
nor any of its subsidiaries has any liabilities (absolute, accrued, contingent
or otherwise) which are, in the aggregate, material to the business, operations
or financial condition of Parent and its subsidiaries taken as a whole, except
liabilities (i) adequately provided for in Parent's balance sheet (including any
related notes thereto) as of March 31, 1996, (ii) incurred in the ordinary
course of business and not required under GAAP to be reflected on such balance
sheet, or (iii) incurred since the date of such balance sheet in the ordinary
course of business which would not be expected to have a Material Adverse
Effect, and liabilities incurred in connection with this Agreement.
Section 3.13 Absence of Litigation. Except as set forth in Section 3.13 of
---------------------
the Parent Disclosure Schedule or as reflected in the Parent SEC Reports, there
are no claims, actions, suits, proceedings or investigations pending or, to the
knowledge of Parent, threatened against Parent or any of its subsidiaries, or
any properties or rights of Parent or any of its subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign, that individually could have a Material Adverse Effect.
Section 3.14 Insurance. Parent and its subsidiaries maintain directors'
---------
and officers' liability, fire and casualty, general liability, business
interruption, product liability and sprinkler and water damage insurance that
Parent believes to be reasonably prudent for its business.
Section 3.15 [Intentionally Omitted]
Section 3.16 Taxes. Other than as disclosed on Section 3.16 of the Parent
-----
Disclosure Schedule, Parent and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax
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<PAGE>
purposes of which Parent or any of its subsidiaries is or has been a member,
have filed all United States federal income Tax Returns and all other material
Tax Returns required to be filed by them or any of them, and have paid and
discharged all Taxes shown therein to be due and there are not other Taxes that
would be due if asserted by a taxing authority, except such as are being
contested in good faith by appropriate proceedings (to the extent that any such
proceedings are required) or with respect to which Parent is maintaining
reserves in accordance with GAAP in its financial statements to the extent
currently required which are in all material respects adequate for their
payment, except, in each instance, to the extent the failure to do so would not
and is not reasonably likely to have a Material Adverse Effect. Neither the IRS
nor any other taxing authority or agency is now asserting or, to the best of
Parent's knowledge, threatening to assert against Parent or any of its
subsidiaries any deficiency or claim for additional Taxes other than additional
Taxes with respect to which Parent is maintaining reserves in accordance with
GAAP in its financial statements which are in all material respects adequate for
their payment, except, in each instance, to the extent that the failure to do so
would not and is not reasonably likely to have a Material Adverse Effect. Except
as set forth in Section 3.16 of the Parent Disclosure Schedule, no Tax Return of
either Parent or any of its subsidiaries is currently being audited by any
taxing authority except as would not and is not reasonably likely to have a
Material Adverse Effect. Except as set forth in Section 3.16 of the Parent
Disclosure Schedule, no material tax claim has become a lien on any assets of
Parent or any subsidiary thereof and neither Parent nor any of its subsidiaries
has, except as would not and is not reasonably likely to have a Material Adverse
Effect, granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax.
Section 3.17 Brokers. No broker, finder or investment banker is entitled
-------
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent .
Section 3.18 No Stockholder Vote. No vote of the stockholders of Parent is
-------------------
necessary to approve the issuance of the National Media Shares.
Section 3.19 Employee Benefit Plans.
----------------------
(a) Section 3.19 of the Parent Disclosure Schedule lists all
employee benefit plans (as defined in Section 3(3) of ERISA), regardless of
whether ERISA is applicable thereto, all other bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement, medical or
life insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plans and other similar fringe benefit plans or programs, written or
otherwise, for the benefit of, or relating to, any current employee of Parent or
any trade or business (whether or not incorporated) which is a member of a
controlled group which includes Parent or which is under common control with
Parent (an "ERISA Affiliate of Parent") within the meaning of Section 414 of the
Code, to which or an ERISA Affiliate of Parent is a party, with respect to which
Parent or an ERISA Affiliate of Parent has or could have any obligation, as well
as each plan with respect to which Parent or an ERISA Affiliate of Parent could
incur liability if such plan has been or were
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<PAGE>
terminated (together, the "Parent Employee Plans"), and a true and correct copy
of each such written Parent Employee Plan has been delivered to the Companies.
(b) Except as set forth in Section 3.19 of the Parent Disclosure
Schedule, (i) none of the Parent Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person and none of the Parent
Employee Plans is a "multiemployer plan" as such term is defined in Section
3(37) of ERISA; (ii) there has been no transaction or failure to act with
respect to any Parent Employee Plan, which could result in any material
liability of Parent; (iii) all Parent Employee Plans are in compliance in all
material respects with the requirements prescribed by any and all statutes,
orders, or governmental rules and regulations currently in effect with respect
thereto, and Parent has performed all material obligations required to be
performed by it under, is not in any material respect in default under or
violation of, and has no knowledge of any default or violation by any other
party to, any of the Parent Employee Plans except as to which such non-
compliance, non-performance or default would not result and is not reasonably
likely to result in a Material Adverse Effect; (iv) each Parent Employee Plan
intended to qualify under Section 401(a) of the Code is the subject of a
favorable determination letter from the IRS, and nothing has occurred which may
reasonably be expected to impair such determination; (v) all contributions
required to be made to any Parent Employee Plan, pursuant to the terms of the
Parent Employee Plan or any collective bargaining agreement, have been made on
or before their due dates and a reasonable amount has been accrued for
contributions to each Parent Employee Plan for the current plan years; (vi) with
respect to each Parent Employee Plan, no "reportable event" within the meaning
of Section 4043 of ERISA (excluding any such event for which the thirty (30) day
notice requirement has been waived under the regulations to Section 4043 of
ERISA) nor any event described in Sections 4062, 4063 and 4041 of ERISA has
occurred; and (vii) neither Parent nor any ERISA Affiliate of Parent has
incurred, nor reasonably expects to incur, any liability under Title IV of
ERISA.
(c) Each Parent Employee Plan that is required or intended to be
qualified under applicable law or registered or approved by a governmental
agency or authority, has been so qualified, registered or approved by the
appropriate governmental agency or authority, and nothing has occurred since the
date of the last qualification, registration or approval to adversely affect, or
cause the appropriate governmental agency or authority to revoke, such
qualification, registration or approval.
(d) All contributions (including premiums) required by law or
contract to have been made or approved by Parent under or with respect to Parent
Employee Plans have been paid or accrued by Parent. Except as disclosed in
Section 3.19(d) of the Parent Disclosure Schedule, without limiting the
foregoing, there are no material unfunded liabilities under any Parent Employee
Plan.
(e) There are no pending or, to the knowledge of Parent,
threatened investigations, litigation or other enforcement actions against
Parent with respect to any of the Parent Employee Plans.
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<PAGE>
(f) There are no actions, suits or claims pending or, to the best
knowledge of Parent, threatened by former or present employees of Parent (or
their beneficiaries) with respect to Parent Employee Plans or the assets or
fiduciaries thereof (other than routine claims for benefits).
(g) No condition or event has occurred with respect to the Parent
Employee Plans which has or could reasonably be expected to result in a material
liability to Parent.
Section 3.20 Regulation S Matters. Neither Parent nor any person acting
--------------------
for Parent has conducted any "directed selling efforts" in the United States, as
such term is defined in Rule 902 of Regulation S, which in general, means any
activity undertaken for the purpose of, or that could reasonably be expected to
have the effect of, conditioning the market in the United States for any of the
Parent common stock issuable hereunder.
Parent's offer and sale of its Common Stock hereunder is not a transaction
(or an element of a series of transactions) that is part of a plan or scheme to
evade the registration provisions of the Securities Act. Assuming the accuracy
of the representations and warranties of the Holders in Sections 2.24 through
2.30 of this Agreement, the offer and sale of Common Stock to the Holders
pursuant to this Agreement will be deemed to occur outside the United States
within the meaning of Rule 901 of Regulation S under the Securities Act and
therefore need not be registered under the Securities Act.
ARTICLE 4
Conduct of Business Pending the Acquisition
Section 4.1 Conduct of Business by the Companies Pending the Acquisition.
------------------------------------------------------------
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, each Holder
covenants and agrees that, unless otherwise specifically provided in this
Agreement (including in Section 4.1 of the Company Disclosure Schedule) or
unless Parent shall otherwise agree in writing, the Holders shall cause each of
the Companies to conduct its business only in, and shall cause each of the
Companies not to take any action except in, the ordinary course of business.
Each Holder agrees to cause each of the Companies to use reasonable commercial
efforts to (i) preserve substantially intact its business organization, (ii) pay
its trade payables and other liabilities in accordance with their terms as they
became due, (iii) collect its receivables and other claims in full in accordance
with their terms, as they become due, (iv) keep available the services of each
of its present officers, employees and consultants (except for those employees
and consultants whose services are terminated in the ordinary course of
business), (v) take all reasonable action in the ordinary course of business
necessary to prevent the loss, cancellation, abandonment forfeiture or
expiration of any Company Intellectual Property, and (vi) preserve each of its
present relationships with customers, suppliers and other persons with which
such Company has significant business relations. By way of amplification and
not limitation, except as contemplated by this Agreement (including in Section
4.1 of the Company Disclosure Schedule), none of the Companies shall, during the
period from the date of this Agreement and continuing until the earlier of the
termination of this
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<PAGE>
Agreement or the Effective Time, directly or indirectly do, or propose to do,
any of the following without the prior written consent of Parent:
(a) amend or otherwise change its organizational documents;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of any class
of its share capital, or any options, warrants, convertible securities or other
rights of any kind (including stock purchase rights) to acquire any of its share
capital, or any other ownership interest (including, without limitation, any
phantom interest) of any of the Companies;
(c) sell, lease, assign, transfer, pledge, dispose of or encumber
any of its assets (whether real, personal or intellectual property) (except for
(i) sales of assets in the ordinary course of business; and (ii) dispositions of
obsolete or worthless assets);
(d) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of any of its share capital (except as set forth in Schedule 4.1 of the
Company Disclosure Schedule), (ii) split, combine or reclassify any of its share
capital or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its share capital or
(iii) amend the terms of, repurchase, redeem or otherwise acquire for value, any
of its securities, or propose to do any of the foregoing;
(e) sell, transfer, license, sublicense or otherwise dispose of
any Company Intellectual Property Rights, or amend or modify any existing
agreements with respect to any Company Intellectual Property Rights or Third
Party Intellectual Property Rights, other than nonexclusive licenses in the
ordinary course of business;
(f) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or representing
the deferred purchase price of any property or assets or issue debt securities
or assume, guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans or advances to
or investments in any person, except in the ordinary course of business; (iii)
create, incur, assume or suffer to exist, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind or nature upon its property or
assets, income or profits, whether now owned or hereafter acquired, not
including liens operating by reason of law or title retention in the ordinary
course of business; (iv) assume, guarantee, endorse or otherwise in anyway be or
become responsible or liable for, directly or indirectly, any material
contingent obligation; (v) enter into or amend any contract or agreement other
than in the ordinary course of business; (vi) other than in the ordinary course
of business, authorize any capital expenditures or purchase of fixed assets
which are, in the aggregate, in excess of $10,000 for the Companies, taken as a
whole; (vii) enter into any agreement or become liable under any agreement for
the
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<PAGE>
lease, hire or use of any real or, other than in the ordinary course of
business, personal property; or (viii) other than in the ordinary course of
business, enter into or amend any contract, agreement, commitment or arrangement
to effect any of the matters prohibited by this Section 4.1(f);
(g) increase the compensation payable or to become payable to
any of their officers or employees or (except in an arms' length transaction in
the ordinary course of business) grant any severance or termination pay to, or
enter into any employment or severance agreement with, any director, officer or
other employee of any of the Companies, or establish, adopt, enter into or amend
any Employee Plan;
(h) take any action, other than as required by ASGAAP or
otherwise agreed to by Parent, to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable and collection of accounts receivable);
(i) make any material Tax election inconsistent with past
practices or settle or compromise any material, national, federal, state, local
or foreign tax liability or agree to an extension of a statute of limitations
for any assessment of any Tax, except to the extent the amount of any such
settlement has been reserved for on the March 31, 1996 balance sheet of such
Company;
(j) pay, discharge or satisfy any principal of any debt with a
maturity of more than one year, for borrowed money or for the deferred purchase
price of property or services, except at the stated maturity of such debt or as
required by mandatory prepayment provisions relating thereto (subject to any
subordination provisions applicable thereto); or amend any provision pertaining
to the subordination or the terms of payment of any debt;
(k) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
other than debt with a maturity of more than one year for borrowed money or for
the deferred purchase price of property or services, other than the payment,
discharge or satisfaction in the ordinary course of business of liabilities
reflected or reserved against on the March 31, 1996 balance sheet of such
Company or incurred in the ordinary course of business;
(l) liquidate or dissolve itself (or suffer any liquidation or
dissolution); or
(m) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through (l) above, or any action which
would make any of the representations or warranties contained in Article 2 of
this Agreement untrue or incorrect or prevent any Company from performing or
cause any Company not to perform its covenants hereunder or result in any of the
conditions to the consummation of the transactions set forth herein not being
satisfied.
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Section 4.2 No Solicitation or Sale of Share Capital or Business Assets.
-----------------------------------------------------------
(a) Each Holder agrees that neither it nor any of the Companies'
respective officers or directors shall, and each Holder shall direct and use
their best efforts to cause the employees, agents, directors and representatives
of each Company and of each Holder (including, without limitation, any attorney
or accountant retained by any of them) not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making of any proposals or offers
(including, without limitation, any proposals or offers to stockholders of any
Company) with respect to a merger, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, any Company or a change in composition of a majority
of directors on the Board of Directors of any Company (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal") or engage in
any negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal.
(b) Each Holder shall immediately notify Parent after receipt of
any Acquisition Proposal or any request for information relating to any of the
Companies in connection with an Acquisition Proposal or for access to the
properties, books or records of any of the Companies by any person or entity
that informs such Company or such Holder that it is considering making, or has
made, an Acquisition Proposal. Such notice to Parent shall be made orally and in
writing and shall indicate in detail and with specificity the identity of the
offeror and the terms and conditions of such proposal, inquiry or contact.
(c) Each Holder shall ensure that each Companies' officers,
directors and employees, and each Holder's advisors and representatives are
aware of the restrictions described in this Section, and shall be responsible
for any breach of this Section 4.2 by such officers, directors, employees,
advisors or representatives.
(d) No Holder shall sell, transfer, pledge or otherwise dispose
of any of his shares or any rights therein prior to the Effective Time or
earlier termination of this Agreement other than for transfers to other
Holder(s).
Section 4.3 Conduct of Business by Parent Pending the Acquisition.
-----------------------------------------------------
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, Parent
covenants and agrees that, unless both Companies shall otherwise agree in
writing, other than actions taken by Parent or its subsidiaries in contemplation
of the Acquisition, Parent shall not directly or indirectly do, or propose to
take or agree in writing or otherwise to take any action which would prevent
Parent from performing or cause Parent not to perform its obligations hereunder.
