<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 23, 1998
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NATIONAL MEDIA CORPORATION
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(Exact name of registrant as specified in charter)
Delaware I-6715 13-2658741
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
15821 Ventura Boulevard, Suite 570, Encino, California 91416
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 818-461-6400
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N/A
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(Former name or former address, if changed since last report.)
Exhibit Index appears on Page 6 hereof.
<PAGE>
Item 1. Changes in Control of Registrant.
On October 23, 1998, National Media Corporation (the "Company")
announced the consummation of a transaction (the "Transaction") pursuant to
which, among other things, operational control of the Company was assumed by an
investor group led by Stephen C. Lehman, Eric R. Weiss and Daniel M. Yukelson. A
copy of the press release announcing the Transaction is attached hereto as
Exhibit 99.1 and incorporated herein by reference. At a special meeting of the
Company's stockholders held earlier on October 23rd, the Company's stockholders
approved the Transaction, elected nine directors, approved an amendment to the
Company's 1991 Stock Option Plan and ratified the appointment of Ernst & Young
LLP as the Company's auditors for the fiscal year ending March 31, 1999.
In connection with the Transaction, NM Acquisition Co., LLC, a Delaware
limited liability company ("ACO"), invested an additional $20,000,000 into the
Company in exchange for shares of newly-created Series E Convertible Preferred
Stock ("Series E Stock") which shares are convertible into 13,333,333 shares of
the Company's common stock, par value $.01 per share ("Common Stock"), at a
fixed conversion price of $1.50 per share. ACO is managed by Temporary Media
Co., LLC, a Delaware limited liability company ("TMC") of which Messrs. Lehman,
Weiss and Yukelson are the managing members. As part of the Transaction, TMC was
granted a five-year option to purchase up to 212,500 shares of Common Stock,
subject to certain vesting requirements, at an exercise price of $1.32 and
warrants to purchase up to 2,762,500 shares of Common Stock at an exercise price
ranging from $1.32 to $3.00. Financing for the Transaction was obtained through
the private placement of equity interests in ACO. A portion of the $20,000,000
was used to repay in full the Company's obligations to its secured lender. The
remainder of the funds were used to pay certain expenses of the Transaction and
for working capital purposes.
As of the closing of the Transaction, members of ACO and TMC
beneficially owned an aggregate of 26,619,854 shares of Common Stock (which
included shares of Common Stock underlying the Series E Stock, the Series D
Preferred Stock, the Series D Common Stock Warrants and the Series C Common
Stock Warrants (collectively, the "Securities")), representing approximately
34% of the outstanding Common Stock on a fully diluted basis. Immediately
following consummation of the Transaction, ACO was dissolved and the Securities
were distributed to its members pro rata according to their membership interests
in ACO. In connection with the dissolution of ACO, each of its members granted
TMC an irrevocable proxy to vote their respective shares with regard to any
election of Directors.
Pursuant to the terms of the Transaction, (i) the stockholders of the
Company elected Messrs. Lehman and Weiss and Andrew M. Schuon to the Company's
Board of Directors, (ii) each of Albert R. Dowden, William M. Goldstein,
Frederick S. Hammer, Robert N. Verratti and Jon W. Yoskin resigned from the
Board of Directors, effective October 23, 1998, (iii) the size of the Board of
Directors was reduced from nine to seven members and (iv) Stuart D. Buchalter,
David E. Salzman and Robert W. Crawford were appointed to the Board of
Directors. Following consummation of the Transaction, Mr. Lehman was appointed
Chairman of the Board and Chief Executive Officer, Mr. Weiss was appointed Vice
Chairman of the Board and Chief Operating Officer, John W. Kirby was appointed
President and Mr. Yukelson was appointed Executive Vice President of Finance,
Chief Financial Officer and Secretary of the Company.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
3 Certificate of Amendment of the Certificate of Incorporation
of National Media Corporation, dated October 23, 1998.
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4.1* Stock Purchase Agreement, dated August 11, 1998, by and
between National Media Corporation and NM Acquisition Co.,
LLC.
4.2* Stockholders' Voting Agreement, dated August 11, 1998, between
NM Acquisition Co., LLC and its stockholders named therein.
4.3 Series D Stock Purchase Agreement, dated as of August 12,
1998, between NM Acquisition Co., LLC, National Media
Corporation, Rose Glen International Investors, LDC and
Capital Ventures International.
4.4** Certificate of Designations, Preferences and Rights of Series
E Preferred Stock, dated October 23, 1998.
4.5*** Registration Rights Agreement, dated October 23, 1998, between
National Media Corporation and NM Acquisition Co., LLC.
10.1 Waiver Agreement, dated as of August 12, 1998, between
Constantinos I. Costalas and National Media Corporation.
10.2 Waiver Agreement, dated as of August 12, 1998, between
National Media Corporation and Frederick S. Hammer.
10.3 Waiver Agreement, dated as of August 12, 1998, between Robert
N. Verratti and National Media Corporation.
10.4 Series B Consent Agreement, dated August 11, 1998, between
National Media Corporation and certain holders of Series B
Convertible Preferred Stock.
10.5 First Union Consent Agreement, dated July 15, 1998, between
National Media Corporation, NM Acquisition Co., LLC and First
Union Bank, N.A.
17.1 Resignation of Albert R. Dowden from the Board of Directors of
National Media Corporation dated October 23, 1998.
17.2 Resignation of William M. Goldstein from the Board of
Directors of National Media Corporation dated October 23,
1998.
17.3 Resignation of Frederick S. Hammer from the Board of Directors
of National Media Corporation dated October 23, 1998.
17.4 Resignation of Robert N. Verratti from the Board of Directors
of National Media Corporation dated October 23, 1998.
17.5 Resignation of Jon W. Yoskin from the Board of Directors of
National Media Corporation dated October 23, 1998.
99.1 Press Release, dated October 23, 1998.
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<PAGE>
* Previously filed as an exhibit to the Company's Form 8-K dated August 13,
1998.
** The form of which was filed with the Company's Form 8-K dated August 13,
1998.
*** The Registration Rights Agreement was filed as an exhibit to the Company's
Form 8-K dated August 13, 1998. At that time, the date of the Agreement was
incorrectly stated as August 11, 1998.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL MEDIA CORPORATION
(Registrant)
Date: October 29, 1998 By: /s/ Daniel M. Yukelson
--------------------------------
Daniel M. Yukelson
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
No.
- ---
<S> <C>
3 Certificate of Amendment of the Certificate of Incorporation of
National Media Corporation, dated October 23, 1998.
4.3 Series D Stock Purchase Agreement, dated as of August 12, 1998, between
NM Acquisition Co., LLC, National Media Corporation, Rose Glen
International Investors, LDC and Capital Ventures International.
10.1 Waiver Agreement, dated as of August 12, 1998, between Constantinos I.
Costalas and National Media Corporation.
10.2 Waiver Agreement, dated as of August 12, 1998, between National Media
Corporation and Frederick S. Hammer.
10.3 Waiver Agreement, dated as of August 12, 1998, between Robert N.
Verratti and National Media Corporation.
10.4 Series B Consent Agreement, dated August 11, 1998, between National
Media Corporation and certain holders of Series B Convertible Preferred
Stock.
10.5 First Union Consent Agreement, dated July 15, 1998, between National
Media Corporation, NM Acquisition Co., LLC and First Union Bank, N.A.
17.1 Resignation of Albert R. Dowden from the Board of Directors of National
Media Corporation dated October 23, 1998.
17.2 Resignation of William M. Goldstein from the Board of Directors of
National Media Corporation dated October 23, 1998.
17.3 Resignation of Frederick S. Hammer from the Board of Directors of
National Media Corporation dated October 23, 1998.
17.4 Resignation of Robert N. Verratti from the Board of Directors of
National Media Corporation dated October 23, 1998.
17.5 Resignation of Jon W. Yoskin from the Board of Directors of National
Media Corporation dated October 23, 1998.
99.1 Press Release, dated October 23, 1998.
</TABLE>
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EXHIBIT 3
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
NATIONAL MEDIA CORPORATION
---------------------------------
National Media Corporation, a corporation organized and existing under
the laws of the State of Delaware (the "Company"), hereby certifies as follows:
FIRST: By unanimous resolution of the Board of Directors of the
Company, dated August 11, 1998, the Board of Directors duly adopted resolutions
proposing and declaring advisable the following amendment to the Company's
Certificate of Incorporation:
That the introductory paragraph of Article Fourth of the
Company's Certificate of Incorporation be amended to read in
its entirety as follows:
"The aggregate number of shares which the Company
shall have the authority to issue is 160,000,000 of
which 10,000,000 shall be Preferred Stock par value
$.01 per share and 150,000,000 shall be common stock
par value $.01 per share ("Common Stock") and the
voting powers, designations, preferences and
relative, participating, optional and other special
qualifications, limitations or restrictions thereof
are set forth hereinafter:"
SECOND: That at a duly noticed and convened Annual Meeting of the
stockholders of the Company held on October 23, 1998, at which a quorum was
present and acting throughout in person or by proxy, the stockholders of the
Company have approved the aforesaid amendment.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Section 242 of the General Corporation Law of
the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate to be
signed by Frederick S. Hammer, the Company's Chairman of the Board, and attested
by Brian J. Sisko, Esq., the Company's Senior Vice President and General
Counsel, this 23rd day of October, 1998.
[CORPORATE SEAL] NATIONAL MEDIA CORPORATION
By:
-----------------------
Frederick S. Hammer
Chairman of the Board
ATTEST:
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Brian J. Sisko, Esq.
Senior Vice President and General Counsel
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<PAGE>
EXHIBIT 4.3
CAPITAL VENTURES INTERNATIONAL
c/o Heights Capital Management, Inc.
