<PAGE>
As filed with the Securities and Exchange Commission on March 18, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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. / /
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PRICE PER SHARE OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share 5,750,000(1)(2) $ 2.25/share(3) $ 12,937,500(3) $ 3,817.00(3)
</TABLE>
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(1) Consists of 5,000,000 shares of the Registrant's Common Stock issuable upon
conversion of a promissory note (the "ValueVision Note") in favor of
ValueVision International, Inc. ("ValueVision") executed by Registrant on
January 5, 1998; 500,000 shares of the Registrant's Common Stock issuable
upon exercise of a warrant (the "1995 Warrants") issued to ValueVision in
April 1995; and 250,000 shares of the Registrant's Common Stock issuable
upon exercise of a warrant (the "1998 Warrants," and, collectively with the
1995 Warrants, the "ValueVision Warrants") issued to ValueVision in January
1998. Of those 5,750,000 shares of Common Stock, 4,000,000 shares of Common
Stock may be issued upon conversion of the ValueVision Note based upon an
assumed conversion price of $2.50 per share. The 4,000,000 base conversion
shares are subject to adjustment by reason of the floating rate conversion
price mechanism set forth in the ValueVision Note. Therefore, in addition to
the 4,000,000 base shares of Common Stock, the 5,000,000 shares of Common
Stock also include an additional 25%, or 1,000,000 shares of Common Stock,
which represent the Registrant's good faith estimate of the additional
number of shares that may be issued upon conversion of the ValueVision Note
if the base conversion shares are adjusted upward pursuant to the floating
rate conversion price mechanism as a result of a decline in the market price
of the Common Stock.
(2) Pursuant to Rule 416(a) under the Securities Act of 1933, as amended (the
"Securities Act"), the number of shares of Common Stock set forth in the
Calculation of Registration Fee Table issuable in respect of (i) the
ValueVision Note and the ValueVision Warrants are subject to adjustment by
reason of stock splits, stock dividends, and other similar transactions in
the Common Stock and (ii) the ValueVision Note is subject also to adjustment
by reason of the floating rate conversion price mechanism included in such
promissory note.
(3) Based on the average of the high and low sale price of the Registrant's
Common Stock as reported by the New York Stock Exchange on March 12, 1998,
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.
<PAGE>
"Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state."
<PAGE>
SUBJECT TO COMPLETION
PROSPECTUS
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NATIONAL MEDIA CORPORATION
Eleven Penn Center, Suite 1100
1835 Market Street
Philadelphia, Pennsylvania 19103
(215) 988-4600
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5,750,000 Shares of CommonStock
-------------------------------
This prospectus concerns the offer and sale by the selling stockholder named
herein (the "Selling Stockholder"), from time to time, of up to 5,750,000 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 shares of Common Stock issuable by the Company
(i) upon conversion by the Selling Stockholder of a promissory note executed by
the Company (the "ValueVision Note") held by such Selling Stockholder (the
"Conversion Shares") and (ii) upon the exercise of warrants (the "ValueVision
Warrants") issued by the Company to the Selling Stockholder (the "ValueVision
Warrant Shares").
The Offered Shares include a good faith estimate of the number of shares of
Common Stock underlying the ValueVision Note that may be issued in connection
with the conversion of the ValueVision Note by reason of the floating rate
conversion mechanism included therein. Pursuant to Rule 416(a) under the
Securities Act of 1933, as amended (the "Securities Act"), the number of Offered
Shares issuable in respect of (i) the ValueVision Note and the ValueVision
Warrants is subject to adjustment by reason of stock splits, stock dividends and
other similar transactions in the Common Stock and (ii) the ValueVision Note is
also subject to adjustment by reason of the floating rate conversion mechanism
included therein.
None of the proceeds from the sale of the Offered Shares by the ValueVision
Note will be received by the Company. However, the Company will receive proceeds
from the exercise of the ValueVision Warrants if the ValueVision 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. Any underwriting commission and
broker fees, however, as well as any applicable transfer taxes, are payable
individually by the Selling Stockholder.
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 March 12,
1998, the closing sale price for the Common Stock, as quoted on the NYSE, was
$2.1875 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 9 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 March , 1998.
<PAGE>
Pursuant to this Prospectus, the Offered Shares may be sold by the Selling
Stockholder, 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 Stockholder has 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, the Selling Stockholder to
whom the Offered Shares were initially issued by the Company, whether or not an
affiliate of the Company, that acquires the Conversion Shares or the ValueVision
Warrant 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 STOCKHOLDER. 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) Amendments to the Form 10-K filed on Form 10-K/A, dated,
respectively, July 28, 1997 and January 9, 1998 (together with the Form
10-K, the "1997 Annual Reports");
(c) The Company's Quarterly Reports on Form 10-Q for the quarters ended
June 30, 1997, September 30, 1997 and December 31, 1997 and amendments to
the Company's Quarterly Reports on Form 10-Q/A for the quarter ended
September 30, 1997, dated, respectively, January 9, 1998 and January 23,
1998;
(d) The Company's Current Reports on Form 8-K, dated April 28, 1997,
June 30, 1997 and September 18, 1997 and January 5, 1998, the Company's
Current Report on Form 8-K/A, dated January 5, 1998 and filed January 16,
1998; and
(e) The Company's Joint Proxy Statement/Prospectus dated March 16,
1998 related to the proposed merger of the Company with Value Vision
International, Inc.; and
(f) 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.
