<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 15, 1998
--------------------------
NATIONAL MEDIA CORPORATION
--------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware I-6715 13-2658741
- -------------------------- ------------------------ --------------------
(State or Other Juris- (Commission File Number) (IRS Employer
diction of Incorporation) Identification No.)
Eleven Penn Center, Ste. 1100, 1835 Market Street, Philadelphia, PA 19103
- -------------------------------------------------------------------------------
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code 215-988-4600
-----------------
N/A
--------------------------------------------------------------
(Former name or former address, if changed since last report.)
----------------------------------
Exhibit Index appears on Page 4 hereof.
<PAGE>
Item 5. Other Events.
On July 16, 1998, National Media Corporation (the "Company") announced
the execution of a letter of intent (the "Letter of Intent"), pursuant to
which an investor group (the "Investor Group") is to acquire a substantial
equity interest in and operational control of the Company through an
investment of a minimum of $30,000,000 (the "Transaction").
In connection with the Transaction, the Company and the Investor Group
have entered into separate letter agreements with the holders of the
Company's Series D Preferred Stock (the "Series D Agreement") and First
Union National Bank (the "First Union Agreement"). In addition, the Investor
Group also entered into a letter agreement with ValueVision International,
Inc. (the "ValueVision Agreement").
A copy of the Letter of Intent, as amended and with Annexes (including the
Series D Agreement, the ValueVision Agreement and the First Union Agreement) and
a copy of the press release announcing the execution of the Letter of Intent are
attached hereto as Exhibit 10 and Exhibit 99 respectively, and are incorporated
herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
<TABLE>
<S> <C>
10 Letter of Intent, dated July 10, 1998 and amended July 15, 1998, with
Annexes.
99 Press Release, dated July 16, 1998.
</TABLE>
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL MEDIA CORPORATION
(Registrant)
Date: July 17, 1998 By: /s/ John J. Sullivan
---------------------------------
Name: John J. Sullivan
Title: Senior Vice President and Chief
Financial Officer
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
No.
- ---
<S> <C>
10 Letter of Intent, dated July 10, 1998 and amended July 15, 1998, with
Annexes
99 Press Release, dated July 16, 1998, of National Media Corporation.
</TABLE>
4
<PAGE>
Exhibit 10
NM Acquisition Co.
c/o BT Alex. Brown Incorporated
1 South Street
Baltimore, Maryland 21202
July 10, 1998
Board of Directors
National Media Corporation
1700 Walnut Street
Philadelphia, PA 19103
Gentlemen:
We are pleased to submit this Letter of Intent on behalf of NM Acquisition
Co., LLC, a newly formed Delaware limited liability company ("ACO"), controlled
by Stephen C. Lehman ("Lehman") to acquire a substantial equity interest in and
operational control of National Media Corporation, a Delaware corporation,
("NMC" or the "Company") (such proposed transaction is referred to herein as the
"Transaction"). As at the date of this Letter of Intent ("LOI"), Lehman, Eric
Weiss ("Weiss") and Dan Yukelson ("Yukelson") are the only proposed managing
members of ACO and BT Capital, Jacor and Gruber McBain are the only proposed
members holding a 10% or greater ownership interest in ACO. ACO will notify NMC
as to any future developments regarding such management or ownership of ACO.
The purpose of this Letter of Intent ("LOI") is to set forth the terms and
conditions pursuant to which NMC and ACO are prepared to negotiate a definitive
agreement(s) to consummate the Transaction. We are committed to working
diligently to complete our due diligence, arrive at a negotiated agreement and
consummate the Transaction as rapidly as possible. We anticipate that we will
be able to complete the required due diligence within two weeks of the date of
this LOI (depending upon when the requested information is provided to us and
the availability of "key" management personnel) and that execution of a
definitive agreement for the Transaction would occur soon after the end of such
two week due diligence period. Once a definitive agreement is executed, we
would expect to jointly proceed to closing the Transaction as soon as
practicable (the "Closing").