Section 4.4 [Intentionally Omitted]
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ARTICLE 5
Additional Covenants
Section 5.1 [Intentionally Omitted]
Section 5.2 Access to Information. Each Company and each Holder shall
---------------------
afford to the officers, employees, accountants, counsel and other
representatives of Parent, reasonable access, during the period prior to the
Effective Time, to all of each Companies' properties, books, contracts,
commitments and records and, during such period, each Holder shall cause each
Company to furnish promptly to Parent all information concerning its business,
properties and personnel as Parent may reasonably request, and each Holder shall
cause each Company to make available to Parent the appropriate individuals
(including attorneys, accountants and other professionals) for discussion of its
business, properties and personnel as Parent may reasonably request. Parent
acknowledges and agrees that all such information shall be maintained in strict
confidence and may not be used for any purpose other than to facilitate the
transactions contemplated hereby.
Section 5.3 Consents; Approvals. Each Company, each Holder and Parent
-------------------
shall each use their best efforts to obtain all consents, waivers, approvals,
authorizations or orders (including, without limitation, all United States and
foreign governmental and regulatory rulings and approvals), and each Company,
each Holder and Parent shall make all filings (including, without limitation,
all filings with United States and foreign governmental or regulatory agencies)
required in connection with the authorization, execution and delivery of this
Agreement by the Companies, the Holders and Parent and the consummation by them
of the transactions contemplated hereby.
Section 5.4 Notification of Certain Matters. Each Holder shall give
-------------------------------
prompt notice to Parent, and Parent shall give prompt notice to the Holders of
(i) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate, and (ii) any failure of
such Holder or Parent, as the case may be, materially to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it or
him/her hereunder; provided, however, that the delivery of any notice pursuant
to this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.5 Further Action. Upon the terms and subject to the conditions
--------------
hereof, each of the parties hereto in good faith shall use all commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary filings, and to
otherwise satisfy or cause to be satisfied all conditions precedent to its
obligations under this Agreement.
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Section 5.6 Public Announcements. Parent shall not, without the prior
--------------------
consent of the Holders, issue any press release or otherwise make any public
statements with respect to this Agreement except to the extent advisable under
the federal securities laws (which determination shall be made in consultation
with Parent's counsel) and the Holders shall not issue any such press release or
make any such public statement without the prior consent of Parent
Section 5.7 Listing of Parent Common Stock. Parent shall cause the
------------------------------
National Media Shares to be issuable hereunder to be approved for listing on the
New York Stock Exchange as soon as practicable after the Effective Time.
Section 5.8 Conveyance Taxes. Parent, the Companies and the Holders shall
----------------
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Effective
Time. Parent agrees to bear all stamp duty payable or assessed in relation to
this Agreement and the transfer of the Australian Shares to Parent or its
nominee.
ARTICLE 6.
Conditions to the Consummation of this Agreement
Section 6.1 Conditions to Obligation of Each Party. The respective
--------------------------------------
obligations of each party to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver at or prior to the
Effective Time of the following conditions:
(a) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the transactions contemplated by
this Agreement shall be in effect, nor shall any proceeding brought by any
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, seeking any of the foregoing be pending;
and there shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the transactions
contemplated by this Agreement, which makes the consummation of such
transactions illegal;
(b) AM shall have entered into a five (5) year employment
agreement substantially on the terms contained in the form of employment
agreement attached as Exhibit A; and
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(c) Either: (i) Parent receiving notice from the Treasurer of the
Commonwealth of Australia to the effect that there is no objection to the
acquisition of the Australian Shares under the Commonwealth Government's foreign
investment policy, such notice being unconditional or, if conditional, imposing
conditions which are acceptable to Parent in its sole discretion, or (ii) the
relevant period following the giving of notice in relation to the acquisition of
the Australian Shares elapsing without any order of prohibition being made under
the Foreign Acquisitions and Takeovers Act.
Section 6.2 Additional Conditions to Obligations of Parent. The
obligations of Parent to effect the transactions contemplated by this Agreement
are also subject to the satisfaction or waiver of the following conditions.
(a) Representations and Warranties. The representations and
warranties of each of the Holders contained in this Agreement (together with the
Company Disclosure Schedule) shall be true and correct in all respects on and as
of the Effective Time, except for (i) changes contemplated by this Agreement,
(ii) those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date) and (iii)
instances where the failure to be true and correct would not and is not
reasonably likely to have a Material Adverse Effect on the Companies, with the
same force and effect as if made on and as of the Effective Time, and Parent
shall have received a certificate to such effect signed by each Holder.
(b) Agreements and Covenants. Each Holder shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by him/her on or prior to the
Effective Time, and Parent shall have received a certificate to such effect
signed by each Holder;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required or advisable (in Parent's discretion) to be
obtained, and all filings required to be made, by the Holders or the Companies
for the authorization, execution and delivery of this Agreement and the
consummation by them of the transactions contemplated hereby shall have been
obtained or made by the Holders or the Companies. At the Effective Time, each of
Holdings and TPL shall deliver to Parent copies of the resolutions adopted by
its respective shareholders and board of directors approving the transfer of the
Australian Shares and the other transactions contemplated hereby, certified by
the Secretary of such company as being in full force and effect and not modified
in any manner whatsoever;
(d) Governmental Actions. There shall not have been instituted,
pending or threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any governmental
authority or administrative agency before any governmental authority,
administrative agency or court of competent jurisdiction, in either case,
seeking to prohibit or limit Parent from exercising all material rights and
privileges pertaining to its ownership of the Companies or the ownership or
operation by Parent or any of its subsidiaries of all or a material portion of
the business or
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assets of Parent or any of its subsidiaries, or seeking to compel Parent or any
of its subsidiaries to dispose of or hold separate all or any material portion
of the business or assets of Parent or any of its subsidiaries, as a result of
the transactions contemplated by this Agreement;
(e) Material Adverse Change. Since the date of this Agreement,
there shall have been no change, occurrence or circumstance affecting the
business, results of operations, financial condition or prospects of any of the
Companies having or reasonably likely to have a Material Adverse Effect;
(f) Legal Opinion. Parent shall have received an opinion, dated
the Effective Time, from counsel to each of the Companies, in form reasonably
satisfactory to Parent;
(g) Consent. Parent shall have received the consent of Meridian
Bank to the transactions contemplated by this Agreement and such consent shall
not be conditioned upon the performance by Parent or any of its subsidiaries of
any material act or obligation;
(h) Delivery by the Shareholders to Parent of (i) the current
share certificates for the Australian Shares, (ii) completed transfers of the
Australian Shares to Parent or its nominee duly executed by the Shareholders in
a form approved by Parent as being registrable, subject to the payment of stamp
duty, (iii) the certificate of incorporation (and any certificate of
incorporation on change of name), common seal, all statutory minute and other
record books and share certificate books of each Company and all unused share
certificate forms, (iv) all certificates of title, title deeds and contractual
documents relating to each Company, (v) all policies of insurance in the name of
a Company or in which a Company has an interest;
(i) The Shareholders must procure that duly convened meetings of
the directors of each Company are held and procure at those meetings (as
applicable) the approval of the registration of the transfer of the Australian
Shares subject to their due stamping and the issue of a new share certificate in
the name of the transferee.
(j) Other Certificates. The Companies and the Holders shall have
furnished Parent such other certificates and documents as Parent shall have
reasonably requested and are customary in transactions of this type;
(k) Employment Matters. All unliquidated claims which may arise
under, and/or all material ambiguities contained in, any agreement any of the
Companies may have with any of its employees or consultants (the determination
of whether any such unliquidated claim or ambiguity exists is to be made by
Parent in its reasonable discretion) shall be clarified and satisfied to the
reasonable satisfaction of Parent, and no such clarification shall result in any
additional material obligation on the part of any of the Companies or Parent;
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(l) National Media shall have received, from an investment
banking firm of its choice, an opinion to the effect that the terms of the
transactions contemplated by the Agreement are fair to the shareholders of
National Media from a financial point of view; and
(m) The Companies shall pay to the Holders at the Effective Time
any amounts indicated in the March 31, 1996 audited financial statements of the
Companies as owing to any of them, other than amounts previously paid; and, if
necessary, National Media shall advance such funds to do so;
(n) The Holders shall pay to the Companies at the Effective Time
any amounts indicated in the March 31, 1996 audited financial statements of the
Companies as being owed, other than any amounts previously paid;
(o) Any amounts payable by any of the Companies as of the
Effective Time (whether due and owing as of such date or in the future) to or
for the benefit of any of the Shareholders or any related entity(ies) of theirs,
other than amounts incurred in the ordinary course of business (such as wages
and salaries) which were not reflected on the audited Financial Statements of
the Companies for the periods ended March 31, 1996 shall be deemed extinguished
and released without any payment being made thereon;
(p) At the Effective Time, the Shareholders shall repay to the
Companies an amount equal to any cash payments made to or for the benefit of any
of the Shareholders or their related entities (including, without limitation,
any dividends), other than as contemplated by this agreement or otherwise in the
ordinary course of business (such as wages or salaries) by the Companies between
March 31, 1996 and the Effective Time.
Section 6.3 Additional Conditions to Obligation of the Holders. The
--------------------------------------------------
obligation of each of the Holders to effect the transactions contemplated by
this Agreement is also subject to the satisfaction or waiver of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent contained in this Agreement (together with the Parent
Disclosure Schedule) shall be true and correct in all respects on and as of the
Effective Time, except for (i) changes contemplated by this Agreement, (ii)
those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date) and (iii)
instances where the failure to be true and correct would not and is not
reasonably likely to have a Material Adverse Effect on Parent, with the same
force and effect as if made on and as of the Effective Time, and the Holders
shall have received a certificate to such effect signed by an officer of Parent;
(b) Agreements and Covenants. Parent shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with
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by it on or prior to the Effective Time, and the Holders shall have received a
certificate to such effect signed by an officer of Parent;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by Parent for the authorization, execution and delivery of this Agreement
and the consummation by them of the transactions contemplated hereby shall have
been obtained or made by Parent. At the Effective Time, Parent shall deliver to
the Holders copies of the resolutions adopted by Parent approving the
transactions contemplated by this Agreement certified by the Secretary of
Parent, as being in full force and effect and not modified in any material
manner whatsoever;
(d) Material Adverse Change. Since the date of this Agreement,
there shall have been no change, occurrence or circumstance in the business,
results of operations or financial condition of Parent having or reasonably
likely to have a Material Adverse Effect; and
(e) Legal Opinion. The Holders shall have received an opinion,
dated the Effective Date, from Klehr, Harrison, Harvey, Branzburg & Ellers,
counsel to Parent, to the effect that; (i) upon delivery of the National Media
Shares in accordance with the terms of this Agreement, such Shares will be duly
authorized, validly issued, fully paid and non-assessable; (ii) the issuance of
Common Stock to the Holders under the Agreement has obtained all approvals
required under the federal securities laws, the General Corporation Law of the
State of Delaware, and the rules of the New York Stock Exchange; (iii)the offer
and sale of Common Stock to the Holders pursuant to the Agreement will be deemed
to occur outside the United States within the meaning of Rule 901 of Regulation
S under the Securities Act and therefore need not be registered under the
Securities Act; (iv)Parent is validly existing and in good standing under the
laws of the State of Delaware; (v) upon delivery the Note will be validly
issued.
(f) National Media Share Certificates. Parent shall have tendered
for delivery to each Holder certificates representing the appropriate number of
NM Shares.
ARTICLE 7
Termination
Section 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent duly authorized by the Board of
Directors of Parent and the Holders; or
(b) by either Parent or the Holders, as a group, if the
transactions contemplated by this Agreement shall not have been consummated by
July 15, 1996 (provided that the right to terminate this
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Agreement under this Section 7.1(b) shall not be available to any party whose
failure to fulfil any obligation under this Agreement has been the, in full or
in part, cause of or resulted in, in full or in part, the failure of the
transactions contemplated by this Agreement to occur on or before such date); or
(c) by Parent or the Holders, as a group, if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a non-appealable final order, decree or ruling or taken any
other action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement; or
(d) by Parent or the Holders, as a group, upon a breach of any
representation, warranty, covenant or agreement on the part of any Holder (in
the case of a termination by Parent) or Parent (in the case of a termination by
the Holders), respectively, set forth in this Agreement or if any representation
or warranty of any Holder or Parent, respectively, shall have become untrue, in
either case, such that the conditions set forth in Section 6.2(a) or 6.2(b), or
Section 6.3(a) or 6.3(b), would not be satisfied (a "Terminating Breach");
provided that, if such Terminating Breach is curable prior to the expiration of
30 days from its occurrence (but in no event later than July 15, 1996) by Parent
or such Company, as the case may be, through the exercise of its reasonable best
efforts and for so long as Parent or such Holder, as the case may be, continues
to exercise such reasonable best efforts, neither the Holders nor Parent,
respectively, may terminate this Agreement under this Section 7.1(d) unless such
30-day period expires without such Terminating Breach having been cured.
Section 7.2 Effect of Termination. In the event of the termination of
---------------------
this Agreement pursuant to Section 7.1, this Agreement shall forthwith become
null and void and there shall be no liability on the part of any party hereto or
any of its affiliates, directors, officers or stockholders except (i) as set
forth in Section 7.3, Article 8 and Section 9.8 hereof, and (ii) nothing herein
shall relieve any party from liability for any wilful breach hereof.
Section 7.3 Fees and Expenses. Except as set forth in this Section 7.3,
-----------------
all fees and expenses incurred by the Holders or Parent in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses. The Companies shall not bear the Holders costs in
connection herewith. ---
ARTICLE 8
Survival of Representations and Warranties; Indemnification
Section 8.1 Survival. All statements contained in any certificate or
other instrument delivered by or on behalf of the Holders or Parent pursuant to
this Agreement or in connection with the transactions
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contemplated by this Agreement shall be considered representations and
warranties by such Holder or Parent with the same force and effect as if
contained in this Agreement. All representations, warranties, covenants and
agreements by the Holders or Parent shall survive the Effective Time for a
period of two years after the Effective Time (provided that the representations,
warranties, covenants and agreements contained in Sections 2.9 and 2.17 and this
Article 8 (including, without limitation, Section 8.2(a)(ii)) in so far as they
relate to any Tax shall survive for so long as the Australian taxing authorities
are entitled to investigate the affairs of the Companies for the period(s) up to
the Effective Time notwithstanding any investigation at any time by or on behalf
of any party to which such representation or warranty was given, and shall not
be considered waived by the consummation of the transactions contemplated by
this Agreement with knowledge of any breach or misrepresentation by any of the
parties hereto. Notwithstanding the foregoing, if Parent proceeds with the
consummation of the transactions contemplated by this Agreement despite its
specific knowledge of the breach as of the Effective Time of the representation
and warranty of the Holders set forth in section 2.8(ii) or (iii) hereof, such
section 2.8(ii) or (iii) representation and warranty shall not be deemed to
survive the Effective Time.
Section 8.2 Indemnification.