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<PAGE>
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 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 or oral
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 or oral 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,
phone number 215-988-4600.
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<PAGE>
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) the Merger (as defined below);
(ii) competition for customers for its products and services; (iii) 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; (iv) the limited market life of the Company's products; and
(v) other statements about the Company or the direct response consumer
marketing industry. Such forward-looking statements include those preceded
by, followed by or that include the words "believes," "expects,"
"anticipates," "intends," "plans," "estimates" or similar expressions.
The Company's ability to predict the results or the effect of any pending
events (including the Merger) 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 manages all phases of direct marketing for 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
Far East Ltd., through which the Company operates in all Asian countries
other than Japan; 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
Holdings Pty Limited and its operating subsidiaries (collectively, "Suzanne
Paul"), which the Company acquired in July 1996. The Company produces
infomercials through DirectAmerica Corporation ("DirectAmerica"), d/b/a
Quantum Television, 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.
RECENT DEVELOPMENTS
GENERAL
On January 5, 1998, the Company announced that it had entered into an
Agreement and Plan of Reorganization and Merger (the "Merger Agreement"),
dated as of January 5, 1998, by and among the Company, ValueVision
International, Inc. ("ValueVision") and V-L Holdings Corp. (subsequently
renamed Quantum Direct Corporation) ("Quantum Direct"), a newly-formed
Delaware corporation. ValueVision is a Minneapolis, Minnesota-based
integrated electronic and print media direct marketing company which operates
the third largest home shopping network in the United States. Following
consummation of the transactions contemplated by the Merger Agreement, the
Company and ValueVision will be wholly-owned subsidiaries of Quantum Direct
(the "Merger"). Subject to the satisfaction of certain conditions set forth
below, the Merger is expected to be consummated in the second calendar
quarter of 1998. On March 16, 1998, each of the Company and ValueVision
mailed a joint proxy statement to its stockholders soliciting approval of the
Merger. Meetings of the Company's and ValueVision's stockholders are
presently scheduled for April 14, 1998. The Merger will be accounted for as a
purchase for accounting and financial reporting purposes with ValueVision as
the acquiror. As a result, approximately $87 million in goodwill will have to
be recognized by Quantum Direct and amortized over a 25-year period. Quantum
Direct is making application to have its Common Stock listed on the New York
Stock Exchange.
5
<PAGE>
As of October 31, 1997, ValueVision had approximately $45.7 million in
cash and cash equivalents and no outstanding indebtedness. The Company
believes that ValueVision's strong balance sheet will, upon consummation of
the Merger, improve the Company's liquidity. Such enhanced liquidity,
management believes, when combined with ValueVision's excess telemarketing,
customer service and order fulfillment capacity, will improve the Company's
financial condition and results of operations; provided, however, that until
such time as the Merger is completed and the businesses of the Company and
ValueVision are integrated, there can be no assurance as to the realization
or magnitude of such operational efficiencies.
The Company's relationship with ValueVision dates back to January 1994,
at which time ValueVision made an unsolicited tender offer to acquire the
Company. Although initially rejected by the Company, the companies eventually
entered into a merger agreement in March 1994, pursuant to which ValueVision
amended its tender offer. In April 1994, ValueVision terminated such merger
agreement. Such termination resulted in a year-long litigation between the
companies. Pursuant to a settlement of such litigation, ValueVision and the
Company entered into a Telemarketing, Production and Post-Production
Agreement in April 1995 (the "Telemarketing Agreement") and the Company
issued to ValueVision a warrant to purchase 500,000 shares of Common Stock at
an exercise price of $8.865 per share. Since entering into the Telemarketing
Agreement, ValueVision and National Media have had an ongoing business
relationship. The Telemarketing Agreement and such warrant will be terminated
as part of the Merger.
TRANSACTION TERMS
Pursuant to the terms of the Merger Agreement, each outstanding share of
Common Stock will be converted into the right to receive one share of common
stock in Quantum Direct and each outstanding share of common stock, $.01 par
value per share ("ValueVision Common Stock") of ValueVision, will be
converted into the right to receive 1.19 shares of common stock in Quantum
Direct. Cash will be paid in lieu of fractional shares of Quantum Direct
common stock. Following consummation of the Merger, Quantum Direct will have
an aggregate of approximately 57 million shares of common stock issued and
outstanding (based upon 25,325,487 shares of Common Stock and 26,755,778
shares of ValueVision Common Stock issued and outstanding as of January 19,
1998). The Company's stockholders will own approximately 45% of the common
stock of Quantum Direct after the Merger. ValueVision's shareholders will own
approximately 55% of the common stock of Quantum Direct after the Merger.
