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As filed with the Securities and Exchange Commission on September 29, 1997
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________
NATIONAL MEDIA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
13-2658741
(I.R.S. Employer Identification Number)
Eleven Penn Center, Suite 1100
1835 Market Street
Philadelphia, Pennsylvania 19103
(Address of principal executive offices)
Brian J. Sisko, Senior Vice President and General Counsel
Eleven Penn Center, Suite 1100
1835 Market Street
Philadelphia, Pennsylvania 19103
(Name and address of agent for service)
(215) 988-4600
(Telephone number, including area code, of agent for service)
__________________
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, check the following box: / /
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
investment plans. Check the following box. /X/
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /______
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C>
Title of Securities Proposed Proposed Amount of
to be Amount to be Maximum Offering Maximum Aggregate Registration
Registered Registered Price Per Share Offering Price Fee
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Common Stock, par
value $.01 per share 8,141,000(1)(2)(3)(4)(5) $5.125/share(6) $41,717,500 $12,642.00(6)
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(1) Includes 7,000,000 shares of Registrant's Common Stock issuable upon
conversion of the Registrant's Series C Convertible Preferred Stock. For
purposes of estimating the number of shares of Common Stock to be included
in this Registration Statement, the Company calculated approximately 212%
of the number of shares of Common Stock issuable in connection with the
conversion of the Series C Convertible Preferred Stock (based on the
currently applicable conversion price of $6.06 per share as set forth in
the Series C Certificate of Designations, Preferences and Rights).
(2) Includes 989,413 shares of Registrant's Common Stock issuable upon exercise
of warrants (the "Series C Warrants") issued in connection with the
Series C Convertible Preferred Stock.
(3) Includes 125,000 shares of Registrant's Common Stock issuable upon exercise
of warrants (the "Bank Warrants") issued to CoreStates Bank, N.A. in
connection with the extension of the Company's principal credit facility.
(4) Includes 26,587 shares of Registrant's Common Stock issued in connection
with Registrant's acquisition of Nancy Langston & Associates, Inc. in August
1996.
(5) In addition to the shares of Common Stock set forth in the Calculation of
Registration Fee Table, which includes a good faith estimate of the number
of shares of Common Stock underlying the Series C Convertible Preferred
Stock, the Series C Warrants and the Bank Warrants, pursuant to Rule 416 of
the Securities Act of 1933, as amended (the "Securities Act"), this
Registration Statement also registers such additional number of shares of
the Registrant's Common Stock as may become issuable (i) upon conversion of
the Series C Convertible Preferred Stock, (ii) upon exercise of the
Series C Warrants or Bank Warrants, or (iii) as a result of any premium
paid on the Series C Convertible Preferred Stock in Common Stock, stock
splits, stock dividends and anti-dilution provisions (including, by reason
of the floating rate conversion price mechanism, as set forth in the Series
C Certificate of Designations, Preferences and Rights).
(6) Based on the closing sales price of the Registrant's Common Stock as
reported by the New York Stock Exchange on September 25, 1997, estimated
solely for the purpose of calculating the registration fee in accordance
with Rule 457(c) under the Securities Act of 1933.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act or until the registration statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
section 8(a), may determine.
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SUBJECT TO COMPLETION
PROSPECTUS
NATIONAL MEDIA CORPORATION
Eleven Penn Center, Suite 1100
1835 Market Street
Philadelphia, Pennsylvania 19103
(215) 988-4600
____________________________________
8,141,000 Shares of Common Stock
____________________________________
This prospectus concerns the offer and sale by the selling stockholders
named herein (the "Selling Stockholders"), from time to time, of up to 8,141,000
common shares (the "Offered Shares"), par value $.01 per share (the "Common
Stock") of National Media Corporation (together with its subsidiaries, the
"Company").
The Offered Shares consist of Common Stock which has been issued by the
Company to one of the Selling Stockholders, Nancy Langston (the "Langston
Shares"); or which is issuable by the Company (i) upon conversion by certain of
the Selling Stockholders (as defined herein, the "Series C Investors") of
Series C Convertible Preferred Stock, par value $.01 per share, of the Company
(the "Series C Preferred Stock") held by such Selling Stockholders (the
"Conversion Shares"), (ii) upon the exercise of warrants (the "Series C
Warrants") issued by the Company to the Series C Investors (the "Series C
Warrant Shares"); and (iii) upon the exercise of warrants (the "Bank Warrants")
issued by the Company to another of the Selling Stockholders (the "Bank") (the
"Bank Shares"). The Series C Warrants and the Bank Warrants are sometimes
hereinafter collectively referred to as the "Warrants". Nancy Langston, the
Series C Investors and the Bank are sometimes collectively referred to herein as
the "Selling Stockholders."
In addition to the Offered Shares, which include a good faith estimate of
the number of shares underlying the Series C Preferred Stock, the Series C
Warrants and the Bank Warrants, pursuant to Rule 416 of the Securities Act of
1933, as amended (the "Securities Act"), this Prospectus also covers such
additional number of shares of Common Stock as may become issuable upon
conversion of the Series C Preferred Stock, exercise of the Warrants, as a
result of any premium paid on the Series C Preferred Stock in Common Stock,
stock splits, stock dividends and anti-dilution provisions (including, by reason
of any reduction in the floating rate conversion price mechanism of the
Preferred Stock).
None of the proceeds from the sale of the Offered Shares by the Selling
Stockholders will be received by the Company. However, the Company will receive
proceeds from the exercise of the Warrants if the Warrants are exercised. The
Company will pay substantially all of the expenses with respect to the offering
and sale of the Offered Shares to the public, including the costs associated
with registering the Offered Shares under the Securities Act and preparing and
printing this Prospectus. Normal underwriting commission and broker fees,
however, as well as any applicable transfer taxes, are payable individually by
the Selling Stockholders.
The Company's Common Stock is listed on the New York Stock Exchange
("NYSE") and the Philadelphia Stock Exchange ("PHLX") under the symbol "NM." On
September 25, 1997, the closing sale price for the Common Stock, as quoted on
the NYSE, was $5.125 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR CERTAIN
INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
____________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY OTHER AUTHORITY
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is September__, 1997.
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Pursuant to this Prospectus, the Offered Shares may be sold by the Selling
Stockholders, from time to time while the Registration Statement to which this
Prospectus relates is effective, on the NYSE, the PHLX or otherwise at prices
and terms prevailing at the time of sale, at prices and terms related to such
prevailing prices and terms, in negotiated transactions or at fixed prices. The
Selling Stockholders have advised the Company that they currently intend to sell
all or a portion of the Offered Shares pursuant to this Registration Statement
from time to time in any manner described under "Plan of Distribution." See
"Plan of Distribution." Notwithstanding the registration of the offer and sale
of Offered Shares hereunder to subsequent purchasers, Selling Stockholders to
whom the Offered Shares were initially issued by the Company, whether or not
affiliates of the Company, that acquire the Langston Shares, the Conversion
Shares, the Series C Warrant Shares or the Bank Shares will be required to
deliver this Prospectus in accordance with the Securities Act in connection with
any transaction involving the resale of such securities.