---------------
(a) Each of the Holders shall jointly and severally indemnify and
hold harmless Parent and the Companies against all loss, liability, damage or
expense (including reasonable fees and expenses of counsel in any matter,
whether involving a third party or between the indemnifying or indemnified
parties) Parent may suffer, sustain or become subject to as a result of (i) any
breach by such Holder of any of its or his representations, warranties,
covenants or other agreements contained in this Agreement, (whether or not
Parent had knowledge, at or prior to the Effective Time, of the breach), (ii)
the failure by the Holders to cause the Companies to pay, perform or discharge
prior to the Effective Time any Company Liabilities (other than the Assumed
Liabilities), (iii) any liability or obligation arising prior to the Effective
Time, or after the Effective Time as a result of events occurring prior to the
Effective Time, from or in connection with the violation of any national,
federal, state or local statute, rule or regulation, decree or ordinance
applicable to any of the Companies, or (iv) any actions on the part of the
Holders or the Companies taken in contemplation of this Agreement or the
transactions referred to herein which result in any Taxes which are in excess of
any Taxes which would have been applicable to the Companies or the transactions
had such actions not been taken, including, but not limited to, the declaration
of any dividends by Holdings (except to the extent provision therefor has been
made on the Companies March 31, 1996 balance sheets).
(b) Parent shall indemnify and hold harmless each Holder against
all loss, liability, damage or expense (including reasonable fees and expenses
of counsel in any matter, whether involving a third party or between the
indemnifying and indemnified parties) such Holder may suffer, sustain or become
subject to as a result of any breach of any warranties, covenants or other
agreements contained in this Agreement or any misrepresentation by Parent, or as
a result of any of Parent's representations or warranties
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<PAGE>
not being true and correct as of the Effective Time (whether or not such Holder
had knowledge, prior to the Effective Time, of the misrepresentation or breach
of warranty).
(c) Each party acknowledges that reliance shall not be an element
of any claim by the other for breach of warranty or misrepresentation under this
Agreement.
Section 8.3 Conditions of Indemnification for Third Party Claims. The
----------------------------------------------------
obligations and liabilities of the parties under this Agreement with respect to,
relating to, caused (in whole or in part) by or arising out of claims of third
parties (individually, a "Third Party Claim" and collectively "Third Party
Claims") including, without limitation, any national, federal, state or local
taxing authorities, shall be subject to the following terms and conditions:
(a) The party entitled to be indemnified hereunder (the
"Indemnified Party") shall give the party obligated to provide the indemnity
(the "Indemnifying Party") prompt notice of any Third Party Claim, and, provided
that the Indemnifying Party acknowledges in writing its obligation to indemnify
in accordance with the terms and subject to the limitations on such party's
obligation to indemnify contained in this Agreement with respect to that claim
(or part of that claim), the Indemnifying Party may undertake the defense of
that claim by representatives chosen by it and reasonably acceptable to the
Indemnified Party. Any such notice of a Third Party Claim shall identify with
reasonable specificity the basis for the Third Party Claim, the facts giving
rise to the Third Party Claim, and the amount of the Third Party Claim (or, if
such amount is not yet known, a reasonable estimate of the amount of the Third
Party Claim). The Indemnified party shall make available to the Indemnifying
Party copies of all relevant documents and records in its possession.
(b) If the Indemnifying Party, within ten (10) business days
after receiving notice of any such Third Party Claim with such information as is
reasonably necessary to enable the Indemnifying Party to make a decision with
respect thereto, fails to assume the defense in accordance with Section 8.3(a)
hereof, the Indemnified Party shall (upon further notice to the Indemnifying
Party and subject to Section 8.3(c) hereof) have the right to undertake the
defense, compromise or settlement of the Third Party Claim.
(c) Anything in this Section 8.3 to the contrary notwithstanding,
(i) the Indemnifying Party shall not, without the written consent of the
Indemnified Party, settle or compromise any Third Party Claim or consent to the
entry of judgment which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the Indemnified Party an
unconditional release from all liability in respect of the Third Party Claim
(unless it is clear from the surrounding circumstances that the Indemnified
Party will have no further liability with respect to such Third Party Claim and
the Indemnifying Party confirms its obligation to indemnify the Indemnified
Party if any further liability does result); and (ii) if there is a reasonable
probability that a claim may materially and adversely affect the Indemnified
Party other than as a result of money damages or other money payments, the
Indemnified Party shall have the right, at its own cost and expense, to
participate in the defense of the Third Party Claim .
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Section 8.4 Payment of Claims. Any party obligated to indemnify another
-----------------
party hereunder shall provide any amounts so payable to the Indemnified Party as
such amounts are incurred (subject to reasonable detail concerning same) by such
Indemnified Party.
Section 8.5 Set-Off. Any party (the "Entitled Party") entitled to
-------
indemnification from another party hereunder (the "Obligated Party") pursuant to
the terms of this Agreement shall have the right to set-off against any amounts
(cash or other) due and payable by such Entitled Party to the Obligated Party
under this Agreement or any other agreement(s) such Obligated Party may have
with the Entitled Party (including, without limitation, any employment
agreement) all amounts due and payable to the Entitled Party by the Obligated
Party under this Section 8.
Section 8.6 Limitation of Liability. Notwithstanding anything to the
-----------------------
contrary in this Article 8 or elsewhere in this Agreement, in the event of the
Parent or either of the Companies making any claim for indemnification against
any of the Holders pursuant to any of the provisions of this Agreement or
otherwise in connection with the sale of the New Zealand Shares to National
Media (for the purposes of this Section 8.6, a "claim"), the following
provisions shall apply in addition to those set forth above:
(a) The total liability of the Holders in respect of all such
claims shall not exceed an amount equal to the value as of the Effective Time of
the consideration to be provided by National Media under this Agreement.
(b) The liability of the Holders in respect of a claim relating
to a liability incurred, or owing, by a Company shall, in the absence of fraud
on the part of any of the Holders in relation to such liability and/or the non-
disclosure thereof to National Media, not exceed the amount of that liability,
notwithstanding the basis upon which the consideration for the New Zealand
shares has been calculated.
(c) To the extent that the total amount of all claims does not
exceed US$300,000, the liability of the Holders to indemnify the Parent or
relevant Company, as the case may be, shall be limited to 50% of the amount of
the aggregate claims up to $300,000.00 and for 100% thereafter, subject to the
other provisions of this Article 8.
(d) If a claim arises in relation to any matter in respect of
which the relevant Company is indemnified under any policy of insurance (or
would have been so entitled had any insurance policy in force at the Effective
Time not been canceled or altered at the express insistence of National Media)
the liability of the Holders in respect of such claim shall be limited to such
amount (if any) as is not (or would not have been) indemnified by such
insurance.
(e) If a claim arises due to any amount provided for present or
future taxes in the financial statements of either of the Companies at March 31,
1996 being inadequate, the Holders shall not be liable in respect of such claim
to the extent that the deficiency results from an error by Ernst & Young in
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calculation of the amount provided unless the error was caused by incorrect
information provided by either of the Companies.
General Provisions
Section 8.7 Disclosure Schedules. Any disclosure made with reference to
--------------------
one or more sections of the Company Disclosure Schedule or the Parent Disclosure
Schedule shall be deemed disclosed with respect to each other section therein as
to which such disclosure is relevant provided such relevance is reasonably
apparent.
Section 8.8 Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered personally, three (3) days after
dispatch by recognized expedited courier (provided delivery is confirmed by the
carrier) and upon transmission by telecopy, confirmed received, to the parties
at the following addresses (or at such other address for a party as shall be
specified by like changes of address):
(a) If to Parent: With a copy to:
National Media Corporation Klehr, Harrison, Harvey, Branzburg
1700 Walnut Street, 9th Floor & Ellers
Philadelphia, PA 19103 1401 Walnut Street
Telecopier No.:(215) 772-5013 Philadelphia, PA 19102
Attention: Brian J. Sisko, Vice Pres./ Telecopier No.:(215) 568-6603
Corporate Development Attention: Stephen T. Burdumy,Esq.
(b) If to a Holder: With a copy to:
c/o Suzanne Paul Holdings Pty Limited Russell McVeagh Mckenzie Bartleet
A.C.N. 003294 764 & Co.
1/19-21 Chard Street The Shortland Centre
Brookvale NSW 2100 51-53 Shortland Street
Telecopier No.: 02-9930-0500 P.O. Box 8
Auckland 1, New Zealand
Telecopier No.: 0-9-377-1849
Attention: John O. Lusk
Section 8.9 Certain Definitions. For purposes of this Agreement,
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the term:
(a) "affiliates" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person,
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<PAGE>
including, without limitation, any partnership or joint venture in which either
of the Companies (either alone, or through or together with any other
subsidiary) has, directly or indirectly, an interest of 10 percent or more;
(b) "business day" means any day other than a day on which banks
in New York, New York or Sydney, Australia are required or authorized to be
closed.
(c) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3)) of the Exchange Act); and
(d) "subsidiary" or "subsidiaries" of any of the Companies,
Parent or any other person means any corporation, partnership, joint venture or
other legal entity of which a Company, Parent or such other person, as the case
may be (either alone or through or together with any other subsidiary), owns,
directly or indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
Section 8.10 Amendment. This Agreement may be amended by each of the
---------
Holders and Parent, in writing, at any time prior to the Effective Time.
Section 8.11 Waiver. At any time prior to the Effective Time, any party
------
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party or parties to be
bound thereby.
Section 8.12 Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.13 Severability. If any term or other provision of this
------------
Agreement is held to be invalid, illegal or incapable of being enforced under
any rule of law or public policy by a court of competent jurisdiction, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner so that the transactions
contemplated hereby are fulfilled to the extent possible.
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<PAGE>
Section 8.14 Entire Agreement. This Agreement constitutes the entire
----------------
agreement between the parties and supersedes all prior agreements and
undertakings both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and, except as otherwise expressly provided
herein, is not intended to confer upon any other person any rights or remedies
hereunder. Notwithstanding the foregoing, the parties hereto acknowledge that
the terms and provisions of that certain Confidentiality Agreement dated January
15, 1996 (the "Confidentiality Agreement") shall survive the execution of this
Agreement and continue in full force and effect. Each Holder hereto agrees to
comply with all terms of the Confidentiality Agreement as if he were named a
party therein.
Section 8.15 Assignment. This Agreement shall not be assigned by operation
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of law or otherwise, except that Parent may assign all or any of their rights
hereunder to any affiliate provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
Section 8.16 Parties In Interest. This Agreement shall be binding upon and
-------------------
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
Section 8.17 Failure or Indulgence Not Waiver; Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
Section 8.18 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW SOUTH WALES,
AUSTRALIA.
Section 8.19 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same Agreement.
Section 8.20 Joint Participation. Each of the Holders has participated in
-------------------
the drafting of this Agreement and expressly acknowledges such joint
participation, to avoid application of any rule construing contractual language
against the party which drafted the language.
Section 8.21 Exhibits and Schedules. All Exhibits and Disclosure Schedules
----------------------
attached hereto are delivered pursuant to this Agreement are incorporated by
reference into, and made a part of, this Agreement.
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<PAGE>
ARTICLE 9
Other Provisions
Section 9.1 Software Rights. The Companies have been involved in the
---------------
creation of certain computer software designed to assist the Companies carry out
the telemarketing, order taking, fulfilment, inventory management, media
management, customer service and other functions of the business of the
Companies (the "Software"). No intellectual property rights to the Software
including, but not limited to, any alterations, additions or improvements
thereto made subsequent to the Effective Time, will or shall belong to the
Holders.
Section 9.2 Certain Trademark Rights. The Companies own the rights to the
------------------------
trademark "Suzanne Paul" in various jurisdictions. Subsequent to Closing, SB
shall have the non-exclusive right to utilize such trademark as a stage name (in
connection with non-competitive endeavors) and for other limited uses approved
in advance by Parent. The right to use such trademark shall be royalty free.
Section 9.3 Waiver of Claims by Companies Against Holders. Parent shall
---------------------------------------------
ensure that all times after the Effective Time no Company takes any action,
proceeding, claim or demand against any of the present or former officers of
that Company, or against the present or any former shareholder of that Company,
in respect of any act, omission, matter or thing arising prior to March 31, 1996
except insofar as such act, omission, matter or thing may give rise to claim
against any of the Holders under the express provisions of this Agreement.
Section 9.4 Removal of Guarantees. To the extent that, as the Effective
---------------------
Time, PM and/or SB and/or AM are acting as guarantor or surety for any
obligation of the Companies, an effort shall be made to have such guarantees or
sureties removed, including, but not limited to, the giving by Parent of a
substitute guarantee, but in lieu thereof, Parent shall, after the Effective
Time, undertake to indemnify each or all of them concerning such guaranties or
suretyships.
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<PAGE>
IN WITNESS WHEREOF, Parent and each Holder have caused this Agreement to be
executed as of the date first written above.
National Media Corporation
By: /s/ Mark P. Hershhorn
---------------------
Name: Mark P. Hershhorn
Title: President and Chief Executive Officer
HOLDERS:
/s/ Paul E. Meier
---------------------------------------
Paul E. Meier
/s/ Susan Barnes
---------------------------------------
Susan Barnes
/s/ Alan Meier
--------------------------------------
Alan Meier
Tancot Pty Limited
By: /s/ Alan Meier
-----------------------------------
Name: Alan Meier
Title: Director
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<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 33-53252, Form S-3 No. 33-34303, Form S-3 No. 33-35301, Form S-3 No. 33-
41916, Form S-3 No. 33-82618, Form S-3 No. 33-63841, Form S-3 No. 333-06007,
Form S-8 No. 33-34304, Form S-8 No. 33-60969 and Form S-8 No. 33-63537) of
National Media Corporation of our report dated May 24, 1996, with respect to the
financial statements of Prestige Marketing Limited included in the Current
Report of National Media Corporation (Form 8-K) dated July 1, 1996 filed with
the Securities and Exchange Commission.
Ernst & Young
Auckland, New Zealand
July 12, 1996
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 33-53252, Form S-3 No. 33-34303, Form S-3 No. 33-35301, Form S-3 No. 33-
41916, Form S-3 No. 33-82618, Form S-3 No. 33-63841, Form S-3 No. 333-06007,
Form S-8 No. 33-34304, Form S-8 No. 33-60969 and Form S-8 No. 33-63537) of
National Media Corporation of our report dated May 24, 1996, with respect to the
financial statements of Prestige Marketing International Limited included in
the Current Report of National Media Corporation (Form 8-K) dated July 1, 1996
filed with the Securities and Exchange Commission.
Ernst & Young
Auckland, New Zealand
July 12, 1996
<PAGE>
Exhibit 23.3
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 33-53252, Form S-3 No. 33-34303, Form S-3 No. 33-35301, Form S-3 No. 33-
41916, Form S-3 No. 33-82618, Form S-3 No. 33-63841, Form S-3 No. 333-06007,
Form S-8 No. 33-34304, Form S-8 No. 33-60969 and Form S-8 No. 33-63537) of
National Media Corporation of our report dated June 7, 1996, with respect to the
financial statements of Suzanne Paul Holdings Pty. Limited Group included in the
Current Report of National Media Corporation (Form 8-K) date July 1, 1996 filed
with the Securities and Exchange Commission.