Concurrently with the execution of the Merger Agreement, the Company
entered into an agreement with the holders of the Series C Preferred Stock
(the "Redemption and Consent Agreement") in which the Company agreed to
exchange the Series C Preferred Stock for the Series D Preferred Stock and to
redeem all of the Series D Preferred Stock for approximately $23.5 million
upon consummation of the Merger. Pursuant to the terms of the Redemption and
Consent Agreement, the Series D Investors agreed, among other things, not to
request the Company to convert the Series C Preferred Stock or Series D
Preferred Stock into Common Stock at a per share price below $6.06 prior to
the earliest of (i) June 1, 1998 (which date may be extended until August 31,
1998 in certain circumstances set forth in the Redemption and Consent
Agreement), (ii) the date upon which it is publicly announced that
ValueVision is unwilling to proceed with the Merger on the terms set forth in
the Merger Agreement, or (iii) the date upon which demand is made to the
Company to repay the Loan (as defined below) described below. In order to
make the required amendments to the terms of the Series C Preferred Stock,
the Company agreed to exchange the Series C Preferred Stock for a class of
newly designated preferred stock, Series D Preferred Stock, which contains
terms substantially similar to those set forth in the Series C Certificate of
Designations, Preferences and Rights. As further consideration for executing
the Redemption and Consent Agreement, the Company issued to the Series D
Investors the Series D Warrants which are exercisable at any time prior to
January 5, 2003.
Until a permanent Quantum Direct chief executive officer is appointed,
Robert Johander, current chief executive officer of ValueVision, will serve
as interim chief executive officer of Quantum Direct. The Company and
ValueVision have commenced a search for a permanent chief executive officer.
Robert Verratti, current chief executive officer of the Company, will reduce
his operational responsibilities upon completion of the Merger but will
remain a member of the Board of Directors and Executive Committee of Quantum
Direct. Frederick Hammer, Chairman of the Board of Directors of the Company,
and Mr. Johander will serve as co-chairmen of the Board of Directors of
Quantum Direct. Nicholas M. Jaksich, the current chief operating officer of
ValueVision, will serve as president and chief operating officer of Quantum
Direct. Stuart R. Romenesko, the current chief financial officer ValueVision,
will serve as chief financial officer of Quantum Direct. The Board of
Directors of Quantum Direct initially will consist of ten members, half
chosen by the Company and half chosen by ValueVision.
Pursuant to the terms of the Merger Agreement, ValueVision agreed to
extend to the Company a working capital loan (the "Loan") of up to $10
million, $7 million of which was advanced upon execution of Merger Agreement.
The Loan proceeds will be used by the Company for various purposes, including
funding of inventory and media purchases. The Loan bears interest at prime
rate plus one and one-half percent per annum and is due on the earlier of
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<PAGE>
January 1, 1999 or upon termination of the Merger Agreement in certain
circumstances. In the event the Company is unable to repay the Loan when due,
ValueVision may elect to receive payment in shares of Common Stock at the
then present market value. In consideration for providing the Loan, the
Company issued to ValueVision a warrant to acquire 250,000 shares of Common
Stock. Such warrant has an exercise price per share equal to $2.73 per share.
The warrant is exercisable until the earlier of (i) January 5, 2003 and (ii)
the occurrence of one of the following termination events: (x) the
consummation of the Merger or (y) the termination by the Company of the
Merger Agreement, if such termination results from a breach of a covenant by
ValueVision or in the event ValueVision's shareholders do not approve the
Merger Agreement; provided, however, that if, within 75 days after such
termination event, the Company has not repaid the Loan in full or if during
such 75 days, the Company defaults under its obligations pursuant to the
Loan, no termination event will be deemed to have occurred and the warrant
shall remain exercisable. The Company also granted registration rights in
connection with the shares of Common Stock issuable in connection with the
Loan and the warrants issued to ValueVision.
Consummation of the Merger is subject to the satisfaction (or waiver) of
a number of conditions, including, but not limited to: (i) the approval and
adoption of the Merger Agreement and approval of the Merger by holders of a
majority of the issued and outstanding shares of Common Stock and ValueVision
Common Stock; (ii) redemption of the Company's Series D Stock for
approximately $23.5 million (which funds are to be advanced by ValueVision to
the Company immediately prior to the closing of the Merger); (iii) the
effectiveness of a Registration Statement in connection with the issuance of
Quantum Direct common stock in the Merger; (iv) the continuing accuracy in
all material respects of the representations and warranties made by each of
the Company and ValueVision in the Merger Agreement on and as of the
Effective Time; (v) the compliance by the parties with certain covenants
contained in the Merger Agreement; (vi) the receipt by each of the Company
and ValueVision, as applicable, of certain opinions regarding tax and certain
other matters; and (vii) the receipt of certain regulatory approvals.