425 California Street, Suite 1100
San Francisco, CA 94104
RGC INTERNATIONAL INVESTORS, LDC
c/o Rose Glen Capital Management, L.P.
3 Bala Plaza East
251 St. Asaph's Road, Suite 200
Bala Cynwyd, PA 19103
August 10, 1998
NM Acquisition Co., LLC
Attn: Eric Weiss
c/o Buchalter, Nemer, Fields & Younger 601 South Figueroa Street
Suite 2400
Los Angeles, CA 90017
Attn: Stuart Buchalter
National Media Corporation
Eleven Penn Center
1835 Market Street
Suite 1 100
Philadelphia, PA 19103
Attn: Board of Directors
Gentlemen:
Each of Capital Ventures International, a Cayman Islands company
("CVI"), and RGC International Investors, LDC, a Cayman Islands limited duration
company ("RGC") and together with CVI, the "Series D Holders"), NM Acquisition
Co., LLC, a Delaware limited liability company ("ACO"), and, to the extent set
forth on the signature page hereof, National Media
<PAGE>
Corporation, a Delaware corporation ("NMC"), by its execution of this letter
(the "Agreement"), hereby agrees as follows:
1. Description of Shares and Warrants.
(a) CVI is the owner of 15,000 shares of the Series D Convertible
Preferred Stock, par value $.0l per share, issued by NMC (the "Series D
Shares"); 375,000 warrants issued by NMC to the Series D Holders and governed
by the National Media Corporation Stock Purchase Warrants-D dated January 5,
1998 (the "Series D Warrants") and 742,060 warrants issued by NMC to the
Series D Holders and governed by the Revised National Media Corporation Stock
Purchase Warrants-C dated September 18, 1997 (the "Series C Warrants")
exercisable into shares of NMC Common Stock, par value $.0l per share ("NMC
Common Stock").
(b) RGC is the owner of 4,900 Series D Shares, 125,000 Series D
Warrants and 247,353 Series C Warrants.
(c) Pursuant to Section 4(b) of this Agreement, each Series D Share
will be convertible into shares of NMC Common Stock at a fixed conversion
price equal to $1.073125 per share of NMC Common Stock (subject to adjustment
pursuant to the terms thereof) and each Series D Warrant and Series C Warrant
is exercisable for one share of NMC Common stock at a fixed exercise price of
$1.073125 (subject to adjustment pursuant to the terms thereof).
(d) The Series D Shares were issued to the Series D Holders by NMC
in exchange for previously issued Series C Convertible Preferred Stock of
NMC. Each of CVI and RGC represents and warrants to its knowledge (without
investigation), and NMC hereby represents and warrants, that the shares of
NMC Common Stock underlying the Series D Shares, the Series C Warrants and
the Series D Warrants were the subject of a Registration Statement on Form
S-3 dated March 18, 1998 filed by NMC on March 18, 1998 with the Securities
and
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<PAGE>
Exchange Commission ("SEC"), which Registration Statement was declared effective
by the SEC on April 9, 1998 (the "Series D Registration Statement").
2. Representations and Warranties.
(a) Representations and Warranties of Series D Holders. Each
Series D Holder represents and warrants to ACO as follows:
(i) On the Closing Date, such Series D Holder will have
conveyed to ACO valid title with respect to its Series D Shares, Series C
Warrants and Series D Warrants sold to ACO pursuant to Section 3 of this
Agreement, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest other than pursuant to this
Agreement.
(ii) Such Series D Holder has duly authorized, executed and
delivered this Agreement and this Agreement constitutes a valid and binding
agreement on the part of such Series D Holder, enforceable against such
Series D Holder in accordance with its terms, except as the enforcement
hereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles. The certificates representing
the Sold Securities (as defined below) to be sold by such Series D Holder to
ACO hereunder will have been duly endorsed and delivered on its behalf, and
such Series D Holder has instructed the Secretary of NMC to transfer the
record ownership of such Sold Securities to ACO on the securities transfer
ledgers of NMC and to issue new stock certificates or warrants, as the case
may be, for such Sold Securities in ACO's name as record owner thereof.
(iii) Such Series D Holder has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization as the type of entity that it purports to be; and such Series D
Holder has full legal right, power and authority to enter into and perform
its obligations under this Agreement and to sell, assign, transfer and
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deliver the Sold Securities to be sold by it to ACO under this Agreement. All
consents, approvals, authorizations and orders (including any required by state
"Blue Sky" laws) required for the execution and delivery by such Series D Holder
of this Agreement, and the sale and delivery of the Sold Securities to be sold
by such Series D Holder to ACO under this Agreement have been obtained and are
in full force and effect.
(b) Representations and Warranties of ACO. ACO represents and
warrants to each of the Series D Holders as follows:
(i) ACO has been duly organized and is validly existing as a
limited liability company under the Delaware Limited Liability Company Act;
ACO has full legal right, power and authority to enter into and perform its
obligations under this Agreement and to purchase the Sold Securities pursuant
to under this Agreement.
(ii) ACO has duly authorized, executed and delivered this
Agreement and this Agreement constitutes a valid and binding agreement on the
part of ACO, enforceable against it in accordance with its terms, except as
the enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
(iii) All consents, approvals, authorizations and orders
required for the execution, delivery and performance by ACO of this
Agreement, and its purchase of the Sold Securities have been obtained and are
in full force and effect.
(iv) ACO is an "accredited investor" as such term is defined
in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933,
as amended (the "Act"). ACO has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
an investment in NMC, and ACO and its members are able to bear the economic
risk of the investment in NMC and at the present time ACO and its members
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could afford a complete loss of ACO's investment in the Sold Securities. ACO
recognizes that its investment in NMC involves substantial risks, including a
risk of total loss of its investment. ACO acknowledges that neither of the
Series D Holders has made any representations or warranties with respect to NMC
or its business, condition (financial or otherwise) or prospects, and ACO has
not relied on either of the Series D Holders for any information or advice with
respect to its investment in the Sold Securities.
(v) The Sold Securities are being acquired for
investment and not with a view to, or for resale in connection with, any
distribution of any such Sold Securities or the NMC Common Stock underlying such
Sold Securities within the meaning of the Act or applicable state securities
laws. By such representation, ACO means that it is acquiring the Sold Securities
for its own account for investment and that no one else has any beneficial
ownership of the Sold Securities other than the members of ACO.
(vi) ACO has retained no finder or broker in
connection with the transactions contemplated by this Agreement, and ACO hereby
agrees to indemnify and to hold harmless the other parties hereto from and
against any liability for any commission or other compensation in the nature of
a finder's fee of any broker or other person (and the costs and expenses of
defending against such liability or asserted liability) for which ACO, any of
its members, employees and representatives is responsible.
3. Purchase, Sale and Delivery of Sold Securities.
(a) The closing of the purchase and sale of the Sold
Securities shall take place at 10:00 a.m. (PDT) on August 12, 1998 (the "Closing
Date") at the offices of Buchalter, Nemer, Fields & Younger, 601 South Figueroa
Street, Suite 2400, Los Angeles, California, or such other date, time and place
as the parties hereto shall mutually designate.
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<PAGE>
(b) On the basis of the representations, warranties and
agreements contained herein, ACO has agreed to purchase and
(i) ACO will purchase and CVI will sell to ACO
7,500 Series D Shares (the "CVI Sold Shares"), 250,000 Series D Warrants and
494,707 Series C Warrants (the "CVI Sold Warrants" and together with the CVI
Sold Shares, the "CVI Sold Securities") in exchange for the aggregate purchase
price of U.S. $7,500,000 (the "CVI Purchase Price"); and
(ii) ACO will purchase and RGC will sell to ACO 2,500
Series D Shares (the "RGC Sold Shares"), 83,333 Series D Warrants and 164,902
Series C Warrants (the "RGC Sold Warrants" and together with RGC Sold Shares the
"RGC Sold Securities") in exchange for the aggregate purchase price of U.S.
$2,500,000 (the "RGC Purchase Price"). The CVI Sold Securities and the RGC Sold
Securities are collectively referred to herein as the "Sold Securities".
(c) Delivery of one or more certificates as contemplated in
Subsection 3(d) below representing the Sold Securities to be purchased and sold
pursuant to this Section 3 will be made on the Closing Date against payment of
the CVI Purchase Price by ACO by bank wire transfer of immediately available
funds, to a bank account identified by CVI and payment of the RGC Purchase Price
by ACO by bank wire transfer of immediately available funds to a bank account
identified by RGC.
(d) In addition, on the Closing Date, each Series D Holder
will deliver to NMC all of the certificates representing Series D Shares to be
sold by it to ACO hereunder; NMC shall issue to ACO certificates representing
such shares and affix a legend to each such certificate (and to certificates
subsequently issued in exchange for such certificates), as follows:
"The conversion terms contained in the Certificate of
Designation for the Series D Convertible Preferred Shares are
subject to a contract between all of the holders of such
shares and National Media Corporation (the "Company") dated
August 10, 1998 (the
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<PAGE>
"Agreement") which provides that the conversion price shall be
$1.073125, subject to adjustment and termination under certain
circumstances. Each person who acquires an interest in the
shares represented by this Certificate takes subject to this
modification and is required by the Agreement to have each
certificate for Shares marked with this legend, and each such
person may inspect the relevant portion of the Agreement at
the office of the Company."
Promptly after the Closing Date, NMC shall deliver to each Series D Holder new
certificates representing its Post Closing Shares, as defined below, containing
the above legend in exchange for such Series D Holder's existing certificates
representing such shares.