Ernst & Young
Sydney, Australia
July 12, 1996
<PAGE>
Exhibit 99.1
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, made as of the 2nd day of July, 1996, by and between Prestige
Marketing Limited, a New Zealand corporation (the "Company"), a wholly-owned
subsidiary of National Media Corporation ("National Media"), and PAUL ERNEST
MEIER ("Executive").
W I T N E S S E T H
-------------------
WHEREAS, of even date herewith National Media is acquiring all of the share
capital of the Company from Executive and the other shareholders of the Company
(the "Acquisition");
WHEREAS, one of the principal terms of the agreement pursuant to which the
Acquisition is being made requires that Executive agree to be employed by the
Company for a period of Five (5) years;
WHEREAS, Executive is benefiting financially both directly and indirectly
as a result of the Acquisition;
WHEREAS, National Media, the Company and Executive acknowledge and agree
that Executive's knowledge of the Company's business operations and the
continued employment of Executive by, and the non-competition of Executive with,
the Company is critical to the continued performance and growth of the Company
in New Zealand and elsewhere during the Term (as hereinafter defined hereof);
WHEREAS, Executive is willing to serve the Company on a full-time basis
during the Term hereof, subject to the terms and conditions hereinafter set
forth; and
WHEREAS, the Company desires to employ Executive in accordance with the
terms hereof.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, it is agreed as follows:
1. Employment. The Company hereby employs Executive, and Executive hereby
----------
accepts employment from the Company, upon the terms and conditions hereinafter
set forth.
2. Terms of Employment.
-------------------
2.1 Employment by the Company of Executive under this contract
commences on this 2nd day of July 1996.
2.2 The Company shall employ the Executive for a period of Five (5)
years commencing on this 2nd day of July 1996 and ending on the 1st day of July
2001 ("the Term").
<PAGE>
2.3 Nothing in this Agreement shall prevent the parties, at or before
the expiration date of the Term, from entering into a subsequent contract of
employment by agreement; but nothing in this clause shall be interpreted or
understood to give to the Executive any expectation that this Agreement will be
renewed, or that any subsequent contract will be entered into, and no
arrangements for any renewal or subsequent contract shall bind either party
unless such arrangement is in writing signed by all parties to this Agreement.
This being an agreement for a fixed period for the reasons set forth in the
recitals hereto, it is acknowledged by Executive, that upon the expiration of
the Term hereunder, no redundancy compensation shall be payable.
3. Duties. Executive shall be engaged as, and hold the position of, Chief
------
Executive Officer of the Company and Prestige Marketing International Limited
("PMIL"). Executive shall also serve as Chief Executive Officer of Suzanne Paul
Holdings Pty Limited, Suzanne Paul (Australia) Pty Limited and Telemall Shopping
Pty Limited (the "Australian Companies") and as an Executive Vice President of
National Media. Executive shall have such authority and responsibilities as are
normally attendant thereto and agrees to perform such duties and render such
services consistent therewith, and as may from time to time be reasonably
required of him by the Company, PMIL, the Australian Companies and National
Media. Executive shall devote his full business time, attention and best
efforts to the affairs of the Company, PMIL, the Australian Companies and
National Media during the Term of this Agreement. Executive will report
directly to the Company's Board of Directors (the "Board") and to such senior
executives of National Media as the Board shall direct.
4. Compensation and Reimbursement for Expenses
-------------------------------------------
4.1 Base Salary. The Company shall pay to Executive a base salary of
-----------
Three Hundred and Twenty Seven Thousand, Seven Hundred and Ninety Seven New
Zealand Dollars (NZ$327,797.00) per annum. Such Base Salary shall be payable in
accordance with the Company's regular payroll practices in effect from time to
time.
4.2 Annual Bonus. In addition to the other amounts payable to
------------
Executive hereunder, Executive shall participate in National Media's Management
Incentive Plan ("MIP"), provided, however, that the amount payable to Executive
under the terms of the MIP for National Media's Plan Year (as defined in the
MIP) ending March 31, 1997 shall be prorated for the period from the
Commencement Date through March 31, 1997 in accordance with the number of days
in such Plan Year during which Executive is employed by the Company pursuant to
this Agreement. The amount of bonus payable under the MIP shall be based on
performance in accordance with the provisions of the plan, as determined by the
Compensation Committee of National Media's Board of Directors. Executive hereby
agrees that any amount paid to Executive under the MIP in any Plan Year shall
not entitle Executive to any particular payment in any other Plan Year.
2
<PAGE>
4.3 Reimbursement of Expenses. The Company will promptly reimburse
-------------------------
Executive, upon receipt of vouchers therefor, for all reasonable and necessary
expenses incurred by Executive for business travel, entertainment and
miscellaneous and other direct business expenses which are incurred in
connection with the performance of his duties hereunder. Such reimbursements
shall be made in accordance with National Media's regular reimbursement
procedures and practices in effect from time to time for similarly situated
officers of National Media and its other subsidiaries.
5. Fringe Benefits.
---------------
5.1 General. Executive shall be eligible to participate in any and
-------
all fringe and other benefit programs generally available to the senior
executive officers of National Media and its subsidiaries, including without
limitation, stock option plans, incentive plans, profit sharing plans, thrift
and savings plans, insurance plans, supplemental insurance and benefit plans.
However, nothing contained in this subparagraph 5.1 shall be construed as
requiring the company or National Media generally to maintain any such fringe
benefit program or to make any discretionary grant to Executive thereunder.
5.2 Plans. Executive shall be eligible to participate in any employee
-----
benefit and/or welfare plans, including but not limited to health, medical, and
savings investment plans sponsored by the Company for its, or National Media for
its and its subsidiaries', senior executive officers, and receive any other
benefits generally applicable to senior executive officers of the Company or
those of National Media and its other subsidiaries.
5.3 Automobile Allowance. The Company shall pay Executive a monthly
--------------------
automobile allowance of Eleven Hundred and Sixty Five New Zealand Dollars
(NZ$1,165.00) which shall be deemed to compensate Executive for all automobile
related costs related to his duties hereunder, including, but not limited to,
insurance, fuel, maintenance, wear and tear, etc.
5.4 Vacations; Holidays; Sick Leave. Executive shall be entitled to
such number of paid vacation days in each calendar year as are generally awarded
to senior executive officers of National Media and its subsidiaries, but not
less than three (3) weeks in any calendar year (prorated in any calendar year
during which Executive is employed hereunder for less than the entire year in
accordance with the number of days in such calendar year during which he is so
employed). Executive shall not be permitted to carry over any portion of
Executive's accrued but unused vacation time from one fiscal year to the next
fiscal year; provided, however, that in the event applicable law renders the
preceding clause unenforceable, Executive shall be permitted to carry over
accrued but unused vacation time, but in no event shall Executive be permitted
to accrue at any time more than three (3) weeks' vacation time. Executive shall
also be entitled to sick leave as is generally awarded to senior executive
officers of National Media and its subsidiaries.
3
<PAGE>
5.5 Nothing contained in this Paragraph 5 shall require or obligate
National Media or the Company to augment any of its employee benefit plans etc
to take into account any tax treatment of any such plans.
6. Restriction on Transfer of National Media Common Stock. Executive shall
------------------------------------------------------
not, without the prior written consent of National Media (which consent will not
be unreasonably withheld), agree to or permit the sale, disposition or other
transfer by him and/or his Permitted Transferees (as defined below) of more than
50,000 shares of the National Media Common Stock issued to Executive in
connection with the Acquisition in any twelve (12) month period, and no more
than 20,000 shares in any three (3) month period, during the first three (3)
years of the Term (the "Transfer Restriction"). This Paragraph 6 shall in no way
restrict or limit Executive's ability to (a) transfer shares of National Media
Common Stock to his immediate family members or to a trust or trusts for the
benefit of his immediate family members for estate planning purposes or (b)
pledge shares of National Media Common Stock to a financial institution as
security for debt incurred by Executive (all transferees permitted by clause (a)
and (b) are referred to herein as "Permitted Transferees"); provided, however,
that Executive and such Permitted Transferees shall (i) be bound by the Transfer
Restriction and (ii) execute, prior to any such transfer to such Permitted
Transferee, such documents as may be reasonably requested by the Company or
National Media to evidence such Transfer Restriction.
In the event that Executive's employment by the Company is terminated
(i) by the Company for any reason other than pursuant to subparagraph 9.1(b)
hereof; or (ii) by Executive pursuant to subparagraph 9.1(c) or Paragraph 11,
the provisions of this Paragraph 6 shall terminate and be of no further force or
effect.
7. Non-Disclosure. Executive shall not at any time during the Term of
--------------
this Agreement or thereafter, except as properly required in the conduct of the
business of the Company and as authorized by the Company, or as otherwise
required by law or court order, disclose or authorize anyone else to disclose
any secret, proprietary, or confidential information, material or matter
relating to the Company, National Media or any of their customers ("Confidential
Information"). For purposes hereof, Confidential Information shall include (but
shall not be limited to) all information, data and materials utilized by
Executive, or coming known to Executive, in the course of his employment
hereunder, such as elements of computer programs utilized by the Company,
customer and vendor lists, pricing techniques, marketing techniques, financial
information, etc.
8. Covenant Not to Compete. From the Commencement Date through the later
-----------------------
of the First anniversary of the termination of this Agreement or the Fifth
anniversary of the Commencement Date, Executive shall not, without the prior
written consent of the Company, engage directly or indirectly in any direct
marketing, television infomercial venture, interactional television marketing or
any television infomercial production activities which is competitive with the
business of the Company or of National Media and shall not be an officer,
director, employee, independent contractor or Substantial Owner of any
4
<PAGE>
such restricted business. "Substantial Owner" as used herein shall mean an owner
of at least two percent (2%) of the beneficial equity or voting interests in a
subject restricted business. Notwithstanding the foregoing, if Executive
terminates this Agreement pursuant to subparagraph 9.1(c) or Paragraph 11
hereof, the restrictions described above shall terminate as of the date of such
termination.
Executive acknowledges that the obligations and restrictions contained in
this Paragraph 8, in view of the nature of the business in which the Company and
National Media are engaged, are reasonable and necessary in order to protect the
legitimate interests of the Company and National Media and that any violation
thereof would result in irreparable injury to the Company and National Media.
Executive understands and agrees that the remedies at law for any breach of the
foregoing covenant may be inadequate and that the Company and National Media
may, notwithstanding the provisions of Paragraph 12 hereof, be entitled to, in
addition to all other remedies which it may have, enforcement of this Agreement
by injunctive relief or by decree of specific performance in a court of
competent jurisdiction. If one or more of the provisions contained in this
Paragraph 8 shall for any reason be held to be excessively broad in scope or
subject, or otherwise to be unenforceable at law, such provision or provisions
shall be construed by the appropriate judicial body by limiting or reducing it
or them, as the case may be, so as to be enforceable to the maximum extent
compatible with applicable law then in existence.
9. Termination.
-----------
9.1 Executive's employment under this Agreement shall terminate upon
the occurrence of any of the following:
(a) Death or Disability. If Executive dies or becomes "Permanently
-------------------
Disabled" (meaning that, in the opinion of an independent physician selected by
the Company and National Media and reasonably satisfactory to Executive or his
representative, he is unable to perform his duties hereunder due to partial or
total mental or physical disability for an aggregate of 180 days (whether or not
consecutive) in any consecutive twelve (12) month period).
(b) Cause. For purposes of this Agreement, the Company shall have
-----
"Cause" to terminate the Executive's employment if the Executive, in the
reasonable judgment of the Company, (i) materially breaches any of his
agreements, duties or obligations under this Agreement and has not cured, or
commenced in good faith to cure, such breach within thirty (30) days after
notice; (ii) embezzles or converts to his own use any funds of the Company or
any client or customer of the Company; (iii) converts to his own use or
unreasonably destroys any property of the Company without the Company's consent;
(iv) is convicted of a criminal offence punishable by imprisonment; (v) is
adjudicated as mentally disordered; or (vi) is habitually intoxicated or is
diagnosed by an independent medical doctor to be addicted to a controlled
substance or any drug whatsoever which impedes Executive's abilities to perform
his duties hereunder. Notwithstanding the foregoing, Executive shall not be
deemed to have been terminated for Cause
5
<PAGE>
unless and until the Executive's rights under paragraph 12 hereof shall have
been satisfied, if he disputes such termination.
(c) Company Breach. In the event of the Company's material breach of
--------------
any provisions of this Agreement, Executive shall have the right to terminate
his employment hereunder; provided that Executive shall give written notice to
the Company of his intent to so terminate setting forth the basis for such
termination, and the Company shall then have the right to dispute such
termination pursuant to the provisions of paragraph 12 hereof.
9.2 Termination Obligations of Executive. In the event Executive's
------------------------------------
employment under this Agreement is terminated, Executive, or his legal
representative in case of termination by death or Executive's physical or mental
incapacity to serve, shall:
(a) by the close of the next business day following termination,
resign from all corporate and board positions held in National Media, the
Company and any of their respective subsidiaries and affiliated companies;
(b) promptly return to a representative designated by the Company all
property, including but not limited to, automobiles, keys, identification cards
and credit cards of the Company or any of its subsidiaries or affiliated
companies; and
(c) incur no further expenses or obligations on behalf of National
Media, the Company or any of its subsidiaries and affiliated companies.
10. Termination Compensation.
------------------------
10.1 Compensation. Subject to the terms of subparagraph 10.2 hereof,
------------
in the event that Executive shall terminate his employment under this Agreement
pursuant to subparagraph 9.1(c) above, or if the Company shall terminate
Executive's employment under this Agreement prior to the fifth anniversary of
the date hereof for any reason other than those set forth in subparagraphs
9.1(a) or (b), the Company shall (a) pay Executive or, in the event of
Executive's death following termination, Executive's estate (i) his full Base
Salary to the date of termination; and (ii) in lieu of any further salary or
other payments to Executive hereunder for periods subsequent to the date of
termination, the Company shall pay as liquidated damages to Executive in
accordance with the terms of subparagraph 10.2 hereof an amount equal to his
full Base Salary from the date of termination through to the fifth anniversary
of the date hereof, and (b) maintain in full force and effect for the continued
benefit of Executive through to the earlier of the fifth anniversary of the date
hereof or Executive obtaining similar benefits through other employment, all
employee benefit plans and programs in which Executive was entitled to
participate immediately prior to Executive's discharge or resignation, provided
that Executive's continued participation is possible under the general terms and
provisions of such benefit plans and programs and otherwise in accordance with
applicable law. In the event
6
<PAGE>
that Executive's participation in any such benefit plan or program is barred,
the Company shall make all reasonable efforts to arrange to provide Executive
with benefits substantially similar to those which Executive is entitled to
receive under such plans and programs.