In the event of the termination of the Merger Agreement under certain
circumstances, such as the proposal of an Alternative Transaction (as defined
in the Merger Agreement), the Company is obligated to pay to ValueVision, or
ValueVision is obligated to pay to the Company, a termination fee equal to
$5.0 million. In addition, the Company has granted to ValueVision an option
to purchase up to 19.9% (5,075,979 shares of Common Stock based upon the
number of shares of Common Stock issued and outstanding on the date of
execution of the Merger Agreement) of the Company's Common Stock at a per
share cash purchase price of $3.4375. Similarly, ValueVision has granted to
the Company an option to purchase up to 19.9% (5,579,119 shares of
ValueVision Common Stock based upon the number of shares of ValueVision
Common Stock issued and outstanding as of the date of execution of the Merger
Agreement) of ValueVision's Common Stock at a per share cash purchase price
of $3.875. Such options (each, a "Termination Option") are exercisable by the
respective party, in whole or in part, at any time after the occurrence of an
event which would entitle such party to the termination fee described above;
provided, however, that neither party may exercise the Termination Option if
such party is in material breach of any of its material representations,
warranties, covenants or agreements contained in the Merger Agreement or in
the Termination Option. Neither party may receive in excess of $7.5 million
in connection with the receipt of the termination fee and the exercise of
such party's Termination Option. The Termination Option could have the effect
of making a third party acquisition of the Company more costly because of the
need to acquire in any such transaction the shares of Common Stock subject to
such Termination Option, and could also jeopardize the ability of a third
party to acquire the Company in a transaction accounted for as a pooling of
interests.
POSSIBLE TRANSACTION VALUE
If one were to use the closing sales price for ValueVision Common Stock
of $3.875 per share on January 2, 1998 (the last trading date immediately
prior to the date the Merger was publicly announced) in determining the
aggregate value of the shares of Quantum Direct common stock expected to be
issued upon consummation of the Merger, the value of the shares of Quantum
Direct common stock would be approximately $189 million. Based upon the
average closing sales price for ValueVision Common Stock of $3.5625 per share
on March 12, 1998, the aggregate value of the shares of Quantum Direct common
stock expected to be issued upon consummation of the Merger would be
approximately $173 million. There can be no assurance as to the price at
which Quantum Direct's common stock will trade following consummation of the
Merger.
COMPARATIVE PER SHARE DATA
The following table summarizes certain unaudited historical and pro forma
per share data, giving effect to the Merger as a purchase with ValueVision
deemed the acquiror for accounting and financial reporting purposes. The
unaudited selected pro forma per share data for the year ended January 31,
1997 (ValueVision's fiscal year ends on January 31) gives effect to the
Merger as if it had occurred on February 1, 1996 and has been prepared on the
basis of the results of operations for the year ended January 31, 1997 for
ValueVision and for the year ended March 31, 1997
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for the Company. The unaudited selected per share data for the nine months
ended October 31, 1997 gives effect to the Merger as if it had occurred on
February 1, 1996 and has been prepared on the basis of the results of
operation for the nine months ended October 31, 1997 for ValueVision and for
the nine months ended December 31, 1997 for the Company. The unaudited
selected pro forma condensed consolidated per share data set forth in the
following table is derived from, and should be read in conjunction with, the
publicly-filed historical consolidated financial statements of ValueVision
and the Company, including the respective notes thereto. The following
unaudited per share data is presented for informational purposes only and is
not necessarily indicative of the results that would have been achieved had
the Merger been consummated on the dates or prior to the periods presented.
<TABLE>
<CAPTION>
PRO FORMA(1)
------------------------------------
YEAR ENDED NINE MONTHS ENDED
JANUARY 31, OCTOBER 31,
1997 1997
------------- ---------------------
<S> <C> <C>
Per share data:
ValueVision Common Stock
Net income (loss):
Historical....................................................................... $ 0.57 $ 0.58
Pro forma consolidated........................................................... (0.30) (0.11)
Book value(2):
Historical....................................................................... 4.41 4.73
Pro forma consolidated........................................................... 3.62
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA(1)
--------------------------------
YEAR ENDED NINE MONTHS ENDED
MARCH 31, DECEMBER 31,
1997 1997
----------- -------------------
<S> <C> <C>
National Media Common Stock
Net loss:
Historical....................................................................... $ (2.09) $ (1.45)
Pro forma equivalent............................................................. (0.30) (0.11)
Book value(2):
Historical....................................................................... 3.68 2.95
Pro forma equivalent............................................................. 3.62
</TABLE>
- ------------------------
(1) Pro Forma adjustments reflect $86.7 million of excess cost over net tangible
assets acquired (i.e., goodwill) arising from the Merger in accordance with
the purchase method of accounting. This adjustment reflects the replacement
of the Company's historical recurring amortization of goodwill with the
amortization of Parent goodwill recorded through purchase accounting.
Goodwill is assumed to be amortized on a straight-line basis over a period
of 25 years. For accounting and financial reporting purposes, ValueVision
will be deemed the acquiror. Also included in the purchase price is the
estimated fair value of stock options "in-the-money" as of the assumed
closing date of the Merger. This adjustment reflects the effect of the
redemption of the Series D Preferred Stock on December 31, 1997 for
approximately $21.4 million. The final allocation of the purchase price will
be determined upon the consummation of the Merger or shortly thereafter.