______________________
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
BUY THE SECURITIES TO WHICH THIS PROSPECTUS RELATES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR SINCE THE DATE AS
OF WHICH INFORMATION IS SET FORTH HEREIN.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Such
reports, proxy and information statements and other information can be inspected
and copied at prescribed rates at the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Commission's regional offices located at 7 World Trade Center, New York, New
York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Such reports and other information filed with the
Commission can be reviewed through the Commission's Electronic Data Gathering
Analysis and Retrieval System, which is publicly available through the
Commission's website (http:www.sec.gov). The Common Stock of the Company is
listed on the NYSE and the PHLX and reports, proxy and information material and
other information concerning the Company may be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005 and the PHLX, 1900 Market
Street, Philadelphia, Pennsylvania 19103.
This Prospectus constitutes a part of a registration statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act with respect to the securities offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Reference is hereby made to the Registration
Statement and to the exhibits thereto for further information with respect to
the Company and the securities offered hereby. Copies of the Registration
Statement and the exhibits thereto are on file at the offices of the Commission
and may be obtained upon payment of the prescribed fee or may be examined
without charge at the Public Reference Section of the Commission described
above. Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by reference to the copy of the applicable document filed with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1997 (the "Form 10-K");
(b) Amendment to the Form 10-K filed on Form 10-K/A (together with the
Form 10-K, the "1997 Annual Report");
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1997;
(d) The Company's Current Reports on Form 8-K, dated April 28, 1997, June
30, 1997 and September 18, 1997; and
(e) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, dated August 28, 1990,
including all amendments and reports filed for the purpose of updating
such description.
All documents filed pursuant to Section 13(a), 13(c), 14 or 15 (d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
completion or termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be part hereof from the date of filing of
such documents. Any statement contained in a document, all or a portion of
which is incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or
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in any other subsequently filed document, which also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written request, a
copy of any or all of such documents which are incorporated herein by reference
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference into the documents that this Prospectus incorporates).
Written requests for copies should be directed to National Media Corporation,
Eleven Penn Center, Suite 1100, 1835 Market Street, Philadelphia, Pennsylvania
19103; Attention: Director of Investor Relations.
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FORWARD-LOOKING STATEMENTS
This Prospectus contains "forward-looking" statements regarding potential
future events and developments affecting the business of the Company. Such
statements relate to, among other things, (i) competition for customers for its
products and services; (ii) the uncertainty of developing or obtaining rights to
new products that will be accepted by the market and the timing of the
introduction of new products into the market; (iii) the limited market life of
the Company's products; and (iv) other statements about the Company or the
direct response consumer marketing industry.
The Company's ability to predict the results or the effect of any pending
events on the Company's operating results is inherently subject to various risks
and uncertainties, including competition for products, customers and media
access; the risks of doing business abroad; the uncertainty of developing or
obtaining rights to new products that will be accepted by the market; the
limited market life of the Company's products; and the effects of government
regulations. Reference is made in particular to the discussion under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's 1997 Annual Report incorporated in this Prospectus
by reference.
THE COMPANY
The Company is principally engaged in the use of direct response
transactional television programming, known as infomercials, to sell consumer
products. The Company is the world's largest publicly-held infomercial company.
The Company manages all phases of direct marketing the majority of its products
in both the United States and international markets, including product selection
and development, manufacturing by third parties, production and broadcast of
infomercials, order processing and fulfillment and customer service.
The Company is engaged in direct marketing of consumer products in the
United States and Canada through its wholly-owned subsidiary, Quantum North
America, Inc. (formerly Media Arts International, Ltd.), which the Company
acquired in 1986, and internationally through its wholly-owned subsidiaries:
Quantum International Limited, which the Company acquired in 1991; Quantum
International Japan Company Limited, which the Company formed in June 1995;
and Prestige Marketing Limited and Prestige Marketing International Limited
(collectively, "Prestige") and Suzanne Paul Holding Pty Limited and its
operating subsidiaries (collectively, "Suzanne Paul"), which the Company
acquired in July 1996. The Company produces a substantial number of
infomercials through DirectAmerica Corporation ("DirectAmerica"), which the
Company acquired in October 1995 and Positive Response Television, Inc.
("Positive Response"), which the Company acquired in May 1996.
The Company is a Delaware corporation, with its principal executive offices
located at Eleven Penn Center, Suite 1100, 1835 Market Street, Philadelphia,
Pennsylvania 19103 and its telephone number is 215-988-4600.
RISK FACTORS
The purchase of the shares of Common Stock offered hereby involve certain
risks. In addition to the other information set forth and incorporated by
reference in this Prospectus, the following factors should be considered
carefully by prospective investors in evaluating an investment in the shares of
Common Stock offered hereby. The Company's fiscal year ends on March 31.
References to fiscal 1997, fiscal 1996 etc. refer to the fiscal period ending in
the indicated calendar year.
Recent Losses; Cash Flow
The Company has suffered net losses in three of its last four fiscal years,
including net losses of approximately $45.7 million in fiscal 1997,
approximately $670,000 in fiscal 1995 and approximately $8.7 million in fiscal
1994. The Company also reported a net loss of approximately $13.0 million for
the first quarter of fiscal 1998 and has stated that it does not expect to
return to profitability in the second quarter of fiscal 1998. Based upon the
deterioration which occurred in the Company's financial condition during fiscal
1997 and the presence of certain other conditions, as of July 14, 1997, the
Company's independent auditors opined that substantial doubt existed as to the
Company's ability to continue as a going concern. During calendar year 1997,
the Company has also experienced, as result of such losses and other
circumstances, significant cash flow difficulties. While the Company has
developed a business plan and implemented a number of programs designed to
reduce costs and return the Company to profitability, there can be no assurance
that the Company's business plan adequately addresses the circumstances and
situations which resulted in the Company's performance in the periods referred
to above. Unless the Company has adequately addressed the reasons for its
recent results of operations, there can be no assurance as to the Company's
future results of operations.