10.2 In the event that Executive is entitled to receive severance in
accordance with subparagraph 10.1(a)(ii) hereof, such severance shall be paid to
Executive in accordance with the Company's normal payroll practices in effect
from time to time as if Executive was employed by the Company through to the
fifth anniversary of the date hereof; provided, however, that in the event that
-------- -------
Executive materially violates the Covenant Not to Compete contained in Paragraph
8 hereof, in addition to all other rights and remedies which the Company may
have, the foregoing severance shall only be payable through to the date of such
violation and the Company shall be entitled to cease providing Executive with
the benefits to which he would otherwise be entitled.
10.3 No Mitigation. Executive shall not be required to mitigate the
-------------
amount of any payments provided for in subparagraph 10.1 above by seeking other
employment or otherwise, nor shall the amount of any payment provided for herein
be reduced by any compensation earned as a result of employment by another
employer.
11. Change of Control. Within thirty (30) days following a Change in
-----------------
Control, as hereinafter defined, notwithstanding anything in this Agreement to
the contrary, Employee may terminate this Agreement by giving the Company at
least thirty (30) days' prior written notice of the effective date of such
termination and upon such termination all of the terms and provisions of this
Agreement (including the provisions contained in Paragraph 8 hereunder) shall
terminate and be of no further force and effect. As used in this Paragraph 11, a
"Change in Control" shall be deemed to have occurred if (a) any person or group
(as such term is defined in Section 13(d)(3) of the Securities Exchange Act of
1934) acquires direct or indirect control over the voting power of the voting
stock of National Media in a transaction not approved by the Company's Board of
Directors, (b) a majority of the members of the Board of Directors of National
Media cease being "Continuing Directors", or (c) if a controlling interest in
the Company is sold or otherwise transferred to an unrelated party. A
"Continuing Director" shall be deemed to be a member of the National Media Board
of Directors who either is a National Media director on the date of this
Agreement or is hereafter nominated for election or appointed by the National
Media Board of Directors by the affirmative vote of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
appointment.
12 Arbitration.
-----------
12.1 Subject to the provisions of Paragraph 8 hereof (the provisions of
which are specifically excluded from the arbitration provision contained in this
Paragraph 12), the following procedure shall apply to any dispute concerning the
interpretation, application or operation of this Agreement and any personal
grievances arising under it.
7
<PAGE>
12.2 The parties hereto must make an earnest effort to resolve the
dispute or grievance within ten (10) working days of the dispute or grievance
having been first raised.
12.3 If the dispute or grievance is not settled, then the dispute or
grievance will be referred to an arbitrator agreed by the parties, but if the
parties are unable to agree upon that appointment the arbitrator must be the
nominee of the President or Vice-President of the Arbitrators' and Mediators'
Institute of New Zealand Incorporated.
12.4 The arbitrator will endeavor to mediate the dispute or grievance
observing the rules of natural justice but if no settlement is reached the
arbitrator will determine the dispute or grievance in accordance with the terms
which follow.
12.5 If any party is dissatisfied with a determination of the
arbitrator, that party may appeal from that determination. The appeal will be by
way of "rehearing" within the meaning and application of rehearing as used in
section 76 of the District Courts Act 1947. This means that the evidence found
by the arbitrator may be used on appeal but that the person hearing the appeal
may in their discretion rehear the whole or any part of the evidence. Any remedy
the arbitrator could have granted may be granted on appeal, or the appeal may be
dismissed. The decision of the person hearing the appeal shall be final.
12.6 The appeal shall be heard and determined by a practicing barrister
or solicitor of not less than 7 years standing agreed upon by the parties or
failing agreement as nominated by the President or Vice-President for the time
being of the Auckland District Law Society.
12.7 Both the arbitrator and the person hearing the appeal have the
following powers and functions and must observe the following procedures:
(a) In adjudicating the dispute or grievance consideration shall be
given to the parties' written statements, evidence and submissions given by or
on behalf of the parties, and such other matters as are relevant and thought fit
to bring into account.
(b) A record must be kept of the matters considered.
(c) The rules of natural justice must be observed.
(d) Otherwise the procedure shall be as directed by the arbitrator or
the person hearing the appeal as will most effectively expeditiously and
economically determine the dispute or grievance. The arbitrator or the person
hearing the appeal may if they choose adapt the rules and procedures for
mediation and arbitration as contained in the Rules of the Arbitrators' and
Mediators' Institute of New Zealand Incorporated.
8
<PAGE>
(e) The arbitrator and the person hearing the appeal may order any
party or the parties to pay the costs of the proceeding in whole or in part, and
the payment of the costs by one party to another, in the discretion of the
arbitrator or the person hearing the appeal.
12.8 The arbitrator and the person hearing the appeal may make a
finding on the dispute or grievance and the parties all agree to comply with
that finding.
12.9 These procedures are instead of all procedures otherwise provided
by the Employment Contracts Act 1991.
13 Counsel Fees and Indemnification. In the event that it shall be
--------------------------------
necessary or desirable for the Executive to retain legal counsel and/or incur
other costs and expenses in connection with the enforcement of any and all of
his rights under this Agreement, including participation in any proceeding
contesting the validity or enforceability of this Agreement and any arbitration
proceeding pursuant to Paragraph 12 of this Agreement, the Executive shall be
entitled to recover from the Company his reasonable attorneys' fees and costs
and expenses in connection with the enforcement of his rights. No fees shall be
payable if the Company is successful on the merits.
The Company shall indemnify and hold Executive harmless to the maximum
extent permitted by law against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees incurred by Executive, in
connection with the defense of, or as a result of, any action or proceeding (or
any appeal from any action or proceeding) in which Executive is made or is
threatened to be made a party by reason of any act or omission of Executive in
his capacity as an officer, director or employee of the Company, regardless of
whether such action or proceeding is one brought by or in the right of the
Company, to procure a judgment in its favor. Expenses (including attorneys'
fees) incurred by Executive in defending any civil, criminal, administrative, or
investigative action, suit or proceeding shall be paid by the Company in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of Executive to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Company as authorized in this Paragraph 13.
The provisions of this Paragraph 13 shall survive termination of this
Agreement and shall survive indefinitely with respect to any cost or liability
incurred by Executive on account of any actual or alleged act, omission, or
decision by Executive during the Term.
14. Notices. Unless either party notifies the other to the contrary, any
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notice required hereunder shall be duly given if delivered in person or by
registered first class mail or recognized overnight mail carrier:
9
<PAGE>
If to the Company, to:
Prestige Marketing Limited
c/o National Media Corporation
1700 Walnut Street
Philadelphia, PA 19103
Attention: President
If to National Media, to:
National Media Corporation
1700 Walnut Street
Philadelphia, PA 19103
Attention: President
If to Executive, to:
Paul Ernest Meier
4C, 41 Albert Street
Auckland
New Zealand
15. General Provisions.
------------------
15.1 Binding Effect. This agreement shall be binding upon and inure to
--------------
the benefit of National Media, the Company and their statutory successors and
assigns and Executive, his designees, and his estate. Neither Executive, his
designees, nor his estate shall commute, pledge, encumber, sell or otherwise
dispose of the rights to receive the payments provided in this Agreement, which
payments and the rights thereto are expressly declared to be non-transferable
and non-assignable (except by death or otherwise by operation of law).
15.2 Set-Off. Executive hereby acknowledges and agrees that the
-------
Company shall have the right to set-off against any amounts due and payable by
the Company to Executive under this Agreement all amounts due and payable to the
Company or National Media by Executive under that certain Acquisition Agreement
dated as of May 30, 1996 including, without limitation, Article 8 thereof.
10
<PAGE>
15.3 Governing Law. This Agreement shall be governed by the laws of
-------------
New Zealand from time to time in effect.
15.4 Entire Agreement. This Agreement represents the entire agreement
----------------
between Executive and the Company with respect to the subject matter hereof.
This Agreement may not be amended or modified except by a writing signed by the
parties hereto. Any written amendment, waiver or termination hereof executed by
the Company and Executive (or his estate) shall be binding upon them and upon
all persons, without the necessity of securing the consent of any other person
and no person shall be deemed to be a third party beneficiary under this
Agreement.
15.5 Third Party Beneficiaries. Except as provided in this Agreement,
-------------------------
each of Executive and the Company intends that this Agreement shall not benefit
or create any right or cause of action in or on behalf of any person other than
Executive and the Company. Notwithstanding the foregoing, Executive and the
Company acknowledge that National Media shall receive the benefits of, and be
entitled to enforce, all of the Company's rights contained in this Agreement.
15.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
15.7 No Waiver. Except as otherwise expressly set forth herein, no
---------
failure on the part of either party hereto to exercise and no delay in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
15.8 Headings. The headings of the paragraphs of this Agreement have
--------
been inserted for convenience of reference only and shall in no way restrict any
of the terms or provisions hereof.
11
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ATTEST: PRESTIGE MARKETING LIMITED
/s/ By: /s/
- ---------------------------------- ----------------------------------------
Name:
WITNESS: Title:
/s/ /s/ Paul Ernest Meier
- ---------------------------------- ----------------------------------------
PAUL ERNEST MEIER
12
<PAGE>
Exhibit 99.2
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, made as of the 2nd day of July, 1996, by and between Prestige
Marketing Limited, a New Zealand corporation (the "Company"), a wholly-owned
subsidiary of National Media Corporation ("National Media"), and SUSAN BARNES
("Executive").
W I T N E S S E T H
-------------------
WHEREAS, of even date herewith National Media is acquiring all of the share
capital of the Company from Executive and the other shareholders of the Company
(the "Acquisition");
WHEREAS, one of the principal terms of the agreement pursuant to which the
Acquisition is being made requires that Executive agree to be employed by the
Company for a period of Five (5) years;
WHEREAS, Executive is benefiting financially both directly and indirectly
as a result of the Acquisition;
WHEREAS, National Media, the Company and Executive acknowledge and agree
that Executive's knowledge of the Company's business operations, her talent as a
spokesperson for the Company's products and the continued employment of
Executive by, and the non-competition of Executive with, the Company is critical
to the continued performance and growth of the Company in New Zealand and
elsewhere during the Term (as hereinafter defined hereof);
WHEREAS, Executive is willing to serve the Company on a full-time basis,
subject to the provisions of paragraph 3 hereof, during the Term hereof, subject
to the terms and conditions hereinafter set forth; and
WHEREAS, the Company desires to employ Executive in accordance with the
terms hereof.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, it is agreed as follows:
1. Employment. The Company hereby employs Executive, and Executive hereby
----------
accepts employment from the Company, upon the terms and conditions hereinafter
set forth.
2. Terms of Employment.
-------------------
2.1 Employment by the Company of Executive under this contract
commences on this 2nd day of July 1996.
2.2 The Company shall employ the Executive for a period of Five (5)
years commencing on this 2nd day of July 1996 and ending on the 1st day of July
2001 ("the Term").
<PAGE>
2.3 Nothing in this Agreement shall prevent the parties, at or before
the expiration date of the Term, from entering into a subsequent contract of
employment by agreement; but nothing in this clause shall be interpreted or
understood to give to the Executive any expectation that this Agreement will be
renewed, or that any subsequent contract will be entered into, and no
arrangements for any renewal or subsequent contract shall bind either party
unless such arrangement is in writing signed by all parties to this Agreement
this being an agreement for a fixed period for the reasons set forth in the
recitals hereto, it is acknowledged by Executive, that upon termination of
employment hereunder, no redundancy compensation shall be payable.
3. Duties. Executive shall be engaged as, and hold the position of, Vice-
------
President of the Company and Prestige Marketing International Limited ("PMIL").
Executive shall also serve as Vice-President of Suzanne Paul Holdings Pty
Limited, Suzanne Paul (Australia) Pty Limited and Telemall Shopping Pty Limited
(the "Australian Companies"). Executive shall have such authority and
responsibilities as are normally attendant thereto. As an element of her
responsibility hereunder, Executive shall perform such services regarding the
development, production etc of the Company's and National Media's, and their
related entities, infomercials, commercials, advertisements etc as the Company's
Chief Executive Officer and/or Board of Directors ("Board") may direct.
Specifically, Executive shall appear in the Company's, National Media's and
their related entities' infomercials, commercials, advertisements, etc as
spokesperson for such products as the Board or the Chief Executive Officer shall
direct. Executive agrees to perform such duties and render such services
consistent therewith, and as may from time to time be reasonably required of her
by the Company, PMIL, the Australian Companies and National Media subject to the
second part of this Paragraph 3. Executive shall devote her full business time,
attention and best efforts to the affairs of the Company, PMIL, the Australian
Companies and National Media during the Term of this Agreement. Executive will
report directly to the Company's Chief Executive Officer and to such senior
executives of National Media as the Board shall direct.
The Company hereby agrees that, so long as such activities (i) do not
constitute a violation of paragraph 8 hereof or (ii) materially inhibit the
carrying out of Executive's assigned duties hereunder in a timely fashion,
Executive shall have the right hereunder, upon reasonable prior notice to the
Company, to take unpaid leaves of absence hereunder in order to pursue certain
television appearance opportunities. Executive's base salary hereunder and
benefits shall be adjusted pro rata to reflect such leaves of absence.
4. Compensation and Reimbursement for Expenses
-------------------------------------------
4.1 Base Salary. Subject to the provisions of paragraph 3 above, the
-----------
Company shall pay to Executive a base salary of Two Hundred and Eighteen
Thousand Five Hundred and Thirty One New Zealand Dollars (NZ$218,531.00) per
annum. Such Base Salary shall be payable in accordance with the Company's
regular payroll practices in effect from time to time.
3
<PAGE>
4.2 Annual Bonus. In addition to the other amounts payable to
------------
Executive hereunder, Executive shall participate in National Media's Management
Incentive Plan ("MIP"), provided, however, that the amount payable to Executive
-------- -------
under the terms of the MIP for National Media's Plan Year (as defined in the
MIP) ending March 31, 1997 shall be prorated for the period from the
Commencement Date through March 31, 1997 in accordance with the number of days
in such Plan Year during which Executive is employed by the Company pursuant to
this Agreement. The amount of bonus payable under the MIP shall be based on
performance in accordance with the provisions of the plan, as determined by the
Compensation Committee of National Media's Board of Directors. Executive hereby
agrees that any amount paid to Executive under the MIP in any Plan Year shall
not entitle Executive to any particular payment in any other Plan Year.
4.3 Reimbursement of Expenses. The Company will promptly reimburse
-------------------------
Executive, upon receipt of vouchers therefor, for all reasonable and necessary
expenses incurred by Executive for business travel, entertainment and
miscellaneous and other direct business expenses which are incurred in
connection with the performance of her duties hereunder. Such reimbursements
shall be made in accordance with National Media's regular reimbursement
procedures and practices in effect from time to time for similarly situated
officers of National Media and its other subsidiaries.
5. Fringe Benefits.
---------------
5.1 General. Executive shall be eligible to participate in any and all
-------
fringe and other benefit programs generally available to the officers of
National Media and its subsidiaries, including without limitation, stock option
plans, incentive plans, profit sharing plans, thrift and savings plans,
insurance plans, supplemental insurance and benefit plans. However, nothing
contained in this subparagraph 5.1 shall be construed as requiring the company
or National Media generally to maintain any such fringe benefit program or to
make any discretionary grant to Executive thereunder.