Based upon the information regarding NMC available to us as of this date
and subject to the terms and conditions herein set forth, we propose the
following:
<PAGE>
Board of Directors
National Media Corporation
July 10, 1998
A. Equity Investment: ACO will raise a minimum of $25 million for
investment (the "Investment") as follows:
1. $10 million of the Investment shall be utilized to purchase fifty
percent (50%) of the outstanding Series D convertible, preferred stock of NMC
("Series D Shares"), including two-thirds (2/3) of the related outstanding
warrants (e.g., 992,942 warrants) from the existing holders of Series D Shares,
substantially on the terms to be annexed as Annex 1 hereto.
2. $15 million of the Investment shall be utilized to purchase from
NMC newly issued convertible, voting Series E preferred stock ("Series E
Shares"). Each Series E Share shall vote with the common stock of the Company
on an as converted basis. Such Series E Shares shall be convertible into shares
of NMC's common stock at a fixed conversion price of $1.50 per share (as may be
adjusted pursuant to standard antidilution provisions). The proceeds of the
Series E Shares shall be utilized by the Company for working capital purposes,
including, but not limited to satisfying the Company's credit facility
obligations with First Union Bank and notes payable obligations with ValueVision
International, Inc. ("ValueVision").
3. The Company shall use best efforts to ensure the continuous
registration with the Securities Exchange Commission (the "SEC") of all common
stock, $0.01 par value ("Shares"), acquired by ACO (and its assigns) through
conversion of Series D or E preferred stock or the conversion of any options or
warrants acquired in connection with the Transaction.
4. In conjunction with the Transaction, the Company and ACO shall
use best efforts to enter into: (a) a definitive agreement with the existing
holders of Series D Shares, substantially on the terms to be annexed as Annex 1
hereto; (b) a definitive agreement with ValueVision, substantially on the terms
to be annexed as Annex 2 hereto; and (c) a definitive agreement with First Union
Bank, substantially on the terms to be annexed as Annex 3 hereto (these three
definitive agreements are the "Third Party Agreements" for the purposes of this
LOI).
5. The Transaction is subject to: (a) ACO and NMC executing
definitive agreements for the Transaction (the "Definitive Agreements")
satisfactory to ACO, NMC and their respective legal counsel; (b) ACO and NMC and
the respective third parties executing the Third Party Agreements; and
(c) receipt of all regulatory, exchange, and other approvals or consents which
may be required. Nothing contained herein shall be deemed to constitute ACO or
Lehman acting in concert or as a "group" with the Company or any of its present
preferred or common stockholders.
<PAGE>
Board of Directors
National Media Corporation
July 10, 1998
B. Consulting Agreement: Upon execution of the Definitive Agreements,
the Company and Temporary Media Co., LLC, a newly formed Delaware limited
liability company ("TMC"), controlled by Lehman, Weiss and Yukelson, shall
execute a consulting agreement (the "Consulting Agreement") including the
following principal terms:
1. Services. In consideration of the Retainer (as defined in
paragraph 2 below), the Option (as defined in paragraph 3 below), and the
Contingent Warrants (as defined in paragraph 4 below), TMC shall provide
executive management consulting services to NMC throughout the Term (as defined
in paragraph 5 below). TMC shall not be required to devote its services
entirely to the Company, and shall, in consultation with the Chairman of the
Board of the Company, determine the method, details and means of performing such
services, subject to reporting to the Company's Chairman. TMC shall ensure that
Lehman, Weiss and Yukelson devote, in aggregate, at least one hundred man-hours
per week to the business of the Company, provided that Lehman, who shall be
designated as "Acting CEO" at no additional cost to the Company, shall devote at
least forty of such man-hours per week.
2. Retainer. During the Term, the Company shall pay TMC the sum of
$80,000 per month, payable on the first day of each month, as a retainer for the
Services (as defined in paragraph 1 above).
3. Option. On the date NMC and the Company execute the Definitive
Agreements (the "Definitive Agreement Date"), the Company shall grant to TMC a
five year option to purchase up to 212,500 shares of the Company's common stock
at an exercise price of $1.32 per Share. One sixth of such options shall vest
on the last business day of each of the six months following the execution of
this LOI, provided that: (a) all such options shall immediately vest upon the
earlier of: (i) the Closing; or (ii) termination of the Consulting Agreement
pursuant to paragraph 6 below; and (b) all non-vested options shall be cancelled
if and when NMC's shareholders resolve that NMC will not proceed with the
transaction.