(e) The parties agree that, as of the Closing Date and
thereafter, NMC shall add an amount equal to the Retained Premium (as defined
below) to the amount of premium (the "Premium") that has accrued with respect to
each Post Closing Share owned by CVI and RGC. The parties agree that the CVI
Sold Shares and the RGC Sold Shares are being sold to ACO without any accrued
Premium, but that Premium on all Series D Stock shall accrue from the Closing
Date. For the purposes hereof, "Retained Premium" shall mean (a) with respect to
CVI, the aggregate amount of all Premium which has accrued from April 14, 1998
with respect to the CVI Sold Shares through and including the Closing Date
divided by the number of Post Closing Shares owned by CVI immediately after
consummation of the sale pursuant to Section 3 hereof, and (b) with respect to
RGC, the aggregate amount of all Premium which has accrued from April 14, 1998
with respect to the RGC Sold Shares through and including the Closing Date
divided by the number of Post Closing Shares owned by RGC immediately after
consummation of the sale pursuant to Section 3 hereof.
(f) Subject to the closing of the Transaction, each of RGC and
CVI waive their right to claim any accrued Premium for any period prior to April
14, 1998. In the event
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that the Transaction terminates or does not close on or before December 31, 1998
the waiver contained in this Section 3(f) shall be void ab initio.
4. Further Agreements.
(a) Board Observer Rights. For so long as CVI owns in the
aggregate at least 500 Post Closing Shares or at least 500,000 shares of NMC
Common Stock acquired upon conversion of Post Closing Shares or exercise of
Series C Warrants or Series D Warrants, NMC shall afford an "Observer Right" to
a designee of CVI (the "Observer") (i) who shall receive notice of all NMC Board
of Directors meetings and all Board Committee meetings, in each case whether in
person, by telephone or other, and NMC shall provide to the Observer,
concurrently with making available to the members of the NMC Board of Directors
or any such Board Committee, a copy of all board packages, minutes, documents,
slides, audio/visual materials, charts, graphs, or other materials provided to
such members, unless distributed at the actual meeting in which case such
materials shall be furnished to the Observer at such meeting, or if the Observer
has not attended such meeting, as soon as practicable thereafter; and (ii) who
may attend, in a nonvoting observer capacity, any such NMC Board of Directors
meeting or Board Committee meeting, provided, that CVI shall execute a
Non-Disclosure Agreement in the form agreed upon by CVI and NMC. NMC
acknowledges that the Observer will likely have, from time to time, information
that may be of interest to NMC ("Information"). NMC agrees that the Observer
shall not have any duty to disclose such Information to NMC or permit NMC to
participate in any projects or investments based on any Information, or to
otherwise take advantage of any opportunity that may be of interest to NMC if it
were aware of such Information, and hereby waives, to the extent permitted by
law, any claim based on the corporate opportunity doctrine or otherwise that
could limit CVI's ability to pursue opportunities based on any Information.
Notice of the first such meeting following the Closing Date shall be
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provided to Michael Spolan as CVI's initial designee, at the address for CVI on
the first page of the Agreement.
(b) Standstill Provisions.
(i) For a period ending on the first anniversary
of the Closing Date, each of CVI, RGC and ACO agrees (for the exclusive benefit
of NMC) not to (A) sell more than 50% of the Series D Shares held by it
immediately after consummation of the purchase and sale of the Sold Securities
pursuant to Section 3 hereof (its "Post Closing Shares"); or (B) sell more than
50% of the NMC Common Stock issuable upon conversion of all of its Post Closing
Shares.
(ii) Each of CVI, RGC and ACO further agrees (for the
exclusive benefit of NMC) that, as to its Post Closing Shares not subject to the
selling restriction of paragraph (i) above, it will not sell or transfer (other
than to affiliates) either more than (x) 25% of such Post Closing Shares or (y)
25% of the NMC Common Stock issuable upon conversion thereof in any of the
following three month periods: (a) the period beginning on August 12, 1998 and
ending on November 11, 1998, (b) the period beginning on November 12, 1998 and
ending on February 11, 1999, (c) the period beginning on February 12, 1999 and
ending on May 11, 1999, or (d) the period beginning on May 12, 1999 and ending
on August 11, 1999 (each, a "Quarter"); provided, however, that any shares of
NMC Common Stock which were permitted to be sold by it in any Quarter and which
were not so sold will be added to the number of shares of NMC Common Stock
permitted to be sold by it in any subsequent Quarter, except that in no event
shall more than 50% of the shares of NMC Common Stock issuable upon conversion
of its Post Closing Shares may be sold in any subsequent Quarter.
(iii) Notwithstanding the provisions contained in
the Certificate of Designations, Preferences and Rights of Series D Convertible
Stock of National Media
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Corporation (the "Certificate of Designations"), the "Conversion Price" (as such
term is used in the Certificate of Designations) shall equal $1.073125 (subject
to adjustment as described in the Certificate of Designations) and the Series D
Holders and ACO waive (for themselves, their successors, assigns and
transferees) their right to convert such shares at the Variable Conversion
Price. As a condition to the transfer of any Series D Shares to any other person
or entity (other than NMC) (each, a "Transferee") by either of the Series D
Holders or ACO, such Transferee shall be required to execute an instrument
reasonably satisfactory to NMC (in form and substance) subjecting such
Transferee to the terms and conditions of this Section 4(b)(iii) and Subsection
3(e) hereof. NMC, CVI, RGC and ACO acknowledge that the Series D Warrants and
the Series C Warrants are exercisable for shares of NMC Common Stock at an
"Exercise Price" (as such term is used in the Series C Warrants and the Series D
Warrants) of $1.073125 (subject to adjustment as described in such warrants).
(iv) The provisions of (i), (ii), (iii) and (vii) of
this Section 4(b) shall immediately and automatically terminate and each of CVI
and RGC shall be free to sell any of its Post Closing Shares or the underlying
NMC Common Stock if (x) the proposed transaction between ACO and NMC as set
forth in a Stock Purchase Agreement between such parties dated August 11, 1998
(the "Transaction") is terminated at any time or not consummated by November 15,
1998 or upon receipt of a letter from NMC to ACO (with a copy to CVI and RGC)
extending the termination date of the Transaction because NMC is awaiting
regulatory or shareholder approval, December 31, 1998, (y) NMC shall agree to
eliminate such provisions, or (z) there shall occur a Change in Control (as
defined below) other than as contemplated by the Transaction.
(v) For the purposes of this Agreement, "Change
in Control" means (A) at such time as any person, other than ACO, any subsidiary
of ACO or any entity Controlled
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(as defined below) by any of the foregoing persons, is or becomes the beneficial
owner, directly or indirectly, through a purchase or other acquisition
transaction or series of transactions (other than a merger or consolidation
involving NMC which is covered by clause (B) below), of shares of capital stock
of NMC entitling such person to exercise in excess of 50% of the total voting
power of all shares of capital stock of NMC entitled to vote generally in the
election of directors; (B) there occurs any consolidation of NMC with, or merger
of NMC into, any other person, any merger of another person into NMC, or any
sale or transfer of the assets of NMC as, or substantially as, an entirety to
another person (other than (y) any such transaction pursuant to which the
holders of all outstanding NMC Common Stock immediately prior to such
transaction have, directly or indirectly, shares of capital stock of the
continuing or surviving corporation immediately after such transaction which
entitle such holders to exercise in excess of 50% of the total voting power of
all shares of capital stock of the continuing or surviving corporation entitled
to vote generally in the election of directors or (y) any merger (1) which does
not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of NMC Common Stock or (2) which is effected solely to change
the jurisdiction of incorporation of NMC and results in a reclassification,
conversion or exchange of outstanding shares of NMC Common Stock solely into
shares of the common stock of the successor to NMC having substantially the same
relative rights as the NMC Common Stock); (C) a change in the Board of Directors
of NMC in which the individuals who constituted the Board of Directors of NMC at
the beginning of the two-year period immediately preceding such change (together
with any other director whose election by the Board of Directors of NMC or whose
nomination for election by the stockholders of NMC was approved by a vote of at
least a majority of the directors then in office either who were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to
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constitute a majority of the directors then in office; or (D) the execution of a
binding agreement to effect of any of the foregoing. For the purpose of the
definition of "Change in Control" the term "Controlled" shall mean ownership or
control of more than 50% of the voting power of such entity.
(vi) The provisions of subsections (i) and (ii) of
this Section 4(b) shall not apply to any sale where the seller and buyer are
both parties to this Agreement.
(vii) During the period commencing on the Closing
Date and ending on the date which is the closing date of the Transaction,
neither of the Series D Holders shall sell short shares of NMC Common Stock.
Subject to the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder and the rules of the New York Stock Exchange
("NYSE") as applicable, during the period commencing on the closing date of the
Transaction and ending on the one year anniversary of the Closing Date, the
Series D Holders shall during any calendar week be permitted to sell short only
such number of shares of NMC Common Stock as does not exceed, in the aggregate,
twenty-five percent (25%) of the average daily trading volume of NMC Common
Stock on the NYSE over the 45 trading day period ending on the last trading day
of the week prior to the week during which any such determination is made;
provided, however, that any amounts permitted to be but not sold short in any
calendar week will not be carried forward to the subsequent calendar week;
provided further that the quantity of sales permitted pursuant to this Section
4(b)(vii) is in addition to the quantity of sales permitted pursuant to Section
4(b)(ii) hereof.
(viii) An example of the limitations described in
Subsection 4(b)(vii) above is: if the average daily trading volume of NMC Common
Stock on the NYSE over the 45-day trading period ending on Friday November 13,
1998 were 300,000 shares, then commencing on the trading week beginning on
Monday, November 16, 1998 and ending on Friday,
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November 20, 1998, the Series D Holders may sell short up to a maximum of 75,000
Shares of NMC. Common Stock during the trading week (e.g., 300,000 x 25% =
75,000 shares).