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Nature of the Infomercial Industry
The worldwide infomercial industry is now characterized by extreme
competition for products, customers and media access. The Company's future in
this industry will depend in part on its access to, and efficient management of,
media time; the introduction of successful products and the full exploitation of
such products through not only direct marketing but also traditional retail
marketing; its ability to enhance its product lines and support product
marketing and sales with efficient order fulfillment and customer services; and
its ability to successfully integrate the entities or businesses the Company has
or may acquire into an efficient global company. The future revenues of the
business will depend substantially on the Company's ability to create and
maintain an effective, integrated organization to develop, introduce and market
products that (i) address changing consumer needs on a timely basis;
(ii) establish and maintain effective distribution channels (infomercial and
non-infomercial) for its products; and (iii) develop new geographic markets
while expanding established geographic markets. There can be no assurance that
the Company will be able to achieve these goals. While the Company maintains an
internal product development group responsible for seeking out new products from
third parties, there can be no assurance that present and potential third party
product providers will choose to market products through the Company in the
future. Delays in product introductions and short falls in successful product
introductions played a significant part in the Company's fiscal 1997 results of
operations. Any significant delays or reductions in product introductions in
the future periods could have a material adverse effect on the Company's future
results of operations.
Dependence on Foreign Sales
The Company had no sales outside the United States and Canada prior to
June 1991. The Company now markets products to consumers in over 70
countries. In fiscal 1997, 1996 and 1995, approximately 47.4%, 51.6% and
45.7%, respectively, of the Company's net revenues were derived from sales to
customers outside the United States and Canada. Such sales represented a
12.4% increase in fiscal 1997 from fiscal 1996, a 87.6% increase in fiscal
1996 from fiscal 1995 and a 74.8% increase in fiscal 1995 from fiscal 1994.
In fiscal 1997, 1996 and 1995, sales in Germany accounted for approximately
5.7%, 7.0% and 13.0%, respectively, of the Company's net revenues. In early
1994, the Company began airing its infomercials in Asia. Sales of the
Company's products in Asia accounted for approximately 19.8% of the Company's
net revenues for fiscal 1997. Sales of the Company's products in Asia, a
significant portion of which were made in Japan, accounted for approximately
17.7% of the Company's net revenues for fiscal 1997. The Company experienced
a decline of approximately 30.3% in its Japanese net revenues in fiscal 1997
compared to fiscal 1996. During the early part of fiscal 1998 this trend
continued. Geographical expansion of sales activity results in increased
working capital requirements as a result of additional lead time for delivery
of and payment for product prior to receipt of sale proceeds. While the
Company's foreign operations have the advantage of airing infomercials that
have already proven successful in the United States market, as well as
successful infomercials produced by other international companies with
limited media access and distribution capabilities, there can be no assurance
that the Company's foreign operations will continue to generate increases in
net revenues. Competition in the Company's international marketplace is
increasing rapidly. In addition, the Company is subject to many risks
associated with doing business abroad, including: adverse fluctuations in
currency exchange rates; transportation delays and interruptions; political
and economic disruptions; the imposition of tariffs and import and export
controls; and increased customs or local regulations. The occurrence of any
one or more of the foregoing could have a material adverse effect on the
Company's results of operations.
Entering into New Markets
As the Company enters into new markets, including countries in Asia and
South America, it is faced with the uncertainty of never having done business in
those commercial, political and social settings. Accordingly, despite the
Company's best efforts, its likelihood of' success in each new market which it
enters is unpredictable for reasons particular to each such market. It is also
possible that, despite the Company's apparently successful entrance into a new
market, some unforeseen circumstance could arise which would limit the Company's
ability to continue to do business or to expand in that new market.
Dependence on New Products; Unpredictable Market Life; Inventory Management and
Product Returns
The Company is dependent on its continuing ability to develop or obtain
rights to new products to supplement or replace existing products as they mature
through their product life cycles. The Company's future results of operations
will also be dependent upon its ability to proactively manage its products
through their life cycles. The Company's five most successful products in each
of fiscal 1997, 1996 and 1995 accounted for approximately 41.2%, 46.0% and
54.0%, respectively, of the Company's net revenues for such periods. For the
most part, the Company's five most successful products change from year to year.
Revenues are dependent from year to year on the introduction of new products.
Even if the Company is able to introduce new products, there can be no assurance
that such new products will be successful. The Company's future results of
operations depend on its ability to spread its revenue (sales) stream over
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a larger number of products in a given period and to more effectively exploit
the full revenue potential of each product it introduces through all levels
of consumer marketing, whether directly or through third parties.
Product sales and results of operations for a given period will depend
upon, among other things, a positive customer response to the Company's
infomercials, the Company's effective management of product inventory and the
stage in their life cycles of products sold during such period. Customer
response to infomercials depends on many variables, including, the appeal of the
products being marketed, the effectiveness of the infomercials, the availability
of competing products and the timing and frequency of air-time. There can be no
assurance that the Company's new products will receive market acceptance.
In the event the Company does not have an adequate supply of inventory, as
a result of production delays or shortages or inadequate inventory management or
cash flow difficulties, it may lose potential product sales. The ability of the
Company to maintain systems and procedures to more effectively manage its
inventory (and its infomercial airings), in the domestic as well as
international markets, is of critical importance to the Company's continuing
cash flow and results of operations. It is possible that, during a product's
life, unanticipated obsolescence of such product may occur or problems may arise
regarding regulatory, intellectual property, product liability or other issues
which may affect the continued viability of the product for sale despite the
fact that the Company may still hold a sizable inventory position in such
product. Most of the Company's products have a limited market life. It is
therefore, extremely important that the Company fully realize the potential of
each successful product.
Historically, the majority of products generate their most significant
domestic revenue in their introductory year. Foreign revenues have tended to
have been generated more evenly over a somewhat longer period. In the event the
number of times an infomercial is broadcast within a market is increased, the
market life of such product in such market may decrease. There can be no
assurance that a product which has produced significant sales will continue to
produce significant, or any, sales in the future. As a result, the Company is
dependent on its ability to adapt to market conditions and competition as well
as other factors which affect the life cycles of its products and its ability to
continue to identify and successfully market new products. The failure of newly
introduced products or significant delays in the introduction of, or failure to
introduce, new products would adversely impact the Company's results of
operations in terms of both lost opportunity cost and actual loss of dollars
invested.
Even when market acceptance for the Company's new products occurs, the
Company's results of operations may be adversely impacted by returns of' such
products, either pursuant to the Company's warranties or otherwise. While the
Company establishes reserves against such returns which it believes are adequate
based upon historic levels and product mix, there can be no assurance that the
Company will not experience unexpectedly high levels of returns (in excess of'
its reserves) for certain products. In the event that returns exceed reserves,
the Company's results of operations would be adversely affected.