4. Contingent Warrants. On the Definitive Agreement Date, the
Company shall grant to TMC five year fully vested but contingent warrants
(substantially in the form to be appended to the definitive agreement) to
purchase up to 3,762,500 Shares (the "Contingent Warrants"), as follows:
(a) A warrant to purchase 3,412,500 Shares at an exercise price
of $1.32 per Share, exercisable on and from the Closing as to 2,912,500 shares.
Upon the price of the Company's common stock first trading in excess of $3.00
per Share, for a period of 15
<PAGE>
Board of Directors
National Media Corporation
July 10, 1998
consecutive trading days (the "Price Threshold"), the warrant shall be
exercisable for an additional 500,000 Shares at an exercise price of $3.00 per
Share.
(b) A warrant to purchase 150,000 Shares at an exercise price of
$1.50 per share, exercisable on and from the Closing.
(c) A warrant to purchase 200,000 Shares, at an exercise price
of $1.50 per share, provided that such warrant shall not be exercisable until
the Price Threshold is achieved.
At the Closing, each of the Warrants shall be exchanged for non-plan
stock options of NMC granted on the same terms and conditions. If the
Transaction is not consummated, then each of the Warrants shall be cancelled.
TMC shall be the sole determinant of the manner in which the Option and the
Warrants are distributed, except that the Warrant referred to in (a) above shall
be distributed as to 1,000,000 Shares to future or existing management of NMC
(other than Lehman, Weiss or Yukelson) and the Warrant referred to in (b) above
shall be distributed to BT Alex. Brown Incorporated.
5. Term: The Consulting Agreement shall have a term of six months
(the "Term") commencing on the Definitive Agreement Date, unless terminated
earlier pursuant to paragraph 6(b) below.
6. Termination: The Consulting Agreement shall terminate upon the
earlier to occur of: (a) the expiration of the Term; (b) a negative vote by the
Company's shareholders regarding the Transaction; or (c) NMC becoming obligated
to pay the Topping Fee pursuant to Section F below. If the Consulting Agreement
is terminated pursuant to (c) above, NMC shall pay to TMC a sum equal to the
amount which would have been payable to TMC if the Consulting Agreement had
continued in full force and effect for an additional six month term plus the
unexpired portion of the Term, provided that the maximum amount payable to TMC
pursuant to the Consulting Agreement shall be $720,000. If the Consulting
Agreement is terminated pursuant to (b) above, NMC shall pay to TMC a sum equal
to the amount which would have been payable to TMC if the Consulting Agreement
had continued in full force and effect for the Term. NMC acknowledges and
agrees that (a) TMC has expended and will expend a considerable amount of time
and effort in connection with the Transaction, (b) TMC has incurred and will
incur significant expenses in connection with the Transaction, (c) the
relationship of the parties is not marked by any self-dealing, and (d) TMC's
costs described above are and will be difficult to predict and ascertain and
that the amount described above is a good faith attempt by TMC to estimate the
amount of such costs.
<PAGE>
Board of Directors
National Media Corporation
July 10, 1998
C. Corporate Governance:
1. In conjunction with the Transaction, the Company shall work with
Lehman and ACO to secure amendments (e.g., waiver of applicable "change of
control" provisions) to certain existing "key" executive contracts,
substantially as follows:
(a) Robert Verratti: In exchange for waiving his rights regarding change
of control, 350,000 of his options will be repriced to $2.00 and the
maturity of all of his issued options will be extended 1 year.
Further, 100,000 of his options will be repriced to $2.00 if by the
close of business on July 15, 1998, ACO and NMC receive (i) the
ValueVision Letter Agreement (Annex 2), and (ii) the First Union Bank
Term Sheet (Annex 3).
(b) Frederick Hammer: In exchange for waiving his rights regarding change
of control, 88,000 of his $5.65 options will be repriced to $2.00 and
the maturity of all of his issued options will be extended 1 year.
Further, 37,000 of his $5.65 options will be repriced to $2.00, if by
the close of business on July 15, 1998, ACO and NMC receive (i) the
ValueVision Letter Agreement (Annex 2), and (ii) the First Union Bank
Term Sheet (Annex 3).