(c) Voting Provisions. Effective on the closing date of the
Transaction, for a period ending on the third anniversary of the closing date of
the Transaction, each of the Series D Holders agrees (for the exclusive benefit
of NMC) that, as to any shares of NMC Common Stock which it owns as of a "record
date" set by NMC for stockholder vote, it will vote (whether by proxy or
otherwise) all of such shares of NMC Common Stock in favor of any proposal
recommended by the NMC Board of Directors for stockholder approval. The
provisions of this Section 4(c) shall immediately and automatically terminate
and each of CVI and RGC shall be free to vote its shares of NMC Common Stock
against any proposal recommended by the NMC Board of Directors for stockholder
approval in any stockholder vote which occurs after a Change in Control has
occurred.
(d) Right of First Refusal. For a period ending on the second
anniversary of the Closing Date, each Series D Holder, prior to selling or
transferring (other than (x) to any of its affiliates, or (y) upon conversion
into NMC Common Stock) any of its Post Closing Shares ("Offered Shares"), shall
provide NMC with the right of first refusal to purchase the Offered Shares in
the following manner:
(i) Any Series D Holder proposing to make such a
sale or transfer shall give notice (the "Transfer Notice") to NMC in writing of
such intention, specifying the number of Offered Shares proposed to be sold or
transferred and the proposed price therefor, and setting forth all the other
terms of such proposed sale and transfer.
(ii) NMC shall have the right, exercisable by written
notice given by NMC (which notice shall constitute a binding commitment by NMC)
to the Series D Holder which gave the Transfer Notice within 5 calendar days
after receipt of such Transfer Notice to
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<PAGE>
purchase for cash (or to cause a person or designated by NMC to purchase for
cash) all, but not a part of, the Offered Shares specified in such Transfer
Notice at the price and otherwise on the same terms set forth therein (except
that the closing thereof shall be governed by Subsection (d)(iii) below). If the
purchase price specified in the Transfer Notice includes any property other than
cash or any property with a readily ascertainable market value, including but
not limited to publicly traded securities, such purchase price shall be deemed
to be the amount of any cash included in the purchase price plus an amount equal
in cash to the fair market value of any property with a readily ascertainable
market value included in such price (which in the case of publicly traded
securities shall equal the last reported sales price on the date of the Transfer
Notice) or, if no readily ascertainable market value exists, an amount equal to
the fair market value of such property determined by a qualified third party
appraiser selected jointly by NMC and the Series D Holder. If NMC and such
Series D Holder are unable to agree upon a third party appraiser, each of NMC
and such Series D Holder shall select a third party appraiser. The two third
party appraisers so selected shall appoint a third appraiser. The determination
of such third appraiser shall be used to determine the consideration payable by
NMC, which determination shall be final and binding on NMC and such Series D
Holder.
(iii) If NMC exercises its right of first refusal
hereunder within the time specified for such exercise, the closing of the
purchase of Offered Shares with respect to which such right has been exercised
shall take place within 5 calendar days after NMC gives notice of such exercise.
(iv) If NMC fails to exercise any right of first
refusal hereunder within the time specified for such exercise, the Series D
Holder giving the Transfer Notice shall be free during the period of 90 calendar
days following the expiration of such time for exercise to sell the Offered
Shares specified in such Notice at the price specified therein or at any price
in
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<PAGE>
excess thereof. If such Series D Holder fails to consummate the transaction
subject to such Transfer Notice within such 90 calendar day period, the right of
first refusal pursuant to this Section 4(d) shall again become applicable to
such Offered Shares.
(v) The provisions of this Section 4(d) shall
immediately and automatically terminate and the Series D Holders will be
permitted to sell any of their Post Closing Shares if (x) the Transaction is
terminated at any time or otherwise fails to be consummated on or before
November 15, 1998, or upon receipt of a letter from NMC to ACO (with a copy to
CVI and RGC) extending the termination date of the Transaction because NMC is
awaiting regulatory or shareholder approval, December 31, 1998; (y) NMC shall
agree to terminate such provisions; or (z) a Change in Control shall occur.
(e) Transfer of Sold Securities. In connection with the
purchase and sale of the Sold Securities:
(i) NMC acknowledges that it has received the
CVI Sold Warrants, the RGC Sold Warrants and, from each Series D Holder,
endorsed stock certificates for the Series D Shares constituting its Sold
Securities and letters of instruction regarding such Sold Securities and its
Post Closing Shares, Series C Warrants and Series D Warrants, and NMC hereby
waives its right to require that it receive an opinion of counsel in connection
with such transfer to the effect that the transfer of the Sold Securities is
exempt from registration under the Act or any state securities laws. NMC, in
waiving this right, may rely on the representations of ACO in Section 2(b)(iv)
hereof as if being made directly to NMC.
(ii) ACO agrees for the benefit of NMC to be
bound by all of the provisions contained in the Registration Rights Agreement,
among NMC, CVI and RGC, dated as of September 4, 1997, as amended (the
"Registration Rights Agreement"). ACO acknowledges that it has no rights with
respect to NMC Series E Preferred Stock, including
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<PAGE>
without limitation, the right to sell NMC Common Stock convertible from such
Series E Preferred Stock, pursuant to the Registration Rights Agreement or under
the Series D Registration Statement.
5. Specific Enforcement. Each of the parties hereto acknowledges and
agrees that a party may not be made whole by monetary damages in the event of
any breach of the provisions of this Agreement. It is accordingly agreed that a
party, in the event of a breach of this Agreement by another party, shall be
entitled to seek an injunction or injunctions to prevent or cure such breaches
and to enforce specifically the terms and provisions hereof, this being in
addition to any other remedy to which the party may be entitled by law or
equity. In furtherance of the foregoing, the parties agree that they shall not
be permitted to, and shall not, assert or bring any claim seeking to terminate
or suspend performance of any provision of this Agreement or seeking any
determination that any provision of this Agreement (including this Paragraph 5)
is invalid or unenforceable.
6. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and, if sent to ACO, shall
be mailed, delivered, or telecopied (and confirmed by letter) at the address set
forth above or at telecopier number (818) 461-5496, Attention: Eric Weiss, with
a copy to Buchalter, Nemer, Fields & Younger, 601 South Figueroa Street, Suite
2400, Los Angeles, California 90017, Attention: Stuart D. Buchalter, telecopier
number: (213) 896-0400, if sent to CVI such notice shall be mailed, delivered,
or telecopied (and confirmed by letter) at the respective addresses set forth
above, Attention: Michael Spolan, or at telecopier number (415) 403-6525, with a
copy to Gibson, Dunn & Crutcher LLP, One Montgomery Street, 31st Floor, San
Francisco, California 94105, Attention: Gregory J. Conklin, telecopier number
(415) 986-5309; if sent to RGC such notice shall be mailed, delivered or
telecopied (and confirmed by letter) to Gary Kaminsky, or at
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<PAGE>
telecopier number (610) 617-0570, with a copy to Morgan Lewis & Bockius LLP,
2000 One Logan Square, Philadelphia, Pennsylvania 19103, Attention: James W.
McKenzie, Jr., telecopier number (215) 963-0570; and if sent to NMC, such notice
shall be mailed, delivered or telecopied (and confirmed by letter) at the
address set forth above or at telecopier number (215) 988-4869, Attention:
General Counsel.
7. Parties. This Agreement shall inure to the benefit of and be binding
upon each of the parties hereto and each of their respective administrators,
successors and assigns. Nothing set forth in this Agreement is intended or shall
be construed to give any person or entity, other than the parties hereto and
their respective administrators, successors and assigns, any legal or equitable
right, remedy or claim in respect of this Agreement or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto and their respective administrators, successors and assigns.
8. Entire Agreement; Amendments. This Agreement, contains the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein or therein. This Agreement supersedes all
prior agreements and understandings among the parties hereto with respect to its
subject matter, including that certain Letter Agreement dated July 15, 1998
among CVI, RGC, ACO and NMC. CVI and RGC acknowledge that the Certificate
Designations for the NMC Series E Preferred Stock contains a provision which
states that, on liquidation of NMC, the Series E Preferred Stock and the Series
D Shares are treated pari passu. This Agreement may be amended only by a written
instrument duly executed by the party or parties charged with the performance of
the provision to be amended or their respective successors or assigns.
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<PAGE>
9. Survival of Representation. All representations, warranties and
agreements made by ACO and the Series D Holders in this Agreement or pursuant
hereto shall survive the Closing Date.
10. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable.
11. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without regard
to its conflict of laws principles.
12. Counterparts. This Agreement may be signed in several counterparts,
each of which will constitute an original, and together shall constitute one and
the same Agreement.
13. Publicity. Prior to filing any document with any governmental
authority or issuing any press release or other public statement which refers to
this Agreement, any of the Series D Holders' obligations hereunder, either of
the Series D Holders or the Series D Holders' ownership of any Series D Shares,
Series C Warrants, Series D Warrants or NMC Common Stock, each party hereto
shall provide the other parties with a reasonable opportunity to review and
comment on such document, press release or other public statement.
If the foregoing correctly sets forth our understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among ACO, the Series D Holders and NMC.
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<PAGE>
"SERIES D HOLDERS"
CAPITAL VENTURES INTERNATIONAL
By: Heights Capital Management Inc.,
as agent
By: ------------------------------------
Michael Spolan
General Counsel and Secretary
RGC INTERNATIONAL INVESTORS, LDC
By: Rose Glen Capital Management, L.P.
By: RGC General Partner Corp.
By: ------------------------------------
Accepted and agreed as of
the date written above.