Dependence on Third Party Manufacturers and Service Providers
The Company is dependent on third party sources, both foreign and domestic,
to manufacture all of its products, although it does not depend on any
particular supplier for a majority of its products. The Company is also
dependent to an extent upon a number of companies which serve to fulfill orders
placed for the Company's products and/or provide telemarketing services. The
inability of the Company, either temporarily or permanently, to obtain a timely
supply of product to fulfill sales orders for a specific product or to satisfy
orders for such product could have a material adverse effect on the Company's
results of operations. Moreover, because the time from this initial approval of
a product by the Company's product development personnel to the first sale of
such product is relatively short, the Company's ability to cause its
manufacturing sources to meet its production and order fulfillment deadlines at
reasonable costs and produce a high-quality product or render quality service is
important to its business. There can be no assurance that the Company will
successfully manage this process in such a way to maximize its sales of its
products. Since the Company often relies on foreign manufacturers, it must
allow longer lead times for products to fulfill customer orders. Utilizing such
foreign manufacturers exposes the Company to the general risks of doing business
abroad.
Dependence on Media Access; Effective Management of Media Time
The Company is dependent on having access to media time to televise its
infomercials on cable networks, network affiliates and local stations. The
Company's future results of operation will also depend upon the Company's
ability to manage its media time, taking advantage of long-term purchases where
prudent and spot purchases where necessary. This media management function must
also include a meaningful coordination between available infomercials and
available media time. In the normal course of business, the Company's media
contracts expire pursuant to their terms from time to time. There can be no
assurance that, as existing contracts expire, the Company will be able to
purchase or renew media time on a long-term basis or at favorable price levels.
The Company purchases a significant amount of its media time from cable
television and satellite networks. These cable television and satellite
networks assemble programming for transmission to multiple and local cable
system operators. These cable system operators may
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not be required to carry all of the network's programming. The Company
currently does not pay and is not paid for the "privilege" of being broadcast
by these operators. It is possible that, if demand for air time grows, these
operators will begin to charge the Company to continue broadcasting the
Company's infomercials or limit the amount of time available for broadcast.
Recently, larger multiple system operators have elected to change their
operations by selling "dark" time (i.e., the hours during which a station
does not broadcast its own programming). Significant increases in the cost
of' media time or significant decreases in the Company's access to media
time, domestically or internationally, including, but not limited to, any
failure to renew or extend existing agreements, could have a material adverse
effect on its results of operations. There can also be no assurances that,
even if the Company secures media access, its programming will attract
viewers or that its products will enjoy consumer acceptance. In addition,
periodically, due to world events, media access and the number of persons
viewing the Company's infomercials in one or more markets may be
substantially diminished. In such circumstances, the Company's results of
operations for such periods may be adversely affected. In recent periods the
Company has experienced an increase in the demand by international media
suppliers for fixed rates and/or for minimum revenue guarantees, both of
which increase the Company's risk.
A significant portion of the Company's media time has historically been
purchased under contracts which are one year or greater in length. Whenever the
Company makes advance purchases and commitments to purchase media time, if the
Company does not manage such media time effectively, such failure could have a
material adverse effect on the Company's results of operations. In the event
the Company is unable to utilize all of the media time it has acquired, it
attempts to arrange to sell a portion of its media time to others. There can be
no assurance, however, that the Company will be able to use all of its media
time or sell it to others or that, upon expiration of such long-term contracts,
the Company will be able to successfully negotiate extensions of such contracts
on terms favorable to the Company. The inability of the Company to extend one
or more of such contracts on reasonable terms as they expire could have a
material adverse effect on the Company's results of operations.
Litigation Involving the Company
The infomercial industry has historically been very litigious and the
Company in recent years has been involved in significant legal proceedings and
has incurred significant charges in prior periods related to such litigation.
Abbreviated information regarding the status of current material pending
litigation involving the Company is set forth below. However, as it pertains to
previously reported matters, such information does not purport to be complete
and is qualified in its entirety by the detailed description of the legal and
regulatory proceedings set forth in the reports filed by the Company pursuant to
the Exchange Act and incorporated by reference herein. Such descriptions
variously include information relating to the status of the proceedings and the
Company's evaluation of the claims made against it. Certain of such previously
reported matters have been resolved substantially in accordance with the terms
set forth in such prior disclosure. In addition, as set forth above, the
Company consummated the acquisition of DirectAmerica in October 1995.
Further, as discussed above, the Company consummated the acquisition of Positive
Response in May 1996. As a result of these acquisitions, all liabilities of
DirectAmerica and Positive Response became liabilities of the respective
wholly-owned subsidiary of the Company into which each of DirectAmerica and
Positive Response was merged. The Company also acquired Prestige and Suzanne
Paul in July 1996, including all of their respective liabilities.
NATIONAL MEDIA LITIGATION
WWOR Litigation
In March 1997, WWOR-TV filed a breach of contract action in the United
States District Court for New Jersey against one of the Company's operating
subsidiaries alleging that the subsidiary wrongfully terminated a contract for
the purchase of media time, seeking in excess of $1,000,000 in compensatory
damages. The Company is contesting the action.
PRTV LITIGATION
PRTV Shareholders' California Class Action
On May 1, 1995, prior to the acquisition of PRTV by the Company, a
purported class action suit was filed in the United States District Court for
the Central District of California against PRTV and its principal executive
officers alleging that PRTV made false and misleading statements in its public
filings, press releases and other public statements with respect to its business
and financial prospects. The suit was filed on behalf of all persons who
purchased PRTV common stock during the period from January 4, 1995 to April 28,
1995. The suit sought unspecified compensatory damages and other equitable
relief. On or about September 25, 1995, the plaintiffs filed a second amended
complaint which added additional officers as defendants and attempted to set
forth new facts to support plaintiff's entitlement to legal relief. The Company
reached an agreement in principle to settle this action in fiscal year 1997
which provides for the payment of $550,000 to the class, 66% of which is to be
paid by PRTV's insurance carrier. The Company recorded
-8-
<PAGE>
a charge of $187,000 during fiscal 1997 in connection with this matter,
reflecting its portion of such settlement. Such settlement is contingent
upon court approval.
Suntiger
In late March 1997, Suntiger, Inc. ("Suntiger"), a distributor of
sunglasses, filed suit against PRTV and certain other parties alleging patent
infringement. PRTV is indemnified by third parties in connection with this
action. The Company is presently involved in negotiations regarding the
settlement of this action. If the Company is able to consummate the settlement
on the terms currently being discussed, the settlement would not be expected to
have a material adverse effect on the Company's financial condition or results
of operations. There can be no assurance that the settlement of this action
will be finalized on the terms currently being discussed.