(2) In making such calculations, historical book value per share is calculated
by dividing total common shareholders' equity by total common shares
outstanding. Pro forma consolidated book value per share is calculated by
dividing total pro forma common shareholders' equity by the sum of total
outstanding shares of National Media's Common Stock (assuming the conversion
of 5.0 shares of the Series B Stock) adjusted for the 1.0 to 1.0 exchange
ratio plus the total outstanding shares of ValueVision Common Stock adjusted
for the 1.19 to 1.0 exchange ratio. Pro forma equivalent book value per
share represents the pro forma consolidated book value per share multiplied
by the 1.0 to 1.0 National Media exchange ratio.
8
<PAGE>
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. The following does not discuss matters which
relate specifically to ValueVision or its business, financial condition or
results of operations. There can be no assurance that the Merger will be
consummated or that, if consummated, the Merger will result in any of the
synergies or other benefits expected to result from the Merger.
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 $35.5
million for the first nine months 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 also experienced, as a 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 such business plan adequately addresses the
circumstances and situations which resulted in the Company's performance in
the periods referred to above. Unless the Company adequately addresses the
reasons for its recent results of operations, there can be no assurance as to
the Company's future results of operations.
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 and other channels of distribution; 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 and subsequent 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
Japan, which represented a significant portion of Asian revenues, 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 fiscal 1998 this
trend has continued. In the first nine months of fiscal 1998, as compared to
the first nine months of fiscal 1997, the Company's revenues in its Asian
marketplace had declined by 49.4%, approximately 10% of which is attributable
to currency devaluation. The Company expects such revenues to continue to
decline in light of the economic downtown, including a significant
devaluation in currencies, and increased
9
<PAGE>
competition experienced in certain Asian countries in the fourth calendar
quarter of 1997 and in the beginning of the first calendar quarter of 1998.
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 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.
10
<PAGE>
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 has historically been dependent on third party sources, both
foreign and domestic, to manufacture all of its products. From time to time,
the Company has also been 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 has historically been 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 operations 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
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.
11
<PAGE>
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 and 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 and believes it
has meritorious defenses to the plaintiff's claims for damages. At this
stage, the Company cannot predict the outcome of this matter; however, even
if plaintiffs were to prevail on all of their claims, the Company does not
believe that such result would have a material adverse impact on the
Company's financial condition or results of operations.
PARKIN
In early October 1997, John Parkin, an on air personality appearing in
certain of the Company's infomercials, brought an action for injunctive
relief and unspecified damages in the United States District Court for the
Eastern District of Pennsylvania, alleging principally breach of contract and
intellectual property based claims. Following court hearings, plaintiff's
claims for injunctive relief were dismissed. While at this stage it is not
possible to predict the outcome of this matter, the Company believes that any
resolution of this matter will not have a material adverse effect on the
Company's results of operations.
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
a charge of $187,000 during fiscal 1997 in connection with this matter,
reflecting its portion of such settlement. Such settlement is contingent upon
final court approval.
SUNTIGER
In late March 1997, Suntiger, Inc., a distributor of sunglasses, filed
suit against PRTV and certain other parties alleging patent infringement. The
Company has reached a settlement with the plaintiffs involving a going
forward business relationship which will not have a material adverse effect
on the Company's financial condition or results of operations.
12
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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 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 certain of the Company's
infomercials in order to determine whether the Company was operating in
compliance with the consent orders referred to above. 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 it no
longer airs in the United States. The Company, which is now indemnified
against damages sustained as a result of any action taken by the FTC in
connection with such infomercial, has 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, especially given the indemnification protection
available to it, 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 or financial condition.
In addition, in Spring 1997, in accordance with applicable regulations,
the Company 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. The
CPSC reviewed the Company's testing results in order to assess the adequacy
of the Company's upgraded components. The CPSC also undertook its own testing
of the product and, in November 1997, the CPSC informed the Company that the
CPSC compliance staff had made a preliminary determination that the Fitness
Strider product and the upgraded component present a substantial product
hazard, as defined under applicable law. The Company and the CPSC staff are
discussing voluntary action to address the CPSC's concerns, including
replacement of the affected components. At present, management of the Company
does not anticipate that any action agreed upon, or action required by the
CPSC, will have any material adverse impact on the Company's financial
condition or results of operations. The Company has also been contacted by
Australian consumer protection regulatory authorities regarding the safety
and fitness of the Fitness Strider product and an exercise rider product
marketed only in Australia and New Zealand. At this point, the Company cannot
predict whether the outcome of these matters regarding the Fitness Strider
will have a material adverse impact upon the Company's financial condition or
results of operations.
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
13
<PAGE>
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.
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. In particular, the Company is highly dependent on certain of its
employees responsible for product development and production of infomercials.
The unexpected loss of the services of one or more of such individuals could
have a material adverse effect on the Company.