NM ACQUISITION CO., LLC.
a Delaware limited liability company
By: Temporary Media Co., LLC,
a Delaware limited liability company
Its Managing Member
By: ---------------------------
Daniel Yukelson
Managing Member
Accepted and agreed as of the date written above
as to Sections 1, 3, 4, 5, 6, 7, 8, 10, 11, 12 and 13
NATIONAL MEDIA CORPORATION,
a Delaware corporation
By: --------------------------------
Robert N. Verratti
CEO
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EXHIBIT 10.1
WAIVER AGREEMENT
This Agreement is made between National Media Corporation (the
"Company") and Constantinos I. Costalas (the "Executive") on August 12, 1998.
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated April 28, 1997, as amended from time to time (the "Employment
Agreement").
WHEREAS, from time to time, the Executive has been granted options to
purchase common stock of the Company.
WHEREAS, in connection with the proposed equity Investment in the
Company by NM Acquisition Co., LLC, a Delaware Limited Liability Company
pursuant to a Stock Purchase Agreement dated as of August 11, 1998 between the
Company and NM Acquisition Co., LLC. (the "Purchase Agreement"), the Company and
the Executive wish to modify certain provisions of the Employment Agreement
(which modifications will be null and void if the transactions contemplated by
the Purchase Agreement are not consummated) and certain terms of certain of the
options held by Executive.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
A. Amendments to the Employment Agreement
1. Duties. Effective at the Closing Date (as defined in the
Purchase Agreement), the first two sentences of Section 2(a) of the Employment
Agreement shall be amended by deleting such sentences entirely and replacing
them with the following:
"The Executive's duties shall be to render such executive
management consultation services as shall be reasonably
assigned from time to time by the Company. The Executive shall
provide these services on a full-time basis. The Executive
will not be the Vice Chairman or an executive officer of the
Company."
2. Term. Effective at the Closing Date, Section 3 of the
Employment Agreement shall be amended by deleting its contents entirely and
replacing them with the following:
"The term of this agreement shall be ninety calendar days from
the Closing Date (as defined in the Stock Purchase Agreement
dated as of August 11, 1998 between the Company and NM
Acquisition Co., LLC), unless sooner terminated in accordance
with the provisions hereof."
3. Additional Consultation Services. Effective at the
Closing Date, a new Section 3 A will be deemed to have been added to the
Employment Agreement as follows:
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<PAGE>
"3A. Additional Consultation Services.
(a) For a period of twenty one (21) months
after the end of the Term provided for in Section 3 (the
"Consulting Term"), the Executive shall be retained as a
consultant to the Company, and shall, on a non-exclusive
basis, provide mutually agreeable executive management
consultation services with respect to the business and affairs
of the Company as reasonably requested from time to time by
the Company; provided however, that such consulting services
shall not, in the sole discretion of the Executive, materially
detract from or otherwise interfere with the Executive's other
employment, charitable, social or personal activities. The
Executive will not be an officer or employee of the Company.
There will be no minimum amount of consultation required, and
the Executive's services will be on an as-needed basis. For
such services, the Company will pay the Executive a consulting
fee of $443,750 (the "Consulting Fee"), payable at such time
as the Company customarily pays its senior executives and (i)
with respect to the first nine (9) months of the Consulting
Term (the "Initial Consulting Term"), in installments based
upon an annual rate of $325,000, and (ii) with respect to the
remaining twelve (12) months of the Consulting Term (the
"Remaining Consulting Term"), in installments based upon an
annual rate of $200,000. The Company will provide the
Executive with all perquisites, benefits, allowances, etc.
described in this Agreement for the Initial Consulting Term,
and the Company will provide the Executive with all
hospitalization insurance, major medical insurance, medical
reimbursement and other medical or hospitalization benefits
described in this Agreement for the Remaining Consulting Term.
The Company will provide the Executive with reasonable office
facilities and stenographic and other support services in the
event consulting services are actually requested by the
Company hereunder.
(b) In the event of the death or Total
Disability (as defined in Section 9(b) of this Agreement) of
the Executive prior to the expiration of the Consulting Term,
the Company shall have no further obligations or liabilities
under this Agreement, except to, as soon as is practicable,
pay the Executive's estate or the Executive, as the case may
be, the portion, if any, of the Consulting Fee not previously
paid under this Agreement. The Company shall, as soon as is
practicable, pay such unpaid portion of the Consulting Fee to
the Executive's estate or the Executive, as the case may be,
notwithstanding the fact that due to such death or Total
Disability the Executive shall no longer provide the
consulting services set forth in section 3A(a) for the
remainder of the Consulting Term."
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<PAGE>
4. Indemnification. Effective at the Closing Date, Section
13 of the Employment Agreement shall be amended by deleting its contents
entirely and replacing them with the following:
"13. Counsel Fees and Indemnification.
(a) In the event that it shall be necessary
or desirable for the Executive to retain legal counsel and/or
incur other costs and expenses in connection with the
enforcement of any and all of his rights (including his right
to payment of the Consulting Fee) under this Agreement,
including participation in any proceeding contesting the
validity or enforceability of this Agreement and any
arbitration proceeding pursuant to Section 9(e) of this
Agreement, the Executive shall be entitled to recover from the
Company his reasonable attorney's fees and costs and expenses
in connection with the enforcement of his rights. No fees
shall be payable if the Company is successful on the merits.
(b) The Company shall indemnify and hold
Executive harmless to the maximum extent permitted by law
against judgments, fines, amounts paid in settlement and
reasonable expenses, including reasonable attorneys' fees
incurred by Executive, in connection with the defense of, or
as a result of, any action or proceeding (or any appeal from
any action or, proceeding) in which Executive is made or is
threatened to be made a party by reason of any act or omission
of Executive in his capacity as an officer, director,
consultant or employee of the Company, regardless of whether
such action or proceeding is one brought by or in the right of
the Company and whether such action related to circumstances
prior to the effective date of this Agreement (or during the
Consulting Term), to procure a judgment in its favor. Expenses
(including reasonable attorneys' fees) incurred by the
Executive in defending any civil, criminal, administrative, or
investigative action, suit or proceeding shall be paid by the
Company in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on
behalf of the Executive to repay such amount if it shall
ultimately be determined that he is not entitled to be
indemnified by the Company as authorized in this Section
13(b)."
5. Change in Control. Effective at the Closing Date, Section
10 of the Employment Agreement shall be deleted and will have no further force
or effect. Furthermore, Executive agrees that a "change in control" (as defined
in the Employment Agreement) does not include any of the transactions
contemplated by, or taken in connection with, the Purchase Agreement.
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<PAGE>
6. Cash Bonus. On the Closing Date, the Company will pay
the Executive a bonus of $180,000.
7. Mutual Release. Effective on the Closing Date, subject to
the provisions of this Agreement and the Executive's continuing right to defense
and indemnification by the Company pursuant to Delaware law or the Employment
Agreement, each, of the parties hereby unconditionally releases and forever
discharges the other party, in the case of the Company, including its
subsidiaries, affiliated or related business entities, shareholders, officers,
directors, committee members, attorneys, employees, agents, successors and
assigns, from and against any and all contractual rights, claims, actions,
causes of action, rights, demands, attorneys' fees, penalties, debts or damages
of every kind or nature whatsoever, whether known or unknown, which arise out of
the Employment Agreement or otherwise in connection with Executive's employment
or relationship with the Company before the Closing Date.
B. Changes to Outstanding Options
1. Reduction in Option Price. Effective on the date hereof, the
exercise price of 50,000 options to purchase the Company's common stock held by
the Executive shall be reduced from $7.00 per share to $2.00 per share.
Executive shall promptly deliver the option document held by him to the Company,
and the Company will deliver to Executive a new option document with the same
terms and conditions as the option document tendered except for the exercise
price, and the Company will deliver to Executive an option document on the same
term for the balance of the shares. Such options shall not be exercisable until
the earlier of consummation of the Purchase Agreement or the termination of the
Purchase Agreement.
2. Change in Terms of Options. The provisions with respect to the
duration of options following termination of service contained in all options to
purchase Common Stock of the Company held by Executive shall be extended for a
one-year period from the date they would otherwise expire. The Company
acknowledges that by previous action of the Board of Directors of the Company,
the time for exercisability of all of Executive's options has previously been
fixed at two years after termination of service. By this agreement, such period
for exercise will be three years after termination of service.
3. Delivery. Promptly after delivery of option document held by
Executive to the Company, the Company will prepare and deliver to the Executive
new option document with the changes provided for herein.
C. Repayment of Indebtedness.
Within 2 business days after the Closing Date, Executive shall repay
the Company the amount of $180,000, which shall constitute all the principal and
interest due under that certain Note to the Company dated December 31, 1997.
D. Other Provisions.
1. Entire Agreement. The Employment Agreement, as amended by
this Agreement, constitutes the entire agreement between the parties pertaining
to the subject matter hereof and
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<PAGE>
fully supersedes any and all prior or contemporaneous agreements or
understandings between the parties hereto pertaining to the subject matter
hereof, subject to paragraph 3 below.
2. Full Force and Effect. Except as expressly amended in this
Agreement, the Employment Agreement shall remain in full force and effect,
subject to paragraph 3 below.
3. Termination of the Agreement. Notwithstanding anything to the
contrary herein, the provisions of Part A. and Parts B.2., B.3., and Part C of
this Agreement shall immediately and automatically terminate and shall have no
further force and effect upon the termination or expiration of the Purchase
Agreement, in accordance with the provisions thereunder. In the event of any
such termination of these parts, the Employment Agreement shall remain in full
force and effect, without the changes provided for herein.
4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NATIONAL MEDIA CORPORATION
By: ---------------------------------
Name: Brian J. Sisko
Title: Senior Vice President
--------------------------------
CONSTANTINOS I. COSTALAS
APPROVED:
- ---------
By: ------------------------
Jon W. Yoskin II, Director
Chairman of the Compensation Committee
of the Board of Directors
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<PAGE>
EXHIBIT 10.2
WAIVER AGREEMENT
This Agreement is made between National Media Corporation (the
"Company") and Frederick S. Hammer (the "Executive") on August 12, 1998.