Regulatory Matters
The infomercial industry is regulated by the Federal Trade Commission (the
"FTC"), the United States Post Office, the Consumer Product Safety Commission,
the Federal Communications Commission, the Food and Drug Administration, various
States' Attorneys General and other state and local consumer protection and
health agencies. The FTC directly regulates marketers of products, such as the
Company, credit card companies which process customer orders and others involved
in the infomercial and direct marketing industries.
The Company's marketing activities and/or products have been and will
continue to be subject to the scrutiny of each of the aforementioned
regulatory agencies. An adverse determination or extended investigation by
any of these agencies could have a material adverse effect on the Company.
Moreover, the domestic and international regulatory environments in which the
Company operates are subject to change from time to time. It is possible
that changes in the regulations to which the Company is subject might have a
material adverse effect on the Company's business or results of operations.
As a result of prior settlements with the FTC, the Company has agreed to two
consent orders. Prior to the Company's acquisition of Positive Response,
Positive Response and its Chief Executive Officer, Michael S. Levey, also
agreed to a consent order with the FTC. Among other things, such consent
orders require the Company, Positive Response and Mr. Levey to submit
compliance reports to the FTC staff. The Company, Positive Response and Mr.
Levey have submitted compliance reports as well as additional information
requested by the FTC staff. In June 1996, the Company received a request from
the FTC for additional information regarding two of the Company's
infomercials in order to determine whether the Company was operating in
compliance with the consent orders referred to above. Such request also
included a request for additional information concerning the acquisition of
Positive Response. The Company responded to such request. The FTC later
advised the Company that it believed the Company had violated one of the
consent orders by allegedly failing to substantiate certain claims made in
one of its infomercials which was aired by the Company between 1993 and 1995.
The Company provided information to the FTC to demonstrate substantiation. If
the Company's substantiation is deemed to be insufficient by the FTC, the FTC
has a variety of enforcement mechanisms available to it, including, but not
limited to, monetary penalties. While no assurances can be given, the Company
does not believe that any remedies to which it may become subject will have a
material adverse effect on the Company's results of operations of financial
condition. In addition, in accordance with applicable regulations, the
Company recently notified the CPSC of breakages which were occurring in its
Fitness Strider product. The Company also notified the CPSC of its
replacement of certain parts of the product with upgraded components. Counsel
for the Company has continued to update the CPSC regarding these
developments. The CPSC is currently reviewing the Company's testing results
in order to assess the adequacy of the Company's upgraded components.
The Company's international business is subject to the laws and regulations
of England, the European Union, Japan and other countries in which the Company
sells its products, including, but not limited to, the various consumer and
health protection laws and regulations in the territories in which the
programming is broadcast, where applicable. If any significant actions were
brought against the Company or any of its subsidiaries in connection with a
breach of such laws or regulations, including the imposition of fines or other
penalties, or against one of the entities through which the Company obtains a
significant portion of its media access, the Company could be materially
adversely affected. There can be no assurance that changes in the laws and
regulations of any territory which forms a significant portion of the Company's
market will not adversely affect the Company's financial condition or results of
operations.
Product Liability Claims
Products sold by the Company may expose it to potential liability from
claims by users of such products, subject to the Company's rights, in certain
instances, to indemnification against such liability from the manufacturers of
such products. The Company generally requires the manufacturers of its products
to carry product liability insurance, although in certain instances where a
limited quantity of products are purchased from non-U.S. vendors, the vendor may
not be formally required to carry product liability insurance. Certain of such
vendors, however, may in fact maintain such insurance. There can be no
assurance that such parties will maintain this insurance or that this coverage
will be adequate to cover all potential claims, including coverage in amounts
which it believes to be adequate. There can be no assurance that the Company
will be able to maintain such coverage or obtain additional coverage on
acceptable terms, or that such insurance will provide adequate coverage against
all potential claims.
Competition
The Company competes directly with many companies which generate sales from
infomercials. The Company also competes with a large number of consumer product
companies and retailers which have substantially greater financial, marketing
and other resources than the Company, some of which have recently commenced, or
indicated their intent to conduct, direct response marketing. The Company also
competes with companies that make imitations of the Company's products at
substantially lower prices. Products similar to the Company's products may be
sold in department stores, pharmacies, general merchandise stores and through
magazines, newspapers, direct mail advertising and catalogs.
-9-
<PAGE>
Dependence on Key Personnel
The Company's executive officers have substantial experience and expertise
and make significant contributions to the Company's growth and success. The
unexpected loss of the services of one or more of such individuals could have a
material adverse effect on the Company.
Convertible Securities; Shares Eligible for Future Sale
Sales of substantial amounts of the shares of Common Stock currently
issued, issuable upon conversion or exercise of securities convertible into or
exercisable for Common Stock or of the shares of Common Stock offered hereby
could adversely affect the market value of the Common Stock, depending upon the
timing of such sales, and, in the case of convertible and exercisable
securities, may effect a dilution of the book value per share of Common Stock.
As of September 26, 1997, 20,000 shares of the Company's Series C Preferred
Stock were issued and outstanding. Each share of the Series C Preferred stock
is convertible into such number of shares of Common Stock as is determined by
dividing the stated value ($1,000) of the shares of Series C Preferred Stock (as
such value is increased by a premium of six percent (6%) per annum based on the
number of days the Series C Preferred Stock is held) by the then current
conversion price (which is determined by reference to the Certificate of
Designations, Preferences and Rights of the Series C Preferred Stock and the
then current market price). If converted on September 26, 1997, the Series C
Preferred Stock would have been convertible into approximately 3,300,330 shares
of Common Stock. Depending on market conditions at the time of conversion, the
number of shares issuable could prove to be significantly greater in the event
of a decrease in the trading price of the Common Stock. Purchasers of Common
Stock could therefore experience substantial dilution upon conversion of the
Series C Preferred Stock. The shares of Series C Preferred Stock are not
registered and may be sold only if registered under the Securities Act or sold
in accordance with an applicable exemption from registration, such as Rule 144.
The shares of Common Stock into which the Series C Preferred Stock may be
converted are being registered pursuant to this Registration Statement.
As of September 26, 1997, approximately 10,376,921 shares of Common Stock
were reserved for issuance upon exercise of outstanding warrants (including
the Warrants), options and the Company's Series B Convertible Preferred Stock
and an additional 7,989,413 shares of Common Stock were reserved for issuance
upon conversion of the Series C Preferred Stock and exercise of the Series C
Warrants. At September 26, 1997, there were 26,162,716 shares of Common
Stock outstanding, nearly all of which were freely tradeable without
restriction under the Securities Act unless held by affiliates.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Offered
Shares of Common Stock offered hereby. The Selling Stockholders will receive
all of the net proceeds from the sale of the Offered Shares of Common Stock
offered hereby. Upon the exercise of the Warrants by the holders thereof, the
Company will receive the exercise price of the Warrants. To the extent the
Warrants are exercised, the Company will apply the proceeds thereof to its
general corporate purposes and working capital.