(c) Constantinos Costalas: In exchange for waiving his rights regarding
change of control:
(i) he will be employed for one year from the Closing in a
position to be determined at an annual salary of $325,000
with full time reporting for the first 90 days thereof;
(ii) NMC will forgive his indebtedness to the Company;
(iii) he will be engaged as a nonexclusive consultant for one year
after the termination of employment at a rate of $200,000
per year plus medical benefits and with no affirmative work
obligations; and
(iv) 50,000 of his $7.00 options will be repriced to $2.00.
2. In conjunction with the Transaction, ACO shall have the ability
to (a) designate Andrew Schuon, Lehman and Weiss to serve on NMC's Board
effective at ACO's option at any point between the Definitive Agreement Date and
the date that NMC's shareholders
<PAGE>
Board of Directors
National Media Corporation
July 10, 1998
vote on the Transaction (the "Shareholders' Meeting") to serve until the earlier
of the termination or consummation of the Transaction and (b) nominate a slate
of directors, who are reasonably acceptable to NMC's outside directors and shall
include the persons named above, whose election shall be voted on at the
Shareholders' Meeting. The directors elected to NMC's Board pursuant to (b)
above shall constitute a majority of NMC's directors on and after the Closing.
3. All of the present NMC directors shall agree to: (a) vote their
individually owned Shares in favor of the Transaction; and (b) vote as directors
in favor of amending the Rights Agreement dated January 3, 1994, between the
Company and Mellon Securities Trust Company, in order to exempt the Transaction
from the provisions thereof.
D. Exclusivity. The Company agrees that, for a 45 day period from the
date hereof, the Company and its officers, directors, employees, representatives
and agents shall not, and each of them shall cause their affiliates and
representatives to not, directly or indirectly, (x) take any action to
encourage, solicit or initiate any Acquisition Proposal (as hereinafter defined)
or (y) respond to, continue, initiate or engage in discussions or negotiations
concerning any Acquisition Proposal with, or disclose in connection with any
Acquisition Proposal any non-public information relating to the Company or its
assets or afford access to the properties, books or records of the Company or
any of its subsidiaries to any person, corporation, partnership or other entity
(except ACO and its representatives), except that the Company may engage in
negotiations with, or disclose such non-public information to, or provide such
access to any person who has made an unsolicited Acquisition Proposal if the
Board of Directors of the Company, after consultation with outside counsel to
the Company, determines that its fiduciary duties under applicable law require
such actions. The Company shall, and shall cause its affiliates and
representatives to, immediately discontinue and, for a 45 day period from the
date hereof, not resume or otherwise continue any discussions with respect to
any Acquisition Proposal existing on or commenced prior the date hereof (other
than, in each case, with ACO and its representatives). In addition, for a 45
day period from the date hereof, the Company shall provide ACO with notice of
any Acquisition Proposal received by the Company not later than 24 hours after
receipt. The term "Acquisition Proposal" as used herein means any offer or
proposal for, or indication of interest in, any acquisition of any interest in
the Company, whether by way of a merger, consolidation or other transaction
involving any equity interest in, or substantial portion of the assets of, the
Company or the acquisition of any capital stock of the Company.
E. Confidentiality. The Company agrees to maintain confidentiality of
the terms of, and existence of, our proposal (including, without limitation,
this LOI) subject to the applicable rules and regulations promulgated under the
Securities Act of 1933 and the Securities Exchange Act of 1934. Subject to the
requirement of the Securities Laws, each of the terms and conditions
<PAGE>
Board of Directors
National Media Corporation
July 10, 1998
of our proposal (including, without limitation, any draft of definitive
documentation), the terms of our proposed financing, our identity and the
identity of our financing sources are confidential and our willingness to
execute a definitive agreement for the Transaction is expressly conditioned upon
your not issuing any press release or disclosing such information to anyone,
including, without limitation, any potential purchasers of any interest in the
Company or any of its subsidiaries or any portion of their assets; provided,
however, the Company may disclose such information to its legal and financial
advisors and lenders and to the existing holders of the Series D shares in
connection with their evaluation of the Transaction and, provided, further, that
such advisors are, prior to receipt of such information, informed of the
confidential nature of such information and agree to be bound by the
nondisclosure provisions hereof.