YEAR 2000 ISSUES
The efficient operation of the Company's business is dependent in part on
its computer hardware, software programs and operating systems (collectively,
"Programs and Systems"). These Programs and Systems are used in several key
areas of the Company's business, including merchandise purchasing, inventory
management, pricing, sales, shopping and financial reporting, as well as in
various administrative functions. The Company has been evaluating its
Programs and Systems to identify potential Year 2000 compliance issues. These
actions are necessary to ensure that the Programs and Systems will recognize
and process the Year 2000 and beyond. It is anticipated that modification or
replacement of some of the Company's Programs and Systems will be necessary
to make such Programs and Systems Year 2000 compliant. The Company is also
communicating with suppliers, financial institutions and others to coordinate
Year 2000 conversion.
Based on present information, the Company believes that it will be able
to achieve such Year 2000 compliance through a combination of modification of
some existing Programs and Systems, and the replacement of other Programs and
Systems with new Programs and Systems that are already Year 2000 compliant.
However, no assurance can be given that these efforts will be successful. The
Company does not expect that the expenses and capital expenditures associated
with achieving Year 2000 compliance will have a material effect on its
financial condition or results of operations.
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 March 12, 1998, there are 20,000 shares of the Company's Series C
Preferred Stock issued and outstanding. In connection with the execution of
the Merger Agreement, the Company entered into an agreement with the holders
of the Series C Preferred Stock whereby such holders are required to exchange
the Series C Preferred Stock for shares of Series D Preferred Stock. Each
share of the Series D Preferred stock will be convertible into such number of
shares of Common Stock as is determined by dividing the stated value ($1,000)
of the shares of Series D Preferred Stock (as such value is increased by a
premium of six percent (6%) per annum based on the number of days the Series
D 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 D Preferred Stock and the then current market price).
The terms of the Series D Preferred Stock do not provide for a beneficial
conversion price upon issuance. The holders of the Series D Preferred Stock
have agreed to refrain from requesting the Company to convert the Series D
Preferred Stock into Common Stock at a price per share lower than $6.06 prior
to June 1, 1998 (which date may be extended until August 31, 1998 in certain
circumstances). Accordingly, if issued and subsequently converted on March
12, 1998, the Series D Preferred Stock would have been convertible into
approximately 3,300,300 shares of Common Stock, excluding the premium payable
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<PAGE>
thereon. Purchasers of Common Stock could therefore experience substantial
dilution upon conversion of the Series D Preferred Stock. The shares of
Series D 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 D Preferred Stock may be converted are currently being
registered for resale under the Securities Act. See "Recent Developments."
As of March 12, 1998, approximately 12,100,000 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. At March 12, 1998, there were 25,375,487 shares of Common Stock
outstanding, nearly all of which were freely tradeable without restriction
under the Securities Act unless held by affiliates.
15
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Offered
Shares of Common Stock offered hereby. The Selling Stockholder will receive
all of the net proceeds from the sale of the Offered Shares of Common Stock
offered hereby. Upon the exercise of the ValueVision Warrants by the holders
thereof, the Company will receive the exercise price of the ValueVision
Warrants. To the extent the ValueVision Warrants are exercised, the Company
will apply the proceeds thereof to its general corporate purposes and working
capital.
16
<PAGE>
SELLING STOCKHOLDER
The following table sets forth the name of the Selling Stockholder, the
number of Common Shares beneficially owned by such Selling Stockholder as of
March 12, 1998 and the number of Offered Shares which may be offered for sale
pursuant to this Prospectus by such Selling Stockholder. The Selling
Stockholder has not held any position, office or other material relationship
with the Company or any of its affiliates within the past three years other
than as set forth under "Recent Developments." The Offered Shares may be
offered from time to time by the Selling Stockholder named below. See "Plan
of Distribution." However, such Selling Stockholder is under no obligation to
sell all or any portion of such Offered Shares, nor is the Selling
Stockholder obligated to sell any such Offered Shares immediately under this
Prospectus. Because the Selling Stockholder may sell all or part of its
Offered Shares, no estimate can be given as to the number of Common Shares
that will be held by the Selling Stockholder upon termination of any offering
made hereby.
Pursuant to Rule 416(a) under the Securities Act, the shares of Common
Stock issuable in respect of (i) the ValueVision Note and the ValueVision
Warrants are subject to adjustment by reason of stock splits, stock
dividends, and other similar transactions in the Common Stock and (ii) the
ValueVision Note is subject also to adjustment by reason of the floating rate
conversion price mechanism included therein.
<TABLE>
<CAPTION>
COMMON SHARES BENEFICIALLY
OWNED AFTER OFFERING (1)
--------------------------------
NUMBER OF COMMON
SHARES BENEFICIALLY
OWNED PRIOR TO COMMON SHARES PERCENT OF
NAME OF SELLING STOCKHOLDER OFFERING OFFERED HEREBY NUMBER OUTSTANDING
- ------------------------------------------------- ---------------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C>
ValueVision International, Inc................... 750,000(2) 5,750,000(3) 0 0
</TABLE>
- ------------------------
(1) Assumes the sale of all Offered Shares.