5.2 Plans. Executive shall be eligible to participate in any employee
-----
benefit and/or welfare plans, including but not limited to health, medical, and
savings investment plans sponsored by the Company for its, or National Media for
its and its subsidiaries', officers, and receive any other benefits generally
applicable to officers of the Company or those of National Media and its other
subsidiaries.
5.3 Automobile Allowance. The Company shall pay Executive a monthly
--------------------
automobile allowance of Eight Hundred and Seventy Four New Zealand Dollars
(NZ$874.00) which shall be deemed to compensate Executive for all automobile
related costs related to her duties hereunder, including, but not limited to,
insurance, fuel, maintenance, wear and tear, etc..
5.4 Vacations; Holidays; Sick Leave. Executive shall be entitled to
-------------------------------
such number of paid vacation days in each calendar year as are generally awarded
to officers of National Media or its subsidiaries, but not less than three (3)
weeks in any calendar year (prorated in any calendar year during
4
<PAGE>
which Executive is employed hereunder for less than the entire year in
accordance with the number of days in such calendar year during which she is so
employed). Executive shall not be permitted to carry over any portion of
Executive's accrued but unused vacation time from one fiscal year to the next
fiscal year; provided, however, that in the event applicable law renders the
preceding clause unenforceable, Executive shall be permitted to carry over
accrued but unused vacation time, but in no event shall Executive be permitted
to accrue at any time more than three (3) weeks' vacation time. Executive shall
also be entitled to sick leave as is generally awarded to officers of National
Media or its subsidiaries.
5.5 Nothing contained in this Paragraph 5 shall require or obligate
National Media or the Company to augment any of its employee benefit plans etc
to take into account any tax treatment of any such plans.
6. Restriction on Transfer of National Media Common Stock. Executive
------------------------------------------------------
shall not, without the prior written consent of National Media (which consent
will not be unreasonably withheld), agree to or permit the sale, disposition or
other transfer by her and/or her Permitted Transferees (as defined below) of
more than 25,000 shares of the National Media Common Stock issued to Executive
in connection with the Acquisition in any twelve (12) month period, and no more
than 10,000 shares in any three (3) month period, during the first three (3)
years of the Term (the "Transfer Restriction"). This Paragraph 6 shall in no way
restrict or limit Executive's ability to (a) transfer shares of National Media
Common Stock to her immediate family members or to a trust or trusts for the
benefit of her immediate family members for estate planning purposes or (b)
pledge shares of National Media Common Stock to a financial institution as
security for debt incurred by Executive (all transferees permitted by clause (a)
and (b) are referred to herein as "Permitted Transferees"); provided, however,
-------- -------
that Executive and such Permitted Transferees shall (i) be bound by the Transfer
Restriction and (ii) execute, prior to any such transfer to such Permitted
Transferee, such documents as may be reasonably requested by the Company or
National Media to evidence such Transfer Restriction.
In the event that Executive's employment by the Company is terminated
(i) by the Company for any reason other than pursuant to subparagraph 9.1(b)
hereof; or (ii) by Executive pursuant to subparagraph 9.1(c) or Paragraph 11,
the provisions of this Paragraph 6 shall terminate and be of no further force or
effect.
7. Non-Disclosure. Executive shall not at any time during the Term of
--------------
this Agreement or thereafter, except as properly required in the conduct of the
business of the Company and as authorized by the Company, or as otherwise
required by law or court order, disclose or authorize anyone else to disclose
any secret, proprietary, or confidential information, material or matter
relating to the Company, National Media or any of their customers ("Confidential
Information"). For purposes hereof, Confidential Information shall include (but
shall not be limited to) all information, data and materials utilized by
Executive, or coming known to Executive, in the course of her employment
hereunder, such as elements of
5
<PAGE>
computer programs utilized by the Company, customer and vendor lists, pricing
techniques, marketing techniques, financial information, etc.
8. Covenant Not to Compete. From the Commencement Date through the later
-----------------------
of the First anniversary of the termination of this Agreement or the Fifth
anniversary of the Commencement Date, Executive shall not, without the prior
written consent of the Company, engage directly or indirectly in any direct
marketing, television infomercial venture, interactional television marketing or
any television infomercial production activities which is competitive with the
business of the Company or of National Media and shall not be an officer,
director, employee, independent contractor or Substantial Owner of any such
restricted business. "Substantial Owner" as used herein shall mean an owner of
at least two percent (2%) of the beneficial equity or voting interests in a
subject restricted business. Notwithstanding the foregoing, if Executive
terminates this Agreement pursuant to subparagraph 9.1(c) hereof the
restrictions described above shall terminate as of the date of such termination.
Executive acknowledges that the obligations and restrictions contained in
this Paragraph 8, in view of the nature of the business in which the Company and
National Media are engaged, are reasonable and necessary in order to protect the
legitimate interests of the Company and National Media and that any violation
thereof would result in irreparable injury to the Company and National Media.
Executive understands and agrees that the remedies at law for any breach of the
foregoing covenant may be inadequate and that the Company and National Media
may, notwithstanding the provisions of Paragraph 12 hereof, be entitled to, in
addition to all other remedies which it may have, enforcement of this Agreement
by injunctive relief or by decree of specific performance in a court of
competent jurisdiction. If one or more of the provisions contained in this
Paragraph 8 shall for any reason be held to be excessively broad in scope or
subject, or otherwise to be unenforceable at law, such provision or provisions
shall be construed by the appropriate judicial body by limiting or reducing it
or them, as the case may be, so as to be enforceable to the maximum extent
compatible with applicable law then in existence.
9. Termination.
-----------
9.1 Executive's employment under this Agreement shall terminate upon
the occurrence of any of the following:
(a) Death or Disability. If Executive dies or becomes
-------------------
"Permanently Disabled" (meaning that, in the opinion of an independent physician
selected by the Company and National Media and reasonably satisfactory to
Executive or her representative, she is unable to perform her duties hereunder
due to partial or total mental or physical disability for an aggregate of 180
days (whether or not consecutive) in any consecutive twelve (12) month period).
(b) Cause. For purposes of this Agreement, the Company shall
-----
have "Cause" to terminate the Executive's employment if the Executive, in the
reasonable judgment of the Company, (i) materially
6
<PAGE>
breaches any of her agreements, duties or obligations under this Agreement and
has not cured, or commenced in good faith to cure, such breach within thirty
(30) days after notice; (ii) embezzles or converts to her own use any funds of
the Company or any client or customer of the Company; (iii) converts to her own
use or unreasonably destroys any property of the Company without the Company's
consent; (iv) is convicted of a criminal offence punishable by imprisonment; (v)
is adjudicated as mentally disordered; or (vi) is habitually intoxicated or is
diagnosed by an independent medical doctor to be addicted to a controlled
substance or any drug whatsoever which impedes Executive's abilities to perform
her duties hereunder. Notwithstanding the foregoing, Executive shall not be
deemed to have been terminated for Cause unless and until the Executive's rights
under paragraph 12 hereof shall have been satisfied, if she disputes such
termination.
(c) Company Breach. In the event of the Company's material breach
--------------
of any provisions of this Agreement, Executive shall have the right to terminate
her employment hereunder; provided that Executive shall give written notice to
the Company of her intent to so terminate setting forth the basis for such
termination, and the Company shall then have the right to dispute such
termination pursuant to the provisions of paragraph 12 hereof.
9.2 Termination Obligations of Executive. In the event Executive's
------------------------------------
employment under this Agreement is terminated, Executive, or her legal
representative in case of termination by death or Executive's physical or mental
incapacity to serve, shall:
(a) by the close of the next business day following termination,
resign from all corporate and board positions held in National Media, the
Company and any of their respective subsidiaries and affiliated companies;
(b) promptly return to a representative designated by the Company all
property, including but not limited to, automobiles, keys, identification cards
and credit cards of the Company or any of its subsidiaries or affiliated
companies; and
(c) incur no further expenses or obligations on behalf of National
Media, the Company or any of its subsidiaries and affiliated companies.
10. Termination Compensation.
------------------------
10.1 Compensation. Subject to the terms of subparagraph 10.2 hereof,
------------
in the event that Executive shall terminate her employment under this Agreement
pursuant to subparagraph 9.1(c) above, or if the Company shall terminate
Executive's employment under this Agreement prior to the fifth anniversary of
the date hereof for any reason other than those set forth in subparagraphs
9.1(a) or (b), the Company shall (a) pay Executive or, in the event of
Executive's death following termination, Executive's estate (i) her full Base
Salary to the date of termination; and (ii) in lieu of any further salary or
other payments to Executive
7
<PAGE>
hereunder for periods subsequent to the date of termination, the Company shall
pay as liquidated damages to Executive in accordance with the terms of
subparagraph 10.2 hereof an amount equal to her full Base Salary from the date
of termination through to the fifth anniversary of the date hereof, and (b)
maintain in full force and effect for the continued benefit of Executive through
to the earlier of the fifth anniversary of the date hereof or Executive
obtaining similar benefits through other employment, all employee benefit plans
and programs in which Executive was entitled to participate immediately prior to
Executive's discharge or resignation, provided that Executive's continued
participation is possible under the general terms and provisions of such benefit
plans and programs and otherwise in accordance with applicable law. In the event
that Executive's participation in any such benefit plan or program is barred,
the Company shall make all reasonable efforts to arrange to provide Executive
with benefits substantially similar to those which Executive is entitled to
receive under such plans and programs.
10.2 In the event that Executive is entitled to receive severance in
accordance with subparagraph 10.1(a)(ii) hereof, such severance shall be paid to
Executive in accordance with the Company's normal payroll practices in effect
from time to time as if Executive was employed by the Company through to the
fifth anniversary of the date hereof; provided, however, that in the event that
-------- -------
Executive materially violates the Covenant Not to Compete contained in Paragraph
8 hereof, in addition to all other rights and remedies which the Company may
have, the foregoing severance shall only be payable through to the date of such
violation and the Company shall be entitled to cease providing Executive with
the benefits to which she would otherwise be entitled.
10.3 No Mitigation. Executive shall not be required to mitigate the
-------------
amount of any payments provided for in subparagraph 10.1 above by seeking other
employment or otherwise, nor shall the amount of any payment provided for herein
be reduced by any compensation earned as a result of employment by another
employer.
11. Change of Control. Within thirty (30) days following a Change in
-----------------
Control, as hereinafter defined, notwithstanding anything in this Agreement to
the contrary, Employee may terminate this Agreement by giving the Company at
least thirty (30) days' prior written notice of the effective date of such
termination and upon such termination all of the terms and provisions of this
Agreement (including the provisions contained in Paragraph 8 hereunder) shall
terminate and be of no further force and effect. As used in this Paragraph 11, a
"Change in Control" shall be deemed to have occurred if (a) any person or group
(as such term is defined in Section 13(d)(3) of the Securities Exchange Act of
1934) acquires direct or indirect control over the voting power of the voting
stock of National Media in a transaction not approved by the Company's Board of
Directors, (b) a majority of the members of the Board of Directors of National
Media cease being "Continuing Directors", or (c) if a controlling interest in
the Company is sold or otherwise transferred to an unrelated party. A
"Continuing Director" shall be deemed to be a member of the National Media Board
of Directors who either is a National Media director on the date of this
Agreement or is hereafter nominated for election or appointed by the National
Media Board of Directors by the
8
<PAGE>
affirmative vote of a majority of the Continuing Directors who were members of
such Board at the time of such nomination or appointment.
12. Arbitration.
-----------
12.1 Subject to the provisions of Paragraph 8 hereof (the provisions
of which are specifically excluded from the arbitration provision contained in
this Paragraph 12), the following procedure shall apply to any dispute
concerning the interpretation, application or operation of this Agreement and
any personal grievances arising under it.
12.2 The parties hereto must make an earnest effort to resolve the
dispute or grievance within ten (10) working days of the dispute or grievance
having been first raised.
12.3 If the dispute or grievance is not settled, then the dispute or
grievance will be referred to an arbitrator agreed by the parties, but if the
parties are unable to agree upon that appointment the arbitrator must be the
nominee of the President or Vice-President of the Arbitrators' and Mediators'
Institute of New Zealand Incorporated.
12.4 The arbitrator will endeavor to mediate the dispute or grievance
observing the rules of natural justice but if no settlement is reached the
arbitrator will determine the dispute or grievance in accordance with the terms
which follow.
12.5 If any party is dissatisfied with a determination of the
arbitrator, that party may appeal from that determination. The appeal will be by
way of "rehearing" within the meaning and application of rehearing as used in
section 76 of the District Courts Act 1947. This means that the evidence found
by the arbitrator may be used on appeal but that the person hearing the appeal
may in their discretion rehear the whole or any part of the evidence. Any remedy
the arbitrator could have granted may be granted on appeal, or the appeal may be
dismissed. The decision of the person hearing the appeal shall be final.
12.6 The appeal shall be heard and determined by a practicing
barrister or solicitor of not less than 7 years standing agreed upon by the
parties or failing agreement as nominated by the President or Vice-President for
the time being of the Auckland District Law Society.
12.7 Both the arbitrator and the person hearing the appeal have the
following powers and functions and must observe the following procedures:
(a) In adjudicating the dispute or grievance consideration shall be
given to the parties' written statements, evidence and submissions given by or
on behalf of the parties, and such other matters as are relevant and thought fit
to bring into account.
9
<PAGE>
(b) A record must be kept of the matters considered.
(c) The rules of natural justice must be observed.
(d) Otherwise the procedure shall be as directed by the arbitrator
or the person hearing the appeal as will most effectively expeditiously and
economically determine the dispute or grievance. The arbitrator or the person
hearing the appeal may if they choose adapt the rules and procedures for
mediation and arbitration as contained in the Rules of the Arbitrators' and
Mediators' Institute of New Zealand Incorporated.
(e) The arbitrator and the person hearing the appeal may order any
party or the parties to pay the costs of the proceeding in whole or in part, and
the payment of the costs by one party to another, in the discretion of the
arbitrator or the person hearing the appeal.
12.8 The arbitrator and the person hearing the appeal may make a
finding on the dispute or grievance and the parties all agree to comply with
that finding.
12.9 These procedures are instead of all procedures otherwise
provided by the Employment Contracts Act 1991.
13. Counsel Fees and Indemnification. In the event that it shall be
--------------------------------
necessary or desirable for the Executive to retain legal counsel and/or incur
other costs and expenses in connection with the enforcement of any and all of
her rights under this Agreement, including participation in any proceeding
contesting the validity or enforceability of this Agreement and any arbitration
proceeding pursuant to Paragraph 12 of this Agreement, the Executive shall be
entitled to recover from the Company her reasonable attorneys' fees and costs
and expenses in connection with the enforcement of her rights. No fees shall be
payable if the Company is successful on the merits.