-10-
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the names of the Selling Stockholders, the
number of Common Shares beneficially owned by such Selling Stockholders as of
September 26, 1997 and the number of Offered Shares which may be offered for
sale pursuant to this Prospectus by each such Selling Stockholder. Other than
for CoreStates Bank, N.A. (or its predecessor in interest), which has been the
Company's principal lender since April 1995, and Nancy Langston, from whom the
Company purchased, and who is President of, the Company's Nancy Langston &
Associates, Inc. subsidiary, none of the Selling Stockholders has held any
position, office or other material relationship with the Company or any of its
affiliates within the past three years other than as a result of his or its
ownership of Common Shares. The Offered Shares may be offered from time to time
by the Selling Stockholders named below. See "Plan of Distribution." However,
such Selling Stockholders are under no obligation to sell all or any portion of
such Offered Shares, nor are the Selling Stockholders obligated to sell any such
Offered Shares immediately under this Prospectus. Because the Selling
Stockholders may sell all or part of their Offered Shares, no estimate can be
given as to the number of Common Shares that will be held by any Selling
Stockholder upon termination of any offering made hereby.
Pursuant to Rule 416 of the Securities Act, Selling Stockholders may also
offer and sell additional Common Shares issued with respect to the Series C
Preferred Stock and the Warrants as a result of any premiums paid on the Series
C Preferred Stock in Common Stock, stock splits, stock dividends and
anti-dilution provisions (including by reason of the floating rate conversion
price mechanism of the Series C Preferred Stock in accordance with the terms
thereof).
<TABLE>
<CAPTION>
Common Shares Beneficially
Owned After Offering (1)
--------------------------
Number of Common
Shares Beneficially Common Shares Percent of
Name of Selling Stockholder Owned Prior to Offering Offered Hereby Number Outstanding
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Ventures International(2) 5,992,060 (3) 5,992,060 0 0
RGC International Investors, 1,997,353 (3) 1,997,353 0 0
LDC(2)
CoreStates Bank, N.A 125,000 (4) 125,000 0 0
Nancy Langston 26,587 (5) 26,587 0 0
</TABLE>
- -------------------------
(1) Assumes the sale of all Offered Shares.
(2) Pursuant to that certain Securities Purchase Agreement, dated
September 4, 1997, among the Company, Capital Ventures International
and RGC International Investors, LDC (collectively, the "Series C
Investors"), the Series C Investors purchased an aggregate of
20,000 shares of Series C Preferred Stock which are convertible
into Common Shares and the Series C warrants to acquire 989,413
Common Shares.
(3) Represents the pro rata allocation among the Series C Investors of
7,000,000 Common Shares which may become issuable upon conversion
of the Series C Preferred Stock and 989,413 Common Shares issuable
upon exercise of the Series C Warrants which the Company is
registering hereunder pursuant to the registration rights agreement
between the Company and the Series C Investors. As of the date of
this Prospectus, the actual number of shares of Common Stock
issuable upon conversion of Series C Preferred Stock and exercise
of the Series C Warrants is indeterminate, is subject to adjustment
and could be materially less or more than such estimated number
depending on factors which cannot be predicted by the Company at
this time, including, among other factors, the future market price
of the Common Stock. The actual number of shares of Common Stock
offered hereby, and included in the Registration Statement of which
this Prospectus is a part, includes such additional number of
shares of Common Stock as my be issued or issuable upon conversion
of the Series C Preferred Stock and exercise of the Series C
Warrants by reason of the floating rate conversion price mechanism
or other adjustment mechanisms described therein, or by reason of
any stock split, stock dividend or similar transaction involving
the Common Stock, in order to prevent dilution, in accordance with
Rule 416 under the Securities Act. Pursuant to the terms of the
Certificate of Designations, Preferences and Rights of the Series C
Preferred Stock, the actual number of Common Shares issuable upon
conversion of the Series C Preferred Stock will equal (in addition
to the Common Shares issuable upon exercise of the Series C
Warrants) (i) the aggregate stated value of the shares of Series C
Preferred Stock then being converted (i.e., $1,000 per share), plus
a premium in the amount of 6% per annum accruing from September 18,
1997, through the date
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<PAGE>
of conversion (unless the Company chooses to pay such premium in
cash) plus any conversion default amount (as defined in the
Certificate of Designations, Preferences and Rights of the Series C
Preferred Stock), divided by (ii) (x) if the conversion occurs on
or before March 17, 1998, a conversion price equal to $6.06 per
share, or (y) in the case of conversions after March 18, 1998, a
conversion price equal to the lower of $6.06 per share and the
lowest volume weighted average sale (as determined in accordance
with the Certificate of Designations, Preferences and Rights of the
Series C Preferred Stock) price of the Common Stock during a
specified trading period immediately prior to such conversion
(subject to adjustment in accordance with the Certificate of
Designations, Preferences and Rights of the Series C Preferred
Stock).
Except under certain limited circumstances, no holder of the Series C
Preferred Stock and Series C Warrants is entitled to convert or
exercise such securities to the extent that the shares to be received
by such holder upon such conversion or exercise would cause such
holder to beneficially own more than 4.9% of the Common Shares.
Therefore, the number of shares set forth herein and which a Series C
Investor may sell pursuant to this Prospectus may exceed the number
of Common Shares such Series C Investor would otherwise beneficially
own as determined pursuant to Section 13(d) of the Exchange Act.
(4) Represents 125,000 Common Shares issuable to such Selling Stockholder
upon the exercise of warrants received by such Selling Stockholder in
connection with the extension of the Company's principal credit facility
in September 1997.
(5) Includes 26,587 Common Shares issued to such Selling Stockholder in
connection with the Company's acquisition of Nancy Langston &
Associates, Inc. in August 1996.
-12-
<PAGE>
PLAN OF DISTRIBUTION
The Offered Shares are being offered on behalf of the Selling Stockholders,
and, except for the exercise price of the Warrants, the Company will not
receive any proceeds from the Offering. The Offered Shares may be sold or
distributed from time to time by the Selling Stockholders, or by pledgees,
donees or transferees of, or other successors in interest to, the Selling
Stockholders, directly to one or more purchasers (including pledgees) or
through brokers, dealers or underwriters who may act solely as agent or may
acquire Offered Shares as principals, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices, at negotiated
prices, or at fixed prices, which may be changed. The sale of the Offered
Shares may be effected in one or more of the following methods: (i) ordinary
brokers' transactions, which may include long or short sales; (ii)
transactions involving cross or block trades or otherwise on the NYSE and
PHLX; (iii) purchases by brokers, dealers or underwriters as principal and
resale by such purchasers for their own accounts pursuant to this Prospectus;
(iv) "at the market" to or through market makers or into established trading
markets, including direct sales to purchasers or sales effected through
agents; (vi) any combination of the foregoing, or by any other legally
available means. In addition, the Selling Stockholders or their successors
in interest may enter into hedging transactions with broker-dealers who may
engage in short sales of Offered Shares in the course of hedging the position
they assume with the Selling Stockholders. The Selling Stockholders or their
successors in interest may also enter into option or other transactions with
broker-dealers that require the delivery by such broker-dealers of the
Offered Shares, which Offered Shares may be resold thereafter pursuant to
this Prospectus. There can be no assurance that all or any of the Offered
Shares will be issued to, or sold by, the Selling Stockholders.