(2) In accordance with Regulation 13D-G promulgated under the Securities
Exchange Act of 1934, as amended, and the terms of the ValueVision Note,
does not include shares of Common Stock which may be issued upon
conversion of the ValueVision Note.
(3) Represents the 5,000,000 shares of Common Stock which may be issued upon
conversion of the ValueVision Note, including payment of any accrued
interest payable thereon in shares of Common Stock and 750,000 Common
Shares issuable upon exercise of the ValueVision Warrants which the
Company is registering hereunder pursuant to the registration rights
agreement between the Company and the Selling Stockholder. As of the date
of this Prospectus, the actual number of shares of Common Stock issuable
upon conversion of ValueVision Note and exercise of the ValueVision
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. These
5,000,000 shares of Common Stock represents a good faith estimate of the
number of shares underlying the ValueVision Note and the interest payable
thereon. Pursuant to the terms of the ValueVision Note, the actual number
of Common Shares issuable upon conversion of the ValueVision Note may be
higher or lower based on the market price of the Common Stock on the date
or dates of conversion of the ValueVision Note into shares of Common
Stock.
17
<PAGE>
PLAN OF DISTRIBUTION
The Offered Shares are being offered on behalf of the Selling Stockholder,
and, except for the exercise price of the ValueVision 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 Stockholder, or by pledgees, donees
or transferees of, or other successors in interest to, the Selling Stockholder,
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 Stockholder or its successor
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 Stockholder. The Selling Stockholder or its
successor 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 Stockholder.
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 Stockholder 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 Stockholder
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 the Selling Stockholder can
presently estimate the amount of such compensation. The Company knows of no
existing arrangements between the Selling Stockholder any other shareholders,
broker, dealer, underwriter or agent relating to the sale or distribution of the
Offered Shares.
The Selling Stockholder 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 Stockholder 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 the Selling Stockholder 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 National Media Corporation'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
as described in Note 1 to the consolidated financial statements) 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.
18
<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 REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE SELLING STOCKHOLDER. 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 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 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
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information........................... 3
Incorporation of Certain
Documents by Reference.......................... 3
Forward-Looking Statements...................... 5
The Company..................................... 5
Recent Developments............................. 5
Risk Factors.................................... 9
Use of Proceeds................................. 16
Selling Stockholder............................. 17
Plan of Distribution............................ 18
Legal Matters................................... 18
Experts......................................... 18
</TABLE>
5,750,000 SHARES OF COMMON STOCK
NATIONAL MEDIA CORPORATION
---------------------
PROSPECTUS
---------------------
MARCH , 1998
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized statement 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:
<TABLE>
<S> <C>
Registration Fee--Securities and Exchange Commission............................ $ 3,817.00
*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....................................................................... $27,317.00
---------
---------
</TABLE>
- ------------------------
* 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.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Schedule of Exhibits.
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
2.1(1) Agreement and Plan of Merger and Reorganization, dated as of October 24, 1995, by and among the
Registrant, DA Acquisition Corp., DirectAmerica Corporation, California Production Group, Inc. and
other parties thereto.
2.2(2) Agreement and Plan of Merger and Reorganization, dated as of January 17, 1996 and amended as of April
4, 1996, by and among the Registrant, PRT Acquisition Corp. and Positive Response Television, Inc.
2.3(3) Acquisition Agreement, dated as of May 30, 1996, by and among Registrant, Paul Meier, Susan Barnes,
Alan Meier and Tancot Pty Limited.
2.4(3) Acquisition Agreement, dated as of May 29, 1996, by and among Registrant, Paul Meier, Susan Barnes
and Prestige Marketing Holdings Limited.
2.5(4) Agreement and Plan of Merger and Reorganization, dated as of August 7, 1996, by and among Registrant,
NLA Acquisition Corp., Nancy Langston & Associates, Inc. and Nancy Langston.
2.6(5) Agreement and Plan of Reorganization and Merger, dated as of January 5, 1998, by and among
Registrant, ValueVision International, Inc. and V-L Holdings Corp.
4.1(6) Certificate of Designations, Preferences and Rights of Series D Convertible Preferred Stock.
4.2(6) Form of Warrant issued in connection with Series D Convertible Preferred Stock.
4.3(7) Rights Agreement dated as of January 3, 1994.
4.4(7) Amendment No. 1 to Rights Agreement, dated as of March 6, 1994.
4.5(8) Amendment No. 2 to Rights Agreement, dated as of September 26, 1994.
4.6(8) Amendment No. 3 to Rights Agreement, dated as of September 30, 1994.
4.7(8) Amendment No. 4 to Rights Agreement, dated as of November 30, 1994.
4.8(9) Amendment No. 5 to Rights Agreement, dated as of August 14, 1997.
4.9(8) Certificate of Designations, Preferences and Rights of Series B Convertible Preferred Stock.
4.10(10) Director's Stock Grant Plan.
4.11(11) Form of Warrant to Purchase Common Stock of the Registrant, dated November 24, 1995, issued to Value
Vision International, Inc. concerning an aggregate of 500,000 shares at an exercise price of $8.865
per share.