F. Transaction Initiation Fee:
NMC acknowledges that following NMC's last Board of Directors meeting,
ACO and Lehman have been requested by NMC to present this proposal to NMC and
that the due diligence, negotiations, investigations required to prepare and
submit this LOI have been time consuming and costly including legal and
accounting fees. The parties acknowledge that ACO has been reluctant to present
this proposal for fear that it will be shopped around and topped by a third
party relying upon ACO's due diligence. For this and other reasons NMC and ACO
agree that from the date hereof should the parties fail to enter into the
Definitive Agreements within one month of the date of this LOI as a result of
any event, action or inaction other than: (a) failure of ACO and any of the
respective third parties to enter into the Third Party Agreements; (b) ACO's
termination of this LOI; or (c) ACO's failure to proceed in good faith
(collectively, "ACO's Termination"), NMC shall promptly pay to the order of ACO
cash in an amount equal to ACO's reasonable expenses, up to a maximum of
$500,000 (the "Base Termination Fee"). Should NMC, prior to the Closing or
within four months after the termination of this LOI or failure to enter into
the Definitive Agreements within the one month period referred to above for
reasons other than ACO's Termination, enter into any understanding or agreement
with a third party for the sale of all or a substantial portion of the stock or
assets of NMC (whether by way of merger, recapitalization, issuance or sale of
capital stock or securities, or sale of assets) (the "Competing Transaction"),
NMC shall promptly pay to the order of ACO cash in the amount of the Base
Termination Fee plus 4.9% of the difference between the aggregate equity value
attribute to NMC for the purposes of the Competing Transaction and the aggregate
equity value attributed to NMC for the purposes of this LOI up to a maximum
amount of $2,500,000 (the "Topping Fee"). For the purposes of this LOI, such
difference between the "aggregate equity values" shall be calculated by: (a)
determining the final price per Share contemplated by the Competing Transaction;
(b) subtracting the mean price per Share on the day this LOI is executed by NMC;
and (c) multiplying that difference by the total number of Shares issued or
issuable on that day
<PAGE>
Board of Directors
National Media Corporation
July 10, 1998
on a fully diluted basis, but excluding therefrom all Shares issuable to ACO or
BT Alex. Brown Incorporated pursuant to options or warrants the exercise price
of which is less than the purchase price of a Share on that day. The Base
Termination Fee and the Topping Fee shall be referred to as the "Transaction
Initiation Fee." NMC acknowledges and agrees that (a) ACO has expended and will
expend a considerable amount of time and effort in connection with the
Transaction, and (b) ACO has incurred and will incur significant expenses in
connection with the Transaction, and (c) the relationship of the parties is not
marked by any self-dealing, and (d) the Transaction Initiation Fee provides ACO
with a reasonable incentive to make the offer contained in this LOI, (e) in
light of the foregoing, the Transaction Initiation Fee constitutes a fair and
reasonable percentage of the Investment, and (f) ACO's costs described above are
and will be difficult to predict and ascertain and that the Transaction
Initiation Fee is a good faith attempt by ACO to estimate the amount of such
costs.
G. Condition Precedent. Other than the provisions of Section E, and
the provisions of Section F with respect to a Competing Transaction in which
ValueVision is the acquiring party, this LOI shall be of no legal force or
effect unless and until such time as ACO and the respective third parties have,
on or before close of business (Pacific Standard Time) on July 17, 1998,
executed letter agreements or term sheets to be annexed hereto as Annex 1, Annex
2 and Annex 3.