Brokers, dealers, underwriters or agents participating in the sale of
the Offered Shares as agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholders and/or
purchasers of the Offered Shares for whom such broker-dealers may act as
agent, or to whom they may sell as principal, or both (which compensation to
a particular broker-dealer may be less than or in excess of customary
commissions). The Selling Stockholders and any broker-dealers or other
persons who act in connection with the sale of Offered Shares hereunder may
be deemed to be "Underwriters" within the meaning of the Securities Act, and
any commission they receive and proceeds of any sale of Offered Shares may be
deemed to be underwriting discounts and commission under the Securities Act.
Neither the Company nor any Selling Stockholder can presently estimate the
amount of such compensation. The Company knows of no existing arrangements
between any Selling Stockholder any other shareholders, broker, dealer,
underwriter or agent relating to the sale or distribution of the Offered
Shares.
The Selling Stockholders and any other persons participating in the sale
or distribution of the Shares will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Offered Shares by the
Selling Stockholders or any other such persons. The foregoing may affect the
marketability of the Offered Shares.
The Company will pay substantially all of the expenses incident to the
registration, offering and sale of the Offered Shares to the public other
than commission or discounts of underwriter, broker-dealers or agents. The
Company has also agreed to indemnify certain of the Selling Stockholders and
certain related persons against certain liabilities, including liabilities
under the Securities Act.
LEGAL MATTERS
The validity of the Offered Shares has been passed upon for the Company
by Brian J. Sisko, Esq., Senior Vice President and General Counsel of the
Company.
EXPERTS
The consolidated financial statements and schedule of National Media
Corporation appearing in the Company's Annual Report (Form 10-K) for the year
ended March 31, 1997 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon (which contains an explanatory
paragraph indicating that matters exist that raise substantial doubt as to the
Company's ability to continue as a going concern) included therein and
incorporated herein by reference. Such consolidated financial statements and
schedule have been incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
-13-
<PAGE>
No dealer, salesman or any other
person has been authorized to give
any information or to make any
representations not contained in this
Prospectus in connection with the
offering described herein and, if
given or made, such information or 8,141,000 Shares of Common Stock
representation must not be relied NATIONAL MEDIA CORPORATION
upon as having been authorized by the
Company or the Selling Stockholders.
This Prospectus does not constitute
an offer to sell or a solicitation of
an offer to buy a security other than
the shares of Common Stock offered
hereby, nor does it constitute an ----------------
offer to sell or a solicitation of an PROSPECTUS
offer to buy any of the securities ----------------
offered hereby in any jurisdiction to
any person to whom it is unlawful to
make such offer or solicitation in
such jurisdiction. Neither the
delivery of this Prospectus nor any September __, 1997
sale made hereunder shall, under any
circumstances, create any implication
that the information contained herein
is correct as of any date subsequent
to the date hereof.
-----------------
TABLE OF CONTENTS
-----------------
Page
Available Information...................3
Incorporation of Certain
Documents by Reference..................3
Forward-Looking Statements..............5
The Company.............................5
Risk Factors............................5
Use of Proceeds........................10
Selling Stockholders...................11
Plan of Distribution...................13
Legal Matters..........................13
Experts................................13
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemizedstatement of the estimated amounts of all
expenses payable by the registrant in connection with the registration of the
Offered Shares, other than underwriting discounts and commissions:
Registration Fee--Securities and Exchange Commission $ 12,642.00
*Blue Sky fees and expenses $ 1,000.00
*Accountants' fees and expenses $ 5,000.00
*Legal fees and expenses $ 10,000.00
*Printing and EDGAR expenses $ 5,000.00
*Miscellaneous $ 2,500.00
------------
Total $ 36,142.00
------------
------------
_________________
* Estimate
Item 15. Indemnification of Directors and Officers.
A. The Delaware General Corporation Law provides that, to the extent
that any director, officer, employee or agent of the Company has been
successful on the merits or otherwise in defense of any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of the Company) to which such person
was a party by reason of the fact that such person is or was a director,
officer, employee or agent of the Company or is or was serving at the request
of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, the
Company shall indemnify any such person against expenses (including
attorneys' fees) actually and reasonably incurred in connection therewith.
B. In addition, the Company has the power to indemnify any of the
persons referred to above against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any such action, suit or proceeding, if such
person acted in good faith and in a manner such person reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe such
person's conduct was unlawful.
Notwithstanding the foregoing, in connection with any action or suit by
or in the right of the Company to procure a judgment in its favor, the
Company shall not make any indemnification as described above in respect of
any claim, issue or matter as to which such person shall have been adjudged
to be liable to the Company unless, and only to the extent that, the Court of
Chancery (in the State of Delaware) or the court in which such action or suit
was brought shall determine, upon application, that despite adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
C. The Company also has the power, under the Delaware General
Corporation Law, to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Company, or is or
was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any other liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Company would have the power to indemnify
such person against such liability under the foregoing provisions.
D. The indemnification provided by or allowable pursuant to the
Delaware General Corporation Law shall or may, as applicable, continue as to
a person who has ceased to be a director, officer, employee or agent of the
Company and shall inure to the benefit of the heirs, executors and
administrators of such person.
II-1
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) Schedule of Exhibits.
Exhibit
Number Exhibit
------- -------
* 4.1 Certificate of Designations, Preferences and
Rights of Series C Convertible Preferred Stock.
* 4.2 Form of Warrant issued in connection with Series C
Convertible Preferred Stock.
* 4.3 Form of Registration Rights Agreement by and among
the Company and the Series C Investors.
* 4.4 Securities Purchase Agreement, dated September 4, 1997,
among the Company and the Series C Investors.
** 4.5 Form of Warrant issued to CoreStates Bank, N.A.
5 Opinion and Consent of Brian J. Sisko, Esquire.
***10.1 Agreement and Plan of Merger and Reorganization dated
as of August 7, 1996, by and among the Company, NLA
Acquisition Corp., Nancy Langston & Associates, Inc. and
Nancy Langston.