WHEREAS, the Company and the Executive are parties to an Employment
Agreement dated February 27, 1997, as amended (the "Employment Agreement").
WHEREAS, from time to time, the Executive has been granted options to
purchase common stock of the Company.
WHEREAS, in connection with the proposed equity investment in the
Company by NM Acquisition Co., LLC, a Delaware Limited Liability Company
pursuant to a Stock Purchase Agreement dated as of August 11, 1998 between the
Company and NM Acquisition Co., LLC (the "Purchase Agreement"), the Company and
the Executive wish to modify certain provisions of the Employment Agreement
(which modifications will be null and void if the transactions contemplated by
the Purchase Agreement are not consummated) and certain terms of options held by
Executive.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
A. Employment Agreement
1. Term. Effective at the Closing Date (as defined in the
Purchase Agreement), the Employment Agreement shall terminate. Until such date,
the provisions of the Employment Agreement shall remain in full force and
effect.
2. Duties. Effective at the Closing Date, the Executive will
cease to be an employee of the Company, but shall continue as a member of the
Company's Board of Directors until such time as his successor is duly elected,
but in such role will not be an officer or employee of the Company.
3. Change in Control. Effective upon execution of this
Agreement, Section 7(d) of the Employment Agreement is amended to insert the
following clause at the end of the paragraph:
"provided, however, that a Change in Control shall not include
any of the transactions contemplated by, or taken in
connection with, the Purchase Agreement."
4. Mutual Release. Effective on the Closing Date, subject to
the provisions of this Agreement and the Executive's continuing right to defense
and indemnification by the Company pursuant to Delaware law or the Employment
Agreement, each of the parties hereby unconditionally releases and forever
discharges the other party, in the case of the Company,
<PAGE>
including its subsidiaries, affiliated or related business entities,
shareholders, officers, directors, committee members, attorneys, employees,
agents, successors and assigns, from and against any and all contractual rights,
claims, actions, causes of action, rights, demands, attorneys' fees, penalties,
debts or damages of every kind or nature whatsoever, whether known or unknown,
which arise out of the Employment Agreement or otherwise in connection with
Executive's employment or relationship with the Company.
B. Changes in Options
1. Reduction in Option Price. Effective on the date hereof,
the exercise price of the options to purchase 125,000 shares of common stock
of the Company held by the Executive shall be reduced from $5.65 per share to
$2.00 per share. The Executive shall promptly deliver the option document
held by him to the Company, and the Company will deliver to Executive a new
option document with the same terms and conditions as the option document
tendered except for the exercise price, and the Company will deliver to
Executive an option document on the original terms for the balance of the
shares. Such options shall not be exercisable until the consummation of the
Purchase Agreement or the termination of the Purchase Agreement.
2. Change in Terms of Options. The provisions with respect
to the duration of options following termination of service contained in all
options to purchase Common Stock of the Company held by Executive shall be
extended for a one-year period from the date they would otherwise expire. The
Company acknowledges that by prior action of the Board of Directors of the
Company, the time for exercisability of all of Executive's options has
previously been fixed at two years after termination of service. By this
agreement such period for exercise will be three years after termination of
service.
3. Delivery. Promptly after delivery of option document
held by Executive to the Company, the Company will prepare and deliver to the
Executive new option document with the changes provided for herein.
4. Consideration. The parties acknowledge that the
reduction in option price pursuant to Section B.1. is given by the Company as
consideration for the release pursuant to Section A.4. and that the Executive
shall have no further right to any payment by the Company after the Closing
Date, other than continuing director fees, if any.
C. Other Provisions.
1. Entire Agreement The Employment Agreement, as amended by
this Agreement, constitutes the entire agreement between the parties
pertaining to the subject matter thereof and fully supersedes any and all
prior or contemporaneous agreements or understandings between the parties
hereto pertaining to the subject matter thereof.
2. Termination. Notwithstanding anything to the contrary
herein, the provisions of Part A. and Parts B.2., B.3. and B.4. of this
Agreement shall immediately and automatically terminate and have no further
force and effect upon the termination or expiration of the Purchase Agreement
(other, than by reason of complete performance), in accordance with the
provisions thereof. In the event of any such termination of such parts of
-2-
<PAGE>
this Agreement, the Employment Agreement shall remain in full force and
effect, without the changes provided for herein.
3. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
NATIONAL MEDIA CORPORATION
By:
----------------------------------
Name: Brian J. Sisko
Title: Senior Vice President
----------------------------------
FREDERICK S. HAMMER
APPROVED:
- ---------
By: ---------------------------
Jon W. Yoskin, II, Director
Chairman of the Compensation Committee
of the Board of Directors
-4-
<PAGE>
EXHIBIT 10.3
WAIVER AGREEMENT
The Agreement is made between National Media Corporation (the
"Company") and Robert N. Verratti (the "Executive") on August 12, 1998.
WHEREAS, the Company and the Executive are parties to an
Employment Agreement dated as of January 28, 1998 (the "Employment
Agreement").
WHEREAS, from time to time, the Executive has been granted
options to purchase Common Stock of the Company.
WHEREAS, in connection with the proposed equity investment in
the Company by NM Acquisition Co., LLC, a Delaware Limited Liability
Company pursuant to a Stock Purchase Agreement dated as of August 11,
1998 between the Company and NM Acquisition Co., LLC (the "Purchase
Agreement"), the Company and the Executive wish to modify certain
provision of the Employment Agreement (which modifications will be null
and void if the transactions contemplated by the Purchase Agreement are
not consummated) and certain terms of options held by Executive.
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein and for other good and valuable consideration
the receipt and adequacy of which are hereby acknowledged, the parties
hereto agree as follows:
A. Employment Agreement.
1. Term. Effective at the date of Closing Date (as
defined in the Purchase Agreement), the Employment Agreement shall
terminate. Until such date, the provisions of the Employment Agreement
shall remain in full force and effect.
2. Duties. From the date hereof until the Closing
Date, the Executive shall remain an employee of the Company but shall
not serve as the Company's Chief Executive Officer. Instead, the
Executive shall perform such services as are requested by the Company
and shall continue as a member of the Company's Board of Directors
(until such time as his successor is duly elected), but in such role
will not be an officer of the Company. Effective at the Closing Date,
the Executive will cease to be an employee of the Company, but shall
continue (unless his successor has been duly elected) as a member of
the Company's Board of Directors (until such time as his successor is
duly elected), but in such role will not be an officer or employee of
the Company.
3. Change in Control. Effective upon execution of the
Agreement, Section 9(d) of the Employment Agreement is amended to
insert the following clause at the end of the paragraph:
"provided, however, that the Change in Control shall
not include any of the transactions contemplated by
or taken in connection with the Purchase Agreement."
4. Mutual Release. Effective on the Closing Date,
subject to the provisions of this Agreement and the Executive's
continuing right to defense and indemnification by the Company
pursuant to Delaware law or the Employment Agreement, each of the
<PAGE>
parties hereby unconditionally releases and forever discharges the
other party, in the case of the Company, including its subsidiaries,
affiliated or related business entities, shareholders, officers,
directors, committee members, attorneys, employees, agents, successors
and assigns, from and against any and all contractual rights, claims,
actions, causes of action, rights, demands, attorneys' fees, penalties,
debts or damages of every kind or nature whatsoever, whether known or
unknown, which arise out of the Employment Agreement or otherwise in
connection with Executive's employment or relationship with the
Company.
B. Change in Options.
1. Reduction in Option Price. Effective on the date hereof,
the exercise price of the option to purchase 450,000 shares of common
stock of the Company held by the Executive shall be reduced from $4.75
per share to $2.00 per share. The Executive shall promptly deliver the
option document held by him to the Company, and the Company will
deliver to Executive a new option document with the same terms and
conditions as the option agreement tendered except for the exercise
price, and the Company will deliver to Executive an option document on
the original terms for the balance of the shares. Such options shall
not be exercisable until the consummation of the Purchase Agreement or
the termination of the Purchase Agreement.
2. Change in Terms of Options. The provisions with respect to
the duration of options following termination of service contained in
all options to purchase Common Stock of the Company held by Executive
shall be extended for a one-year period from the date they would
otherwise expire. The Company acknowledges that by previous action of
the Board of Directors of the Company, the time for exercisability of
all of Executive's options has previously been fixed at two years after
termination of service. By this agreement, such period for exercise
will be three years after termination of service.
3. Delivery. Promptly after delivery of option document held
by Executive to the Company, the Company will prepare and deliver to
the Executive new option document with the changes provided for herein.
4. Consideration. The parties acknowledge that the reduction
in option price pursuant to Section B.1. is given by the Company as
consideration for the release pursuant to Section A.4. and that the
Executive shall have no further right to any payment by the Company
after the Closing Date, other than continuing director fees, if any.
C. Other Provisions.
1. Entire Agreement. The Employment Agreement, as amended by
this Agreement constitutes the entire agreement between the parties
pertaining to the subject matter thereof and supersedes any and all
prior or contemporaneous agreements or understandings between the
parties hereto pertaining to the subject matter thereof.
2. Termination. Notwithstanding anything to the contrary
herein, the provisions of Part A. and Parts B.2., B.3. and B.4. of
this Agreement shall immediately
-2-
<PAGE>
and automatically terminate and have no further force and effect upon
the termination or expiration of the Purchase Agreement (other than by
reason of complete performance), in accordance with the provisions
thereof. In the event of any such termination of such parts of this
Agreement, the Employment Agreement shall remain in full force and
effect, without the changes provided for herein.
3. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same instrument.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date first written above.
NATIONAL MEDIA CORPORATION
By: -----------------------------
Name: Brian J. Sisko
Title: Senior Vice President
------------------------------------
Robert N. Verratti
APPROVED:
---------
By: ---------------------------
Jon Yoskin, III, Director
Chairman of the Compensation Committee
of the Board of Directors
-4-
<PAGE>
EXHIBIT 10.4
NATIONAL MEDIA CORPORATION
Eleven Penn Center
1835 Market Street, Suite 1100
Philadelphia, PA 19103
(215) 988-4600
August 11, 1998
TO CERTAIN HOLDERS OF SERIES B
CONVERTIBLE PREFERRED STOCK
OF NATIONAL MEDIA CORPORATION
RE: Proposed Transaction
Dear Sirs:
National Media Corporation ("National Media") has negotiated
the terms of a stock purchase (the "Transaction") between National
Media and NM Acquisition Co., LLC ("ACO") substantially in the form of
the National Media Corporation Series E Preferred Stock Purchase
Agreement (the "Stock Purchase Agreement") previously delivered to you.
The terms of the Stock Purchase Agreement and Section 5(b) of the
Certificate of Designation of the Series B Convertible Preferred Stock
of National Media (the "Series B Stock") require the holders of the
Series B Stock to consent to the issuance by National Media of a new
series of preferred stock, the Series E Convertible Preferred Stock
(the "Series E Stock"). The rights, preference and privileges of the
Series E Stock will be as set forth in the attached Certificate of
Designation of the Series E Stock.
Please indicate your consent to the Transaction, including the
issuance of the Series E Stock and the waiver of all antidilution
provisions of the Series B Stock as such relate to the issuance of the
Series E Stock and options and warrants issued or to be issued in
connection with that certain Consulting Agreement entered into in
connection with the Stock Purchase Agreement, by signing below.
Very truly yours,
Brian J. Sisko
Senior Vice President and
General Counsel
Agreed to and Accepted as of
this ____ day of August, 1998.
SAFEGUARD SCIENTIFICS (DELAWARE), INC.
By:
--------------------------------- ------------------------------
WARREN V. MUSSER
<PAGE>
EXHIBIT 10.5
[First Union Logo]
July 15, 1998
NM Acquisition Co.
c/o BT Alex Brown, Inc.
1 South Street
Baltimore, MD 21202
Attn: Mr. Eric Weiss
Re: First Union/National Media Credit Facilities
Dear Eric:
You have informed us that NM Acquisition Co., LLC ("ACO") is
interested in acquiring an equity interest in National Media
Corporation ("NMC"). This letter is in response to your letter of July
7, 1998 to us proposing alternatives for the disposition of the credit
facilities of First Union National Bank, as successor to CoreStates
Bank, N.A. ("Bank"), in conjunction with a closing (the "ACO Closing")
on ACO's acquisition of an equity interest in NMC. This letter will
confirm the Bank's willingness to accept payment (by wire transfer) an
amount equal to 75% of the outstanding principal obligations of NMC and
its affiliates to the Bank with respect to the line of credit and term
indebtedness described in the Amended and Restated Loan and Security
Agreement dated June 26, 1996 between NMC and its affiliates and the
Bank, as amended, ("Loan Agreement"), the total such indebtedness
presently approximately $22,000,000, (the dat of payment thereof being
the date of the "Bank Closing") on or before the date of the ACO
Closing, expressly subject to the following terms and conditions:
1. Interest at the presently accruing rate is paid and kept
current on a monthly basis, and all unpaid amounts are paid at the Bank
Closing. Likewise, any fees accruing under the existing financing
arrangements of the Bank with NMC would be paid as due.
2. We receive no later than July 16, 1998 a letter signed by
NMC and ACO representing theat written agreement ("ACO Agreement") has
been reached between them representing ACO's acquisition of an equity
interest in NMC, accompanied b a copy of such agreement.
3. The maturity of all of the outstanding loans of the Bank to
NMC shall be set for November 15, 1998, subject to the terms hereof.
The Bank Closing shall occur and final payment to the Bank of all
amounts provided for herein shall be made no later than November 15,
1998.
<PAGE>
NM Acquisition Co.
July 15, 1998
Page 2
----------------------
4. If (a) the ACO Agreement is terminated by any party for any
reason; (b) the shareholders of NMC do not approve the ACO Agreement;
(c) any regulatory body having jurisdiction over the transactions
described in the ACO Agreement rejects or otherwise fails to timely
approve such transactions; (d) there occurs a termination, default or
violation of any of the agreements referred to in paragraph 13 below;
(e) there occurs a default or violation in the conditions, undertakings
and covenants to the Bank set forth in this letter; (f) an Event of
Default occurs under the Loan Agreement; or (g) the Bank Closing does
not occur by November 15, 1998, the Bank shall have the option, at its
sole discretion, to terminate its agreement herein to accept any sum
other than full and complete payment of all outstanding obligations of
every kind owned to the Bank and, in addition, to accelerate the
maturity of any and all such obligations.
5. Upon your approval and NMC's approval of this agreement, we
would waive the outstanding violations of the following three financial
covenants so long as NMC is in compliance with the covenant levels (at
all times prior to the Bank Closing) set forth next to the title of
each covenant.
<TABLE>
<CAPTION>
<S> <C>
(a) Tangible Net Worth - minimum of $16,000,000
(b) Debt to Worth - maximum of 4 to 1
(c) Working Capital - minimum of $9,000,000
</TABLE>
6. No further borrowings will be made by NMC or its affiliates
from the Bank.
7. All necessary action will be promptly taken to unwind the
ACH arrangement that presently exists with the Bank and terminate all
ACH transactions, with such termination to occur not later than 60 days
following the date hereof.
8. All of the operational accounts of NMC and each affiliate
with the Bank will be closed at least ten days after the Bank Closing
in a manner acceptable to the Bank.
9. The outstanding Letter of Credit for the account of NMC
(which matures in September) will be replaced or terminated prior to
its present expiry date.
10. All outstanding FX contracts will be canceled not later
than October 1, 1998 with no liability of any kind thereunder imposed
upon Bank.
<PAGE>
NM Acquisition Co.
July 15, 1998
Page 3
----------------------
11. We will continue to charge NMC's account for legal fees
and costs as bills are received, with all outstanding legal fees and
expenses paid in full (without any discount) not later than the Bank
Closing.
12. The Bank, on the one hand, and NMC and each affiliates as
well as ACO, on the other hand, shall exchange mutual release at the
Bank Closing.
13. We shall receive, no later than July 31, 1998, copies of
signed agreements between ACO and/or NMC with each of ValueVision and
the Preferred C/D shareholders reflecting an agreed arrangement
regarding the payment of NMC's obligations to each such party. Under no
circumstances can any payment be made to ValueVision prior to our
receiving full payment as provided herein at the Bank Closing. In
addition, no cash payment shall be made to the Preferred C/D
shareholders prior to our receiving full payment as provided herein at
the Bank closing if the direct result thereof (when combined with any
cash equity investment by ACO in NMC to the date thereof but without
regard to market fluctuations, results of operations or any other
factors) is a decrease in the shareholders' equity of NMC.
14. We shall receive a cash flow statement covering the period
from July 13, 1998 to November 15, 1998 (prepared in a week to week
format) with respect to NMC updated on a weekly basis up to the Bank
Closing.
15. We shall receive monthly financial statements (which may
be marked "preliminary") within 15 days of the end of each month.
16. Except as otherwise provided herein, all terms, covenants,
undertaking and provisions set forth in the existing financing
agreements between the Bank and NMC and its affiliates (as previously
modified) remain in full force and effect.
If this letter sets forth an acceptable arrangement for ACO
and NMC to proceed, please have a copy of this letter signed by ACO and
NMC, and returned to us indicating their respective approvals of the
terms hereof. This letter supersedes all prior communications and
discussions between us and with NMC regarding the specific subject
matter hereof. No modification hereof shall be binding upon us unless
approved in
<PAGE>
NM Acquisition Co.
July 15, 1998
Page 4
----------------------
writing by us. If a signed copy of this letter is not received from
each of ACO and NMC (on behalf of its affiliates) by July 16, 1998, our
agreement set forth herein shall terminate.
Very truly yours,
FIRST UNION NATIONAL BANK
By:
----------------------------
APPROVED:
NM Acquisition Co., LLC
By:
-----------------------------------------------------
NATIONAL MEDIA CORPORATION
By:
----------------------------------------------------
cc: Mr. Robert Verratti
<PAGE>
EXHIBIT 17.1
[National Media Logo]
NATIONAL MEDIA CORPORATION
October 13, 1998
National Media Corporation
1835 Market Street
Suite 1100
Philadelphia, PA 19103
Dear Sirs:
Please accept this as my resignation from the Board of
Directors of National Media Corporation (the "Company") effective upon
consummation of that certain stock purchase agreement dated August 11,
1998 by and between the Company and NM Acquisition Co., LLC.
Very truly yours,
Albert R. Dowden
<PAGE>
EXHIBIT 17.2
[National Media Logo]
NATIONAL MEDIA CORPORATION
October 13, 1998
National Media Corporation
1835 Market Street
Suite 1100
Philadelphia, PA 19103
Dear Sirs:
Please accept this as my resignation from the Board of
Directors of National Media Corporation (the "Company") effective upon
consummation of that certain stock purchase agreement dated August 11,
1998 by and between the Company and NM Acquisition Co., LLC.