H. Definitive Agreement Conditions:
In addition to the other terms and conditions set forth in this LOI,
including the execution of the Third Party Agreements, both the execution of the
Definitive Agreements and the Closing of the Transaction are conditional upon
ACO's satisfaction with the following:
1. Obtaining all necessary third party, exchange and governmental
consents and approvals;
2. As to the execution of the Definitive Agreements only, the
results of the business, legal and accounting due diligence investigations and
review of NMC to be performed by ACO and its advisors;
3. Absence of any material adverse change, since March 31, 1998 and
prior to Closing in NMC's businesses, assets, financial condition, operating
results, customer, supplier and employee relations, or business prospects other
than as disclosed to ACO and set forth in the Definitive Agreements. For the
purpose of this paragraph 3, any delisting of the Company's common stock by the
New York Stock Exchange, Inc. (the "NYSE") pursuant to a decision by
<PAGE>
Board of Directors
National Media Corporation
July 10, 1998
the NYSE shall be deemed a material adverse change, but any other action taken
by the NYSE with respect the listing of the Company's common stock shall not be
deemed a material adverse change.
I. Expenses. Except as provided herein, the Company shall bear its own
and all of ACO's reasonable expenses and costs in connection with the
Transaction, unless ACO determines not to proceed with the transaction prior to
execution of the Definitive Agreements. Without limiting the generality of the
previous sentence, the Company shall bear the expense and costs of all
regulatory filings (for example, pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act) in connection with this LOI or the Transaction; provided,
however, that the Company shall not be obligated to pay any of ACO's such
expenses if the Base Termination Fee or the Transaction Initiation Fee are paid.
J. General.
(i) This LOI shall be governed and construed in accordance with the
laws of the State of Delaware, without regard to choice of law principles.
(ii) This LOI may be amended, modified and supplemented only upon a
written instrument executed by all of the parties to this LOI.
(iii) The parties agree that money damages would be insufficient remedy
for a breach of the Mandatory Provisions (as defined below) and that money
damages would be extremely difficult to calculate. Accordingly, in addition to
any other remedies available at law, or in equity, it is agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of the
Mandatory Provisions and to enforce specifically the Mandatory Provisions. For
purposes of this LOI, "Mandatory Provisions" means the provisions of
paragraphs D, E, F and H of this LOI which are intended to constitute a binding
agreement of the parties hereto.
(iv) This LOI may be executed in one or more counterparts, each of
which shall be considered one and the same agreement and the Mandatory
Provisions shall become effective when two or more counterparts have been signed
by each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
(v) Neither this LOI nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, the Mandatory
<PAGE>
Board of Directors
National Media Corporation
July 10, 1998
Provisions will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Please acknowledge your understanding of and agreement to the terms
of this Letter of Intent by signing and dating the enclosed copy of this
letter and returning one fully executed copy to the undersigned. This Letter
of Intent shall remain open for your consideration until 5:00 p.m. (EST) on
July 10, 1998. Your execution and returning of this Letter of Intent shall
acknowledge your determination that the Transaction is fair in all material
respects to NMC and its shareholders. We look forward to moving
expeditiously to consummate the Transaction. Please feel free to call me if
there are any questions or comments.
Very truly yours,
NM ACQUISITION CO., LLC
By: /s/
-----------------------
Stephen C. Lehman
ACCEPTED AND AGREED TO
this 15th day of July, 1998
NATIONAL MEDIA CORPORATION
By: s/s
------------------------------
Its:
----------------------------
<PAGE>
NM Acquisition Co.
c/o BT Alex. Brown Incorporated
1 South Street
Baltimore, Maryland 21202
July 15, 1998
Board of Directors
National Media Corporation
1700 Walnut Street
Philadelphia, PA 19103
Gentlemen:
Please refer to that certain Letter of Intent dated July 10, 1998 between
us ("LOI") with regard to our proposed equity investment in National Media
Corporation ("NMC").
As required by paragraph A.4 of the LOI, we enclose:
(i) Annex 1 -- Letter Agreement with Holders of Series D Preferred Shares
dated July 15, 1998.
(ii) Annex 2 -- Letter Agreement with ValueVision International, Inc.,
dated July 15, 1998.
(iii) Annex 3 -- Letter Agreement with First Union National Bank dated July
15, 1998.
Further, per our prior understanding, we are amending the provisions of
paragraph A.2. to concur with the First Union National Bank ("F/U Bank") Letter
Agreement so that our minimum investment will be $30 million but not to exceed
$32 million and our investment in the Series E Preferred Shares shall be $20
million to $22 million, as your Board of Directors shall determine prior to the
closing of the Transaction.