The Company shall indemnify and hold Executive harmless to the maximum
extent permitted by law against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees incurred by Executive, in
connection with the defense of, or as a result of, any action or proceeding (or
any appeal from any action or proceeding) in which Executive is made or is
threatened to be made a party by reason of any act or omission of Executive in
her capacity as an officer, director or employee of the Company, regardless of
whether such action or proceeding is one brought by or in the right of the
Company, to procure a judgment in its favor. Expenses (including attorneys'
fees) incurred by Executive in defending any civil, criminal, administrative, or
investigative action, suit or proceeding shall be paid by the Company in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of Executive to repay such amount if it shall
ultimately be determined that she is not entitled to be indemnified by the
Company as authorized in this Paragraph 13.
10
<PAGE>
The provisions of this Paragraph 13 shall survive termination of this
Agreement and shall survive indefinitely with respect to any cost or liability
incurred by Executive on account of any actual or alleged act, omission, or
decision by Executive during the Term.
14. Notices. Unless either party notifies the other to the contrary, any
-------
notice required hereunder shall be duly given if delivered in person or by
registered first class mail or recognized overnight mail carrier:
If to the Company, to:
Prestige Marketing Limited
c/o National Media Corporation
1700 Walnut Street
Philadelphia, PA 19103
Attention: President
If to National Media, to:
National Media Corporation
1700 Walnut Street
Philadelphia, PA 19103
Attention: President
If to Executive, to:
Susan Barnes
111 Benson Road
Remuera
Auckland
15. General Provisions; Miscellaneous.
---------------------------------
15.1 Binding Effect. This agreement shall be binding upon and inure
--------------
to the benefit of National Media, the Company and their statutory successors and
assigns and Executive, her designees, and her estate. Neither Executive, her
designees, nor her estate shall commute, pledge, encumber, sell or otherwise
dispose of the rights to receive the payments provided in this Agreement, which
payments and the rights thereto are expressly declared to be non-transferable
and non-assignable (except by death or otherwise by operation of law).
15.2 Set-Off. Executive hereby acknowledges and agrees that the
-------
Company shall have the right to set-off against any amounts due and payable by
the Company to Executive under this Agreement
11
<PAGE>
all amounts due and payable to the Company or National Media by Executive under
that certain Acquisition Agreement dated as of May 30, 1996 including, without
limitation, Article 8 thereof.
15.3 Governing Law. This Agreement shall be governed by the laws of
-------------
New Zealand from time to time in effect.
15.4 Entire Agreement. This Agreement represents the entire agreement
----------------
between Executive and the Company with respect to the subject matter hereof.
This Agreement may not be amended or modified except by a writing signed by the
parties hereto. Any written amendment, waiver or termination hereof executed by
the Company and Executive (or her estate) shall be binding upon them and upon
all persons, without the necessity of securing the consent of any other person
and no person shall be deemed to be a third party beneficiary under this
Agreement.
15.5 Third Party Beneficiaries. Except as provided in this Agreement,
-------------------------
each of Executive and the Company intends that this Agreement shall not benefit
or create any right or cause of action in or on behalf of any person other than
Executive and the Company. Notwithstanding the foregoing, Executive and the
Company acknowledge that National Media shall receive the benefits of, and be
entitled to enforce, all of the Company's rights contained in this Agreement.
15.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
15.7 No Waiver. Except as otherwise expressly set forth herein, no
---------
failure on the part of either party hereto to exercise and no delay in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
15.8 Headings. The headings of the paragraphs of this Agreement have
--------
been inserted for convenience of reference only and shall in no way restrict any
of the terms or provisions hereof.
15.9 It is understood that Executive has in the past and will during
the Term of the Agreement, appear in the television and other advertisements
developed and/or produced by or on behalf of the Company, National Media or
their related entities. Any such appearance shall be deemed to be wholly within
the scope of Executive's employment with the Company. The Company and National
Media shall have the right to publicize, broadcast, telecast and otherwise
utilize all of such advertisements, or cause others to do so, in its sole
discretion and without any payment being made for such right other than the
amounts due Executive hereunder whether such activities take place during or
after Executive's employment hereunder. Executive agrees that such activities
may include the reasonable amendment or revision of such
12
<PAGE>
advertisements. Executive hereby gives permission for all such activities and
waives all moral rights Executive may have under Part IV of the Copyright Act
1994.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ATTEST: PRESTIGE MARKETING LIMITED
/s/ By: /s/
- ------------------------------------- -------------------------------------
Name:
WITNESS: Title:
/s/ /s/ Susan Barnes
- ------------------------------------- -----------------------------------------
SUSAN BARNES
13
<PAGE>
Exhibit 99.3
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, made as of the 3rd day of July, 1996, by and between
Suzanne Paul (Australia) Pty Limited (ACN 003 294 764), an Australian
corporation (the "Company"), a wholly-owned subsidiary of National Media
Corporation ("National Media"), and ALAN MEIER ("Executive").
WITNESSETH
----------
WHEREAS, of even date herewith National Media is acquiring all of the
share capital of the Company from Executive and the other shareholders of the
Company (the "Acquisition");
WHEREAS, one of the principal terms of the agreement pursuant to which
the Acquisition is being made requires that Executive agree to be employed by
the Company for a period of Five (5) years;
WHEREAS, Executive is benefiting financially both directly and
indirectly as a result of the Acquisition;
WHEREAS, National Media, the Company and Executive acknowledge and
agree that Executive's knowledge of the Company's business operations, and its
information management system in particular, and the continued employment of
Executive by, and the non-competition of Executive with, the Company is critical
to the continued performance and growth of the Company in Australia and
elsewhere during the Term (as hereinafter defined hereof);
WHEREAS, Executive is willing to serve the Company on a full-time
basis during the Term hereof, subject to the terms and conditions hereinafter
set forth; and
WHEREAS, the Company desires to employ Executive in accordance with
the terms hereof.
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth, it is agreed as follows:
1. Employment. The Company hereby employs Executive, and Executive
----------
hereby accepts employment from the Company, upon the terms and conditions
hereinafter set forth.
2. Terms of Employment.
-------------------
2.1 Employment by the Company of Executive under this contract
commences on this 3rd day of July 1996.
1
<PAGE>
2.2. The Company shall employ the Executive for a period of Five
(5) years commencing on this 3rd day of July 1996 and ending on the 2nd day of
July 2001 ("the Term").
2.3 Nothing in this Agreement shall prevent the parties, at or
before the expiration date of the Term, from entering into a subsequent contract
of employment by agreement; but nothing in this clause shall be interpreted or
understood to give to the Executive any expectation that this Agreement will be
renewed, or that any subsequent contract will be entered into, and no
arrangements for any renewal or subsequent contract shall bind either party
unless such arrangement is in writing signed by all parties to this Agreement.
This being an agreement for a fixed period for the reasons set forth in the
recitals hereto, it is acknowledged by Executive, that upon termination of
employment hereunder, no redundancy compensation shall be payable.
3. Duties. Executive shall be engaged as, and hold the position of,
------
Vice President of the Company, Suzanne Paul Holdings Pty Limited, and Telemall
Shopping Pty Limited (the "Australian Companies") and Prestige Marketing Limited
("PML") and Prestige Marketing International Limited ("PMIL") (the "New Zealand
Companies"). Executive shall have such authority and responsibilities as are
normally attendant thereto and agrees to perform such duties and render such
services consistent therewith, and as may from time to time be reasonably
required of him by the Company, the other Australian Companies and the New
Zealand Companies and National Media. Executive shall devote his full business
time, attention and best efforts to the affairs of the Company, the other
Australian Companies, the New Zealand Companies and National Media during the
Term of this Agreement. Executive will report directly to the Company's Chief
Executive Officer and to such senior executives of National Media as the Board
shall direct.
4. Compensation and Reimbursement for Expenses.
-------------------------------------------
4.1 Base Salary. The Company shall pay to Executive a base salary
-----------
of One Hundred and Ninety One Thousand, One Hundred and Thirty One Australian
Dollars (AUS$$191,131) per annum. Such Base Salary shall be payable in
accordance with the Company's regular payroll practices in effect from time to
time.
4.2 Annual Bonus. In addition to the other amounts payable to
------------
Executive hereunder, Executive shall participate in National Media's Management
Incentive Plan ("MIP"), provided, however, that the amount payable to Executive
under the terms of the MIP for National Media's Plan Year (as defined in the
MIP) ending March 31, 1997 shall be prorated for the period from the
Commencement Date through March 31, 1997 in accordance with the number of days
in such Plan Year during which Executive is employed by the Company pursuant to
this Agreement. The amount of bonus payable under the MIP shall be based on
performance in accordance with the provisions of the plan, as determined by the
Compensation Committee of National Media's Board of Directors. Executive hereby
agrees that any amount paid to
2
<PAGE>
Executive under the MIP in any Plan Year shall not entitle Executive to any
particular payment in any other Plan Year.
4.3 Reimbursement of Expenses. The Company will promptly reimburse
-------------------------
Executive, upon receipt of vouchers therefor, for all reasonable and necessary
expenses incurred by Executive for business travel, entertainment and
miscellaneous and other direct business expenses which are incurred in
connection with the performance of his duties hereunder. Such reimbursements
shall be made in accordance with National Media's regular reimbursement
procedures and practices in effect from time to time for similarly situated
officers of National Media and its other subsidiaries.
5. Fringe Benefits.
---------------
5.1 General. Executive shall be eligible to participate in any and
-------
all fringe and other benefit programs generally available to the officers of
National Media and its subsidiaries, including without limitation, stock option
plans, incentive plans, profit sharing plans, thrift and savings plans,
insurance plans, supplemental insurance and benefit plans. However, nothing
contained in this subparagraph 5.1 shall be construed as requiring the company
or National Media generally to maintain any such fringe benefit program or to
make any discretionary grant to Executive thereunder.
5.2 Plans. Executive shall be eligible to participate in any
-----
employee benefit and/or welfare plans, including but not limited to health,
medical, and savings investment plans sponsored by the Company for its, or
National Media for its and its subsidiaries', officers, and receive any other
benefits generally applicable to officers of the Company or those of National
Media and its other subsidiaries.
5.3 Automobile Allowance. The Company shall pay Executive a
--------------------
monthly automobile allowance of Seven Hundred and Sixty Five Australian Dollars
(NZ$765.00) which shall be deemed to compensate Executive for all automobile
related costs related to his duties hereunder, including, but not limited to,
insurance, fuel, maintenance, wear and tear, etc..
5.4 Vacations; Holidays; Sick Leave. Executive shall be entitled
-------------------------------
to such number of paid vacation days in each calendar year as are generally
awarded to officers of National Media and its subsidiaries, but not less than
three (3) weeks in any calendar year, unless a greater number of days is
required pursuant to the laws of New South Wales, (prorated in any calendar year
during which Executive is employed hereunder for less than the entire year in
accordance with the number of days in such calendar year during which he is so
employed). Executive shall not be permitted to carry over any portion of
Executive's accrued but unused vacation time from one fiscal year to the next
fiscal year; provided, however, that in the event applicable law renders the
-------- -------
preceding clause unenforceable, Executive shall be permitted to carry over
accrued but unused vacation time. Executive shall also be entitled to sick leave
as is generally awarded to executives of National Media, and its subsidiaries.
3
<PAGE>
5.5 Nothing contained in this Paragraph 5 shall require or
obligate National Media or the Company to augment any of its employee benefit
plans etc to take into account the tax implications of any such plans.
6. Restriction on Transfer of National Common Stock. Executive shall
------------------------------------------------
not, without the prior written consent of National Media (which consent will not
be unreasonably withheld), agree to or permit the sale, disposition or other
transfer by him and/or his Permitted Transferees (as defined below) of more than
25,000 shares of the National Media Common Stock issued to Executive in
connection with the Acquisition in any twelve (12) month period, and no more
than 10,000 shares in any three (3) month period, during the first three (3)
years of the Tenn (the "Transfer Restriction"). This Paragraph 6 shall in no way
restrict or limit Executive's ability to (a) transfer shares of National Media
Common Stock to his immediate family members or to a trust or trusts for the
benefit of his immediate family members for estate planning purposes or (b)
pledge shares of National Media Common Stock to a financial institution as
security for debt incurred by Executive (all transferees permitted by clause (a)
and (b) are referred to herein as "Permitted Transferees"); provided, however,
-------- -------
that Executive and such Permitted Transferees shall (i) be bound by the Transfer
Restriction and (ii) execute, prior to any such transfer to such Permitted
Transferee, such documents as may be reasonably requested by the Company or
National Media to evidence such Transfer Restriction.
In the event that Executive's employment by the Company is
terminated (i) by the Company for any reason other than pursuant to subparagraph
9.1(b) hereof, or (ii) by Executive pursuant to subparagraph 9.1 (c) or
Paragraph 11, the provisions of this Paragraph 6 shall terminate and be of no
further force or effect.
7. Non-Disclosure. Executive shall not at any time during the Term of
--------------
this Agreement or thereafter, except as properly required in the conduct of the
business of the Company and as authorized by the Company, or as otherwise
required by law or court order, disclose or authorize anyone else to disclose
any secret, proprietary, or confidential information, material or matter
relating to the Company, National Media or any of their customers ("Confidential
Information"). For purposes hereof, Confidential Information shall include (but
shall not be limited to) all information, data and materials utilized by
Executive in the course of his employment hereunder, such as elements of
computer programs utilized by the Company, customer and vendor lists, pricing
policies, marketing techniques, financial information, etc.
8. Covenant Not to Compete. From the Commencement Date through the
-----------------------
later of the First anniversary of the termination of this Agreement or the Fifth
anniversary of the Commencement Date, Executive shall not, without the prior
written consent of the Company, engage directly or indirectly in any direct
marketing, television infomercial venture, interactional television marketing or
any television infomercial production activities which is competitive with the
business of the Company or of National Media and shall not be an officer,
director, employee, independent contractor or Substantial Owner of any such
restricted business. By way of amplification, not limitation, Executive shall
not act as a computer or
4
<PAGE>
software or information management consultant or contractor for any entity
engaging in a restricted business as described herein. "Substantial Owner" as
used herein shall mean an owner of at least two percent (2%) of the beneficial
equity or voting interests in a subject restricted business. Notwithstanding the
foregoing, if Executive terminates this Agreement pursuant to subparagraph 9.1
(c) or Paragraph 11 hereof, the restrictions described above shall terminate as
of the date of such termination.
Executive acknowledges that the obligations and restrictions contained
in this Paragraph 8, in view of the nature of the business in which the Company
and National Media are engaged, are reasonable and necessary in order to protect
the legitimate interests of the Company and National Media and that any
violation thereof would result in irreparable injury to the Company and National
Media. Executive understands and agrees that, notwithstanding Paragraph 12
hereof, the remedies at law for any breach of the foregoing covenant may be
inadequate and that the Company and National Media may be entitled to, in
addition to all other remedies which it may have, enforcement of this Agreement
by injunctive relief or by decree of specific performance in a court of
competent jurisdiction. If one or more of the provisions contained in this
Paragraph 8 shall for any reason be held to be excessively broad in scope or
subject, or otherwise to be unenforceable at law, such provision or provisions
shall be construed by the appropriate judicial body by limiting or reducing it
or them, as the case may be, so as to be enforceable to the maximum extent
compatible with applicable law then in existence.