23.1 Consent of Ernst & Young LLP, independent auditors, with
respect to the consolidated financial statements of National
Media Corporation for the year ended March 31, 1997.
24 The Powers of Attorney contained on the signature pages of
this Registration Statement are hereby incorporated by
reference.
_________________
* Incorporated by reference to the Company's Current Report on Form 8-K dated
September 18, 1997.
** To be filed by amendment.
*** Incorporated by reference to the Company's Current Report on Form 8-K dated
August 13, 1997.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
For purposes of determining any liability under the Securities Act, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d)
of the Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Philadelphia, Commonwealth of
Pennsylvania, on this 29th day of September, 1997.
NATIONAL MEDIA CORPORATION
BY: /s/ Robert N. Verratti
------------------------------------
Robert N. Verratti,
President and Chief Executive Officer
POWER OF ATTORNEY
Each of the undersigned officers and directors of National Media
Corporation whose signature appears below hereby appoints Brian J. Sisko,
Esquire and Paul R. Brazina and each of them individually as true and lawful
attorney-in-fact for the undersigned with full power of substitution, to
execute in his name and on his behalf in each capacity stated below, any and
all amendments (including post-effective amendments) to this Registration
Statement as the attorney-in-fact shall deem appropriate, and to cause to be
filed any such amendment (including exhibits thereto and other documents in
connection therewith) to this Registration Statement with the Securities and
Exchange Commission, as fully and to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact, or any of them, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on this 29th day of September, 1997.
Signature Title(s)
/s/ Robert N. Verratti President, Chief Executive
- ----------------------------- Officer and Director
Robert N. Verratti
/s/ Constantinos I. Costalas Vice Chairman of the Board, Director
- -----------------------------
Constantinos I. Costalas
/s/ Albert R. Dowden Director
- -----------------------------
Albert R. Dowden
/s/ Michael J. Emmi Director
- -----------------------------
Michael J. Emmi
/s/ William M. Goldstein Director
- -----------------------------
William M. Goldstein
/s/ Frederick S. Hammer Chairman of the Board, Director
- -----------------------------
Frederick S. Hammer
/s/ Robert E. Keith, Jr. Director
- -----------------------------
Robert E. Keith, Jr.
Director
- -----------------------------
Ira M. Lubert
/s/ Brian McAdams Director
- -----------------------------
Brian McAdams
/s/ Warren V. Musser Director
- -----------------------------
Warren V. Musser
/s/ Jon W. Yoskin II Director
- -----------------------------
Jon W. Yoskin II
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- --------------
5 Opinion of Brian J. Sisko, Esq. with respect to the legality of the
shares of Common Stock being registered hereunder.
23.1 Consent of Ernst & Young LLP, independent auditors, with respect
to consolidated financial statements of National Media Corporation
for the year ended March 31, 1997.
24 Powers of Attorney (included in the signature pages hereto).
<PAGE>
EXHIBIT 5
<PAGE>
NATIONAL MEDIA CORPORATION
Eleven Penn Center, Suite 1100
1835 Market Street
Philadelphia, PA 19103
September 29, 1997
Board of Directors
National Media Corporation
Eleven Penn Center, Suite 1100
1835 Market Street
Philadelphia, Pennsylvania 19103
Re: Registration Statement on Form S-3
----------------------------------
Gentlemen:
I am general counsel to National Media Corporation (the "Company") and have
caused to be prepared a registration statement on Form S-3 in connection with
the proposed registration of shares of the Company's common stock, par value
$.01 per share (the "Common Stock") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"). Such registration statement, as it may be
amended or supplemented from time to time, including all exhibits thereto, is
referred to hereinafter as the "Registration Statement."
The shares to be registered (the "Shares") consist of 7,000,000 shares of
Common Stock issuable upon conversion of the Company's Series C Convertible
Preferred Stock, par value $.01 per share (the "Series C Preferred Stock"),
989,413 shares of Common Stock issuable upon exercise of warrants issued in
connection with the Series C Preferred Stock, 125,000 shares of Common Stock
issuable upon conversion of warrants issued in connection with the extension of
the Company's principal credit facility, and 26,587 shares of Common Stock
issued by the Company in connection with its acquisition of Nancy Langston &
Associates, Inc. The Shares may be offered and sold from time to time for the
account of the persons referred to in the Registration Statement as "Selling
Stockholders."
In this regard, I have examined: (i) the agreements (the "Agreements")
pursuant to which the Selling Stockholders have received or may acquire the
Offered Shares from the Company; (ii) the Company's Certificate of Incorporation
and Bylaws, each as amended and as presently in effect; (iii) the Registration
Statement; and (iv) such officers' certificates, resolutions, minutes, corporate
records and other documents as I have deemed necessary or appropriate for
purposes of rendering the opinions expressed herein.
In rendering such opinions, I have assumed the authenticity of all
documents and records examined, the conformity with the original documents of
all documents submitted to me as copies and the genuineness of all signatures.
The opinions expressed herein are based solely upon my review of the
documents and other materials expressly referred to above. Other than such
documents and related materials, I have not reviewed any other documents in
rendering such opinions. Such opinions are therefore qualified by the scope of
that document examination.
<PAGE>
Board of Directors
September 29, 1997
Page 2
Based upon and subject to the foregoing, and on such other examinations of
law and fact as I have deemed necessary or appropriate in connection herewith, I
am of the opinion that, upon issuance in accordance with the provisions of the
Agreements, the Offered Shares will be duly authorized, validly issued, fully
paid and nonassessable shares of Common Stock.
This opinion is limited to the law of the Commonwealth of Pennsylvania and
the Federal securities law of the United States. For purposes of this opinion,
I have assumed the identity of the General Corporation Law of the State of
Delaware with those of the Commonwealth of Pennsylvania. Except as expressly
otherwise noted herein, this opinion is given as of the date hereof.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference made to me under the caption "Legal
Matters" in the Prospectus constituting a part of the Registration Statement.
By giving such consent, I do not hereby admit that I fall within the category of
persons whose consent is required pursuant to Section 7 of the Securities Act.
Very truly yours,
/s/ Brian J. Sisko, Esq.
Brian J. Sisko, Esq.
<PAGE>
EXHIBIT 23.1
<PAGE>
Independent Auditors' Consent
We consent to the reference of our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of National Media
Corporation for the registration of 8,141,000 shares of its common stock and to
the incorporation by reference therein of our report dated July 14, 1997 with
respect to the consolidated financial statements and schedule of National Media
Corporation included in its Annual Report (Form 10-K) for the year ended March
31, 1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young, LLP
Philadelphia, Pennsylvania
September 26, 1997