<PAGE>
Board of Directors
National Media Corporation
July 15, 1998
Please sign and return a copy of this letter to us acknowledging receipt
for the above Annexes to the LOI and agreeing to this first amendment to the
LOI.
Very truly yours,
NM ACQUISITION CO., LLC
By: /s/
-----------------------------------
Stephen C. Lehman
ACCEPTED AND AGREED TO
this 15th day of July, 1998
NATIONAL MEDIA CORPORATION
By: /s/
-------------------------------
Its:
-------------------------------
<PAGE>
NM Acquisition Co.
c/o BT Alex Brown Incorporated
1 South Street
Baltimore, Maryland 21202
July 15, 1998
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 19004
National Media Corporation
1700 Walnut Street
Philadelphia, PA 19103
Gentlemen:
NM Acquisition Co., LLC, a newly formed Delaware limited liability company
controlled by Stephen C. Lehman ("ACO"), is considering making an offer to
acquire an equity interest in National Media Corporation, a Delaware
corporation, ("NMC") (such proposed transaction referred to herein as the
"Transaction"). In order to make such an offer, ACO will need to enter into
suitable arrangements with the substantial creditors and stockholders of NMC,
including RCC International Investors, LDC, and Capital Ventures International,
holders of NMC Series D Preferred Stock ("Series D Holders").
<PAGE>
Capital Ventures International
RGC International Investors, LDC
National Media Corporation
July 15, 1998
The purpose of this letter is to set forth the terms and conditions of our
agreement relevant to the Series D Holders pursuant to which ACO is prepared to
negotiate definitive agreements with (i) the Series D Holders with respect to
the transactions contemplated herein and (ii) NMC and its creditors and
stockholders to document and consummate the Transaction.
Subject to the terms and conditions herein set forth, we agree to the
following:
A. Term Sheet: The Series D Holders and ACO will negotiate in good faith
and use their best efforts to promptly execute a definitive agreement
substantially incorporating the terms set forth in the attached Term Sheet (the
"Purchase Agreement"), provided that ACO enters into a definitive agreement with
NMC with regard to the Transaction. Each party hereto represents to the others
that it has the bona fide intention and is legally entitled to enter into the
Purchase Agreement and each party acknowledges that the other parties will
invest significant time and money pursuing the transactions contemplated by this
Letter Agreement and the Transaction in reliance upon such representation.
B. Confidentiality: The Series D Holders agree to maintain
confidentiality of the terms of, and existence of, this Letter Agreement and of
ACO's proposal to NMC, subject to the
<PAGE>
Capital Ventures International
RGC International Investors, LDC
National Media Corporation
July 15, 1998
applicable rules and regulations promulgated under the Securities Act of 1933
and the Securities Exchange Act of 1934 (the "Securities Laws"). Subject to the
requirement of the Securities Laws, each of the terms and conditions of this
Letter Agreement (including, without limitation, any drafts of definitive
documentation), the terms of ACO's proposal to NMC, and ACO's identity are
confidential and ACO's willingness to execute definitive agreements for the
Transaction is expressly conditioned upon the Series D Holders and their
respective representatives not issuing any press release or disclosing such
information to anyone; provided, however, each Series D Holder and its
representatives may disclose such information to its legal and financial
advisors in connection with their evaluation of the Transaction and proposed
Purchase Agreement or other proposed agreements and documents executed in
connection therewith; and provided, further, that such advisors are, prior to
receipt of such information, informed of the confidential nature of such
information and agree to be bound by the nondisclosure provisions hereof.
C. General:
1. This Letter Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to choice of
law principles.
<PAGE>
Capital Ventures International
RGC International Investors, LDC
National Media Corporation
July 15, 1998
2. This Letter Agreement may be amended, modified and supplemented
only upon a written instrument executed by ACO and the Series D Holders, except
as to provisions that would require the Company's concurrence to effect, in
which case the Company's written consent shall also be required.
3. This Letter Agreement may be executed in one or more
counterparts, each of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
4. Neither this Letter Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Letter Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
5. To the extent there exists any irreconcilable conflict between
the terms hereof or the Purchase Agreement and the Letter of Intent dated
July 10, 1998 between the
<PAGE>
Capital Ventures International
RGC International Investors, LDC
National Media Corporation
July 15, 1998
Company and ACO or any definitive agreement between the Company and ACO in
respect of the Transaction, the terms of this Letter Agreement shall govern.