9. Termination.
-----------
9.1 Executive's employment under this Agreement shall terminate
upon the occurrence of any of the following:
(a) Death or Disability. If Executive dies or becomes
-------------------
"Permanently Disabled" (meaning that, in the opinion of an independent physician
selected by the Company and National Media and reasonably satisfactory to
Executive or his representative, he is unable to perform his duties hereunder
due to partial or total mental or physical disability for an aggregate of 180
days (whether or not consecutive) in any consecutive twelve (12) month period).
(b) Cause. For purposes of this Agreement, the Company shall
-----
have "Cause" to terminate the Executive's employment if the Executive, in the
reasonable judgment of the Company, (i) materially breaches any of his
agreements, duties or obligations under this Agreement and has not cured, or
commenced in good faith to cure, such breach within thirty (30) days after
notice; (ii) embezzles or converts to his own use any funds of the Company or
any client or customer of the Company; (iii) converts to his own use or
unreasonably destroys any property of the Company without the Company's consent;
(iv) is convicted of a criminal offence punishable by imprisonment; (v) is
adjudicated as mentally disordered; or (vi) is habitually intoxicated or is
diagnosed by an independent medical doctor to be addicted to a controlled
substance or any drug whatsoever which impedes Executive's abilities to perform
his duties hereunder. Notwithstanding the foregoing, Executive shall not be
deemed to have been terminated for Cause
5
<PAGE>
unless and until the Executive's rights under paragraph 12 hereof shall have
been satisfied, if he disputes such termination.
(c) Company Breach. In the event of the Company's material breach
--------------
of any provisions of this Agreement, Executive shall have the right to terminate
his employment hereunder; provided that Executive shall give written notice to
the Company of his intent to so terminate setting forth the basis for such
termination, and the Company shall then have the right to dispute such
termination pursuant to the provisions of paragraph 12 hereof.
9.2 Termination Obligations of Executive. In the event Executive's
------------------------------------
employment under this Agreement is terminated, Executive, or his legal
representative in case of termination by death or Executive's physical or mental
incapacity to serve, shall:
(a) by the close of the next business day following termination,
resign from all corporate and board positions held in National Media, the
Company and any of their respective subsidiaries and affiliated companies;
(b) promptly return to a representative designated by the
Company all property, including but not limited to, automobiles, keys,
identification cards and credit cards of the Company or any of its subsidiaries
or affiliated companies; and
(c) incur no further expenses or obligations on behalf of
National Media, the Company or any of its subsidiaries and affiliated companies.
10. Termination Compensation.
------------------------
10.1 Compensation. Subject to the terms of subparagraph 10.2
------------
hereof, in the event that Executive shall terminate his employment under this
Agreement pursuant to subparagraph 9.1(c) above, or if the Company shall
terminate Executive's employment under this Agreement prior to the fifth
anniversary of the date hereof for any reason other than those set forth in
subparagraphs 9.1(a) or (b), the Company shall (a) pay Executive or, in the
event of Executive's death following termination, Executive's estate (i) his
full Base Salary to the date of termination; and (ii) in lieu of any further
salary or other payments to Executive hereunder for periods subsequent to the
date of termination, the Company shall pay as liquidated damages to Executive in
accordance with the terms of subparagraph 10.2 hereof an amount equal to his
full Base Salary from the date of termination through to the fifth anniversary
of the date hereof, and (b) maintain in full force and effect for the continued
benefit of Executive through to the earlier of the fifth anniversary of the date
hereof or Executive obtaining similar benefits through other employment, all
employee benefit plans and programs in which Executive was entitled to
participate immediately prior to Executive's discharge or resignation, provided
that Executive's continued participation is possible under the general terms and
provisions of such benefit plans and programs and otherwise in accordance with
applicable law. In the event
6
<PAGE>
that Executive's participation in any such benefit plan or program is barred,
the Company shall make all reasonable efforts to arrange to provide Executive
with benefits substantially similar to those which Executive is entitled to
receive under such plans and programs.
10.2 In the event that Executive is entitled to receive severance
in accordance with subparagraph 10.1(a)(ii) hereof, such severance shall be paid
to Executive in accordance with the Company's normal payroll practices in effect
from time to time as if Executive was employed by the Company through to the
fifth anniversary of the date hereof, provided, however, that in the event that
-------- -------
Executive materially violates the Covenant Not to Compete contained in Paragraph
8 hereof, in addition to all other rights and remedies which the Company may
have, the foregoing severance shall only be payable through to the date of such
violation and the Company shall be entitled to cease providing Executive with
the benefits to which he would otherwise be entitled.
10.3 No Mitigation. Executive shall not be required to mitigate
-------------
the amount of any payments provided for in subparagraph 10.1 above by seeking
other employment or otherwise, nor shall the amount of any payment provided for
herein be reduced by any compensation earned as a result of employment by
another employer.
11. Change of Control. Within thirty (30) days following a Change in
-----------------
Control, as hereinafter defined, notwithstanding anything in this Agreement to
the contrary, Employee may terminate this Agreement by giving the Company at
least thirty (30) days prior written notice of the effective date of such
termination and upon such termination all of the terms and provisions of this
Agreement (including the provisions contained in Paragraph 8 hereunder) shall
terminate and be of no further force and effect. As used in this Paragraph 11, a
"Change in Control" shall be deemed to have occurred if (a) any person or group
(as such term is defined in Section 13(d)(3) of the Securities Exchange Act of
1934) acquires direct or indirect control over the voting power of the voting
stock of National Media in a transaction not approved by the Company's Board of
Directors, (b) a majority of the members of the Board of Directors of National
Media cease being "Continuing Directors"; or (c) if a controlling interest in
the Company is sold or otherwise transferred to an unrelated party. A
"Continuing Director" shall be deemed to be a member of the National Media Board
of Directors who either is a National Media director on the date of this
Agreement or is hereafter nominated for election or appointed by the National
Media Board of Directors by the affirmative vote of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
appointment.
12. Arbitration.
-----------
12.1 Subject to Paragraph 8 hereof (the provisions of which are
specifically excluded from the arbitration provisions contained in this
Paragraph 12), the following procedure shall apply to any dispute concerning the
interpretation, application or operation of this Agreement and any personal
grievances arising under it.
7
<PAGE>
12.2 The parties hereto must make an earnest effort to resolve the
dispute or grievance within ten (10) working days of the dispute or grievance
having been first raised.
12.3 If the dispute or grievance is not settled, then the dispute
or grievance will be referred to an arbitrator agreed by the parties, but if the
parties are unable to agree upon that appointment the arbitrator must be the
nominee of the President of the Law Society of New South Wales.
12.4 The referee will endeavor to mediate the dispute or grievance
observing the rules of natural justice but if no settlement is reached the
referee will determine the dispute or grievance in accordance with the terms
which follow.
12.5 If any party is dissatisfied with a determination of the
arbitrator, that party may appeal from that determination. The appeal will be
by way of "rehearing" in that the evidence found by the arbitrator may be used
on appeal but that the person hearing the appeal may in their discretion rehear
the whole or any part of the evidence. Any remedy the referee could have
granted may be granted on appeal, or the appeal may be dismissed. The decision
of the person hearing the appeal shall be final.
12.6 The appeal shall be heard and determined by a practicing
barrister or solicitor of not less than 7 years standing agreed upon by the
parties or failing agreement as nominated by the President of the Law Society of
New South Wales.
12.7 Both the arbitrator and the person hearing the appeal have
the following powers and functions and must observe the following procedures:
(a) In adjudicating the dispute or grievance consideration
shall be given to the parties' written statements, evidence and submissions
given by or on behalf of the parties, and such other matters as are relevant and
thought fit to bring into account.
(b) A record must be kept of the matters considered.
(c) The rules of natural justice must be observed.
(d) Otherwise the procedure shall be as directed by the
arbitrator or the person hearing the appeal as will most effectively
expeditiously and economically determine the dispute or grievance. The
arbitrator or the person hearing the appeal may if they choose adapt the rules
and procedures for mediation and arbitration as contained in the Institute of
Arbitrators Australia Rules for the Conduct of Commercial Arbitrations.
8
<PAGE>
(e) The arbitrator and the person hearing the appeal may
order any party or the parties to pay the costs of the proceeding in whole or in
part, and the payment of the costs by one party to another, in the discretion of
the referee or the person hearing the appeal.
12.8 The arbitrator and the person hearing the appeal may make a
finding on the dispute or grievance and the parties all agree to comply with
that finding.
13. Counsel Fees and Indemnification. In the event that it shall be
--------------------------------
necessary or desirable for the Executive to retain legal counsel and/or incur
other costs and expenses in connection with the enforcement of any and all of
his rights under this Agreement, including participation in any proceeding
contesting the validity or enforceability of this Agreement and any arbitration
proceeding pursuant to Paragraph 12 of this Agreement, the Executive shall be
entitled to recover from the Company his reasonable attorneys' fees and costs
and expenses in connection with the enforcement of his rights. No fees shall be
payable if the Company is successful on the merits.
The Company shall indemnify and hold Executive harmless to the
maximum extent permitted by law against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees incurred by
Executive, in connection with the defense of, or as a result of, any action or
proceeding (or any appeal from any action or proceeding) in which Executive is
made or is threatened to be made a party by reason of any act or omission of
Executive in his capacity as an officer, director or employee of the Company,
regardless of whether such action or proceeding is one brought by or in the
right of the Company, to procure a judgment in its favor. Expenses (including
attorneys' fees) incurred by Executive in defending any civil, criminal,
administrative, or investigative action, suit or proceeding shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of Executive to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the Company as authorized in this Paragraph 13.
The provisions of this Paragraph 13 shall survive termination of
this Agreement and shall survive indefinitely with respect to any cost or
liability incurred by Executive on account of any actual or alleged act,
omission, or decision by Executive during the Term.
14. Notices. Unless either party notifies the other to the contrary, any
-------
notice required hereunder shall be duly given if delivered in person or by
registered first class mail or recognized overnight mail carrier:
9
<PAGE>
If to the Company, to:
Prestige Marketing Limited
c/o National Media Corporation
1700 Walnut Street
Philadelphia, PA 19103
Attention: President
If to National Media, to:
National Media Corporation
1700 Walnut Street
Philadelphia, PA 19103
Attention: President
If to Executive, to:
Alan Meier
62 Herbert Avenue
Newport NSW 2106
Australia
15. General Provisions.
------------------
15.1 Binding Effect. This agreement shall be binding upon and inure
--------------
to the benefit of National Media, the Company and their statutory successors and
assigns and Executive, his designees, and his estate. Neither Executive, his
designees, nor his estate shall commute, pledge, encumber, sell or otherwise
dispose of the rights to receive the payments provided in this Agreement, which
payments and the rights thereto are expressly declared to be non-transferable
and non-assignable (except by death or otherwise by operation of law).
15.2 Set-Off. Executive hereby acknowledges and agrees that the
-------
Company shall have the right to set-off against any amounts due and payable by
the Company to Executive under this Agreement all amounts due and payable to the
Company or National Media by Executive under that certain Acquisition Agreement
dated as of May 30, 1996 including, without limitation, Article 8 thereof.
15.3 Governing Law. This Agreement shall be governed by the laws of
-------------
New South Wales, Australia from time to time in effect.
10
<PAGE>
15.4 Entire Agreement. This Agreement represents the entire
----------------
agreement between Executive and the Company with respect to the subject matter
hereof. This Agreement may not be amended or modified except by a writing signed
by the parties hereto. Any written amendment, waiver or termination hereof
executed by the Company and Executive (or his estate) shall be binding upon them
and upon all persons, without the necessity of securing the consent of any other
person and no person shall be deemed to be a third party beneficiary under this
Agreement.
15.5 Third Party Beneficiaries. Except as provided in this
-------------------------
Agreement, each of Executive and the Company intends that this Agreement shall
not benefit or create any right or cause of action in or on behalf of any person
other than Executive and the Company. Notwithstanding the foregoing, Executive
and the Company acknowledge that National Media shall receive the benefits of,
and be entitled to enforce, all of the Company's rights contained in this
Agreement.
15.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
15.7 No Waiver. Except as otherwise expressly set forth herein, no
---------
failure on the part of either party hereto to exercise and no delay in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
15.8 Headings. The headings of the paragraphs of this Agreement
--------
have been inserted for convenience of reference only and shall in no way
restrict any of the terms or provisions hereof.
11
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ATTEST: PRESTIGE MARKETING LIMITED
/s/ By: /s/
- --------------------------------- ------------------------------
Name:
Title:
WITNESS:
/s/ /s/ Alan Meier
- --------------------------------- ---------------------------------
ALAN MEIER
12
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Exhibit 99.4
NATIONAL MEDIA CORPORATION COMPLETES ACQUISITION OF TWO PACIFIC RIM
TELEVISION MARKETERS: TRANSACTION VALUED AT APPROXIMATELY $22 MILLION
PHILADELPHIA, July 8 / PRNewswire/ -- National Media Corporation
(NYSE: NM) today announced that it has completed its acquisition of two
television marketing companies, one doing business in New Zealand and throughout
Asia and the other doing business in Australia.
The two companies, Prestige Marketing (doing business in New Zealand
and throughout Asia) and Suzanne Paul (doing business in Australia) were
formerly joint venture partners in New Zealand and Australia with Quantum
International Limited, a National Media Corporation international subsidiary.
National Media's agreements to acquire the two companies were announced on May
30, 1996.
The companies are the two largest direct response television companies
in Australia and New Zealand and were the two largest independent, direct
response companies operating in the Pacific Rim.
Mark P. Hershhorn, President and Chief Executive Officer of National
Media Corporation, said, "We're delighted to have quickly completed our
acquisitions of Prestige Marketing and Suzanne Paul and to make them part of the
National Media family of global companies. We expect these new subsidiaries of
National Media Corporation to begin adding revenues and profits from day one."
The acquisitions were funded by a combination of $4.2 million in cash,
a $2.8 million note payable and 787,879 shares of National Media Corporation
common stock. Combined, the two companies produced approximately $35 million in
revenues and approximately $6 million in net income during the last fiscal year.
Together, the companies market more than 60 products directly, and in
concert with their licensee (TV Media, an independent company not part of the
transaction). Prestige Marketing and Suzanne Paul direct response television
programming appears on 30 different networks in Australia, New Zealand, Hong
Kong, Singapore, Malaysia, Indonesia, Thailand, the Philippines, South Africa,
Fiji, Taiwan, Japan and Russia.
Paul Meier, Managing Director of Prestige Marketing, said, "We're
pleased to have joined the world's premier television marketing company. We
have every confidence that this joining of forces will provide the marketing
power and expertise to fully realize all the opportunity present in this part of
the world."
National Media Corporation is the world's largest publicly held
infomercial company and has built a strong, integrated, global consumer with its
subsidiaries, brings infomercial programming to more than 270 million households
worldwide.
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