Very truly yours,
William M. Goldstein
Eleven Penn Center 1835 Market Street Suite 1100 Philadelphia, PA 19103
Phone: 215-988-4600 Fax: 215-988-4900
<PAGE>
EXHIBIT 17.3
[National Media Logo]
NATIONAL MEDIA CORPORATION
October 13, 1998
National Media Corporation
1835 Market Street
Suite 1100
Philadelphia, PA 19103
Dear Sirs:
Please accept this as my resignation from the Board of Directors of
National Media Corporation (the "Company") effective upon consummation of
that certain stock purchase agreement dated August 11, 1998 by and between
the Company and NM Acquisition Co., LLC.
Very truly yours,
Frederick S. Hammer
Eleven Penn Center 1835 Market Street Suite 1100 Philadelphia, PA 19103
Phone: 215-988-4600 Fax: 215-988-4900
<PAGE>
EXHIBIT 17.4
[National Media Logo]
NATIONAL MEDIA CORPORATION
October 13, 1998
National Media Corporation
1835 Market Street
Suite 1100
Philadelphia, PA 19103
Dear Sirs:
Please accept this as my resignation from the Board of Directors of
National Media Corporation (the "Company") effective upon consummation of
that certain stock purchase agreement dated August 11, 1998 by and between
the Company and NM Acquisition Co., LLC.
Very truly yours,
Robert N. Verratti
Eleven Penn Center 1835 Market Street Suite 1100 Philadelphia, PA 19103
Phone: 215-988-4600 Fax: 215-988-4900
<PAGE>
EXHIBIT 17.5
[National Media Logo]
NATIONAL MEDIA CORPORATION
October 13, 1998
National Media Corporation
1835 Market Street
Suite 1100
Philadelphia, PA 19103
Dear Sirs:
Please accept this as my resignation from the Board of Directors of
National Media Corporation (the "Company") effective upon consummation of
that certain stock purchase agreement dated August 11, 1998 by and between
the Company and NM Acquisition Co., LLC.
Very truly yours,
Jon W. Yoskin, II
Eleven Penn Center 1835 Market Street Suite 1100 Philadelphia, PA 19103
Phone: 215-988-4600 Fax: 215-988-4900
<PAGE>
EXHIBIT 99.1
National Media Shareholders Approve Transaction With Investor Group Led
By Stephen C. Lehman
Lehman Outlines Vision for the Company
PHILADELPHIA, Oct. 23/PRNewswire/ -- National Media Corporation (NYSE:
NM) today announced stockholder approval of a transaction resulting in
acquisition of operational control of the Company by Stephen C. Lehman and
his management team; and a substantial equity investment in National Media by
Mr. Lehman's investor group. Mr. Lehman, who has been serving as Acting Chief
Executive Officer since the signing of a definitive agreement on August 11,
1998 and who will now serve as Chairman of the Board and Chief Executive
Officer, addressed the Company's stockholders after the meeting and outlined
his vision for the Company.
The Company's shareholders approved the sale to the investor group of
$20 million of newly issued shares of Series E Convertible Preferred Stock by
the Company. The new investment is in addition to the group's prior purchase
of $10 million of issued and outstanding Series D Convertible Preferred Stock
which was consummated during August 1990.
In his address to stockholders. Mr. Lehman articulated his vision for
expanding National Media into a broadbased and vertically-integrated
electronic commerce company which efficiently leverages its global
television, Internet, and radio infrastructure. "This Company is uniquely
well-positioned to become a leader in the fast-growing E-Commerce/Internet
marketplace," Mr. Lehman said. "We have an incredible opportunity through our
$100 million in annual television media; our millions of customer contacts;
our international infrastructure; and our ability to deliver live, taped, and
on demand programming over the Internet. We are a leader in electronic direct
marketing and we will use this creativity and expertise to drive consumers to
our sites and make their visits rewarding."
As examples of National Media's electronic commerce strategy, Mr. Lehman
identified the Company's recent launch of its Everything4Less membership
shopping club which features brand name products at guaranteed low prices;
and its alliance with broadcast.com which will provide complete Internet
broadcasting services for National Media Corporation's direct response
programming. The broadcast.com alliance will create the first 24-hour per day
live and on-demand streaming video shopping channels on the Internet as well
as a link from broadcast.com's Web site which currently receives over 460,000
average unique visitors each day. National Media's programming will soon be
available on-demand at its Web site hosted by www.broadcast.com.
Mr. Lehman outlined four areas where the Company was focusing its
efforts: "First, we need to grow top-line revenues by improving and expanding
our basic
<PAGE>
infomercial business. National Media's President Jack Kirby has that
initiative off to an excellent start. Second, we will reduce expenses. Eric
Weiss, our Chief Operating Officer, and Dan Yukelson, our Chief Financial
Officer, are making this their very highest priority. Third, we will focus on
extending the life of our infomercials and reducing the cyclical nature of
our business by building our continuity program where our customers order
products on a continuing basis throughout the year. Jack Kirby is responsible
for this direction. Fourth is the Internet and our electronic commerce
initiative. I believe this is such a crucial and potentially rewarding area
that I have made this my personal number one goal."
The investor group, consisting primarily of companies and executives in
the television, electronic commerce, and radio industries, includes in part:
-- Jacor Communications, Inc. (Nasdaq: JCOR), including, personally,
Randy Michaels, Chief Executive Officer of Jacor and Bobby Lawrence,
President of Jacor. Jacor owns, operates, or represents 219 radio
stations and, through its subsidiary Premiere Radio Networks, syndicates
some of the nation's leading radio talk shows including the Rush
Limbaugh Show and The Dr. Laura Schlessinger Show.
--Mark Cuban, President of Broadcast.com (Nasdaq: BCST). Broadcast.com
is the leading aggregator and broadcaster of streaming media programming
on the Internet. Its programming includes more then 355 radio stations
and networks and 21 television stations and cable networks that it
broadcasts over the Internet 24 hours a day. The Broadcast.com website
currently receives an average of 460,000 unique visitors per day.
-- R. Steven Hicks, Chief Executive Officer of Capstar Broadcasting
Corporation ("NYSE: CRB). With over 300 radio stations, Capstar is the
largest owner and operator of radio station in the nation. Capstar
recently announced its agreement to merge with Chancellor Media
Corporation (Nasdaq: AMFM) which will create the largest broadcasting
entity in the nation with over 463 radio stations in 105 markets.
--Geoff Armstrong, Chief Operating Officer of Capstar Broadcasting
Corporation. Mr. Armstrong previously served as Executive Vice President
and Director of SFX Entertainment (Nasdaq: SFXE)
--David E. Salzman. A chief executive in the television industry for
over 25 years, Mr. Salzman has served as Chairman of Group W
Productions, head of network and syndicated television for Lorimar
Telepictures, and Co-CEO of Quincy Jones * David Salzman Entertainment.
He is the award-winning producer of such shows as the Academy Awards,
President Clinton's First Inauguration, The Fresh Prince of BelAir. and
Mad-TV.
<PAGE>
--Andrew W. Schuon, Executive Vice President and General Manager of
Warner Bros. Records and former Executive Vice President of Programming
for MTV.
The new Board of Directors will consist of: Mr. Lehman; Mr. Schuon; Mr.
Salzman; Eric R. Weiss, who will also serve as Vice-Chairman and Chief
Operating Officer of the Company; John W. Kirby, President of the Company;
Stuart O. Buchalter, and Robert Crawford. Mr. Weiss, an experienced media
executive, has been serving as a consultant to the Company pending
shareholder approval of the transaction. Mr. Kirby has been President of the
Company since March 1998 and has served as Chairman, Chief Executive Officer,
and President of Quantum Television (formerly d/b/a DirectAmerica
Corporation) since the Company's acquisition of DirectAmerica in 1995. Mr.
Buchalter is Of Counsel to the California law firm of Buchalter, Nemer,
Fields & Younger and previously served as Chairman of the Board and Chief
Executive Officer of Standard Brands Paint Company. He is also a director of
Authentic Fitness Corp.; Earl Scheib, Inc., Faroudja, Inc., City National
Corp., the holding company of City National Bank, and is Vice-Chairman of the
Board of Trustees of Otis College of Art and Design. Mr. Crawford is a
management consultant and senior executive with Premiere Radio Networks. In
addition to Mr. Lehman and the investors listed above, Mr. Weiss, Mr. Kirby,
Mr. Crawford and other members of National Media's management team were part
of the investor group.
Mr. Lehman, said "the investment of millions of dollars by so many
leaders in the television, radio, and electronic commerce industries, by the
Members of the Board of Directors, and by our new Management team reflects
both confidence in our vision of National Media and our commitment to
enhancing shareholder value."
National Media Corporation (NYSE: NM) is the world's largest publicly
held direct response television company and is an innovative leader in the
growing world of electronic commerce. It broadcasts more than 3.000
half-hours of programming each week, reaches 90 percent of television homes
in the United States, and brings its programming to more than 370 million
television households in more than 70 countries worldwide.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
press release (as well as information included in oral statements or other
written statements made or to be made by the Company) contains statements
that are forward-looking, such as statements relating to consummation of the
transaction, anticipated future revenues of the Company and success of
current product offerings. Such forward-looking information involves
important risks and uncertainties that could significantly affect anticipated
results in the future and, accordingly, such results may differ materially
from those expressed in any forward- looking statements made by or on behalf
of the Company. For a description of additional risks and uncertainties,
please refer to the Company's filings with the Securities and Exchange
Commissions, including Forms 10-K and 10-Q.
<PAGE>
To Request Previous press releases on National Media Corporation please
contact, PR Newswire at 800-758-5804, Ext. 604644.
SOURCE National Media Corporation
- -0- 10/23/98
/CONTACT: Bruce Goodman, Senior Vice President of
National Media, 818-461-6510/
/Company News On-Call: http://www.prnewswire.com/comp/604644.html
or fax, 800-758-5804. ext. 604644/
(NM JCOR BCST AMFM SFXE)