4.12(11) Form of Warrant to Purchase Common Stock of the Registrant, dated November 24, 1995, issued to
various persons concerning an aggregate of 500,000 shares at an exercise price of $10.00 per share.
4.13(12) Certificate of Designations, Preferences and Rights of the Series C Convertible Preferred Stock.
4.14(12) Form of Warrant issued in connection with the Series C Convertible Preferred Stock.
4.14(a)(6) Amendment to Form of Warrant issued to holders of Series C Convertible Preferred Stock.
4.15(5) Warrant Agreement by and between the Registrant and ValueVision International, Inc., dated as of
January 5, 1998.
4.16(5) Warrant Certificate No. 1, dated January 5, 1998, issued by the Registrant to ValueVision
International, Inc. to purchase 250,000 shares of the Registrant's common stock.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
5(13) Opinion and Consent of Brian J. Sisko, Esquire.
10.1(6) Amendment No. 1 to Registration Rights Agreement by and among the Company and the Series D Investors.
10.2(5) $10,000,000 Demand Promissory Note, dated January 5, 1998, issued by the Company to ValueVision.
10.3(5) Warrant Agreement, by and between the Company and ValueVision, dated as of January 5, 1998.
10.4(5) Warrant Agreement by and between the Company and ValueVision, dated as of November 24, 1995.
10.5(5) Registration Rights Agreement by and between the Company and ValueVision, dated as of January 5,
1998.
10.6(5) Redemption and Consent Agreement, dated as of January 5, 1998, among the Company and the Series D
Holders.
23.1(13) 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.
</TABLE>
- ------------------------
(1) Incorporated by reference to Registrant's Current Report on Form 8-K dated
October 19, 1995.
(2) Incorporated by reference to Registrant's Current Report on Form 8-K dated
May 17, 1996.
(3) Incorporated by reference to Registrant's Current Report on Form 8-K dated
July 1, 1996.
(4) Incorporated by reference to Registrant's Current Report on Form 8-K dated
August 7, 1996.
(5) Incorporated by reference to Registrant's Current Report on Form 8-K/A dated
January 5, 1998.
(6) Incorporated by reference to Registrant's Registration Statement on Form S-3
(File No. ).
(7) Incorporated by reference to Registrant's Annual Report on Form 10-K for
fiscal year ended March 31, 1994.
(8) Incorporated by reference to Registrant's Annual Report on Form 10-K for
fiscal year ended March 31, 1995.
(9) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
the period ended September 30, 1997.
(10) Incorporated by reference to Registrant's Registration Statement on Form
S-8 filed October 19, 1995.
(11) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for
the period ended December 31, 1995.
(12) Incorporated by reference to Registrant's Report on Form 8-K dated
September 18, 1997.
(13) Filed herewith.
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-3
<PAGE>
(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.
(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-4
<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 on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Philadelphia,
Commonwealth of Pennsylvania, on this 17th day of March, 1998.
NATIONAL MEDIA CORPORATION
BY: /S/ ROBERT N. VERRATTI
--------------------------------------
Robert N. Verratti, 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 John J. Sullivan 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 17th day of March, 1998.
SIGNATURE TITLE
- ------------------------------ --------------------------------
/s/ ROBERT N. VERRATTI Chief Executive Officer and
- ------------------------------ Director
Robert N. Verratti
/s/ JOHN J. SULLIVAN Senior Vice President and
- ------------------------------ Chief Financial Officer
John J. Sullivan
/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.
/s/ IRA M. LUBERT 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
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------------
<C> <S>
5 Opinion and Consent of Brian J. Sisko, Esquire.
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.
</TABLE>
<PAGE>
EXHIBIT 5
NATIONAL MEDIA CORPORATION
Eleven Penn Center, Suite 1100
1835 Market Street
Philadelphia, PA 19103
March 17, 1998
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 "Offered Shares") consist of (i)
5,000,000 shares of Common Stock (the "ValueVision Conversion Shares")
issuable pursuant to the terms of a promissory note executed by the Company
in favor of ValueVision International, Inc. ("ValueVision") and (ii) 750,000
shares of Common Stock (the "ValueVision Warrant Shares") issuable upon
exercise of warrants issued to ValueVision. The Offered Shares may be offered
and sold from time to time for the account of the entity referred to in the
Registration Statement as "Selling Stockholder."
In this regard, I have examined: (i) the agreements (the "Agreements")
pursuant to which the Selling Stockholder has 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.
<PAGE>
Board of Directors
March 17, 1998
Page 2
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.
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 appropriate Agreements, the ValueVision Conversion Shares
and the ValueVision Warrant Shares will be duly authorized, validly issued,
fully paid and nonassessable shares of Common Stock.
This opinion is limited to the laws of the Commonwealth of Pennsylvania
and the General Corporation Law of the State of Delaware; provided, however,
that no opinion is hereby rendered as to the state securities laws of either
the Commonwealth of Pennsylvania or the State of Delaware. 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
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of National Media
Corporation for the registration of 5,750,000 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
March 18, 1998