6. Prior to filing any document with any governmental authority or
issuing any press release or other public statement which refers to any of the
transactions contemplated hereby or any of the parties hereto 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.
7. The Series D Holders agree that, for purposes of paragraph C of
Article XI of the Certificate of Designations Preferences and Rights for the
Series D Preferred, the date of the first public announcement of the Transaction
or any of the transactions contemplated hereby shall not constitute an
"Announcement Date".
Please acknowledge your understanding of and agreement to the terms of this
Letter Agreement by signing and dating the enclosed copy of this letter and
returning one fully executed copy to the undersigned. Each party hereto
represents to the other parties that such party is duly authorized to execute
and deliver this Letter Agreement and pursue the transactions contemplated
hereby.
<PAGE>
Capital Ventures International
RGC International Investors, LDC
National Media Corporation
July 15, 1998
We look forward to moving expeditiously to consummate the transactions
contemplated by the Purchase Agreement. Please feel free to call me if there
are any questions or comments.
Very truly yours,
NM ACQUISITION CO., LLC
By: /s/
-----------------------------------
Stephen C. Lehman
Its:
-----------------------------------
ACCEPTED AND AGREED TO
this 15th day of July, 1998
Capital Ventures International
By: Heights Capital Management, Inc.,
its authorized agent
By: /s/
---------------------------------
Its:
---------------------------------
<PAGE>
Capital Ventures International
RGC International Investors, LDC
National Media Corporation
July 15, 1998
RGC International Investors, LDC
By: /s/
---------------------------------
Its:
---------------------------------
National Media Corporation
By: /s/
---------------------------------
Its:
---------------------------------
<PAGE>
CONFIDENTIAL TERM SHEET
Transaction: Purchase of (the "Purchase") Series D Convertible
Preferred Stock ("Series D Preferred") and Warrants
issued by National Media Corp. (the "Company") owned by
RGC International Investors, LDC and Capital Ventures
International (the "Series D Holders").
Preferred Stock: 10,000 shares of Series D Preferred (face value $10
million), divided pro rata between the Series D Holders
based on their initial purchases of Series D Preferred.
Warrants: 992,942 Warrants (two-thirds of 1,489,413) to purchase
common stock of the Company subject to an exercise price
of $1.07 per warrant (as may be adjusted pursuant to
their terms), to be sold by the Series D Holders pro rata
based on their initial purchases of Series D Preferred.
Total Consideration: $10 million in cash, payable at closing, to be divided
between the Series D Holders pro rata based on the number
of shares of Series D Preferred sold by each of them.
Accrued Premium: Any and all accrued but unpaid premium (6% per annum) as of
the closing shall be retained by the Series D Holders and
any and all premium related to the aforementioned 10,000
shares of Series D Preferred accruing after the closing
shall inure to the benefit of Purchaser.
Board of Directors: So long as the Series D Holders hold any shares of the
Series D Preferred, they shall have the right to have an
observer present at all meetings of the Company's Board of
Directors and any committees thereof.
Voting Agreement: Series D Preferred Holders will agree that, for a period
of 3 years after the closing of the Transaction, they
will vote any shares of common stock of the Company of
which they are the record owners as of the record date
for such vote in favor of any proposal recommended for
stockholder approval by the Company's Board of Directors.
Sales pursuant to the terms of the Purchase Agreement
will be exempt from this voting agreement.
Other: Series D Holders will agree to enter into a "stand-still
agreement" with the Company, which agreement shall become
effective upon
<PAGE>
closing of the Purchase (but will terminate automatically
upon termination of the Transaction). Pursuant to the
stand-still agreement, Series D Holders will agree to not
sell 50% of their shares of Series D Preferred remaining
after closing of the Purchase for a period of one-year
from such closing. Holders will further agree to not
sell more than 25% of such shares not subject to the
stand-still agreement in any calendar quarter during this
period; provided, however, that any such shares permitted
to be sold in any such quarter that have not been sold at
the end of such quarter may be sold in any subsequent
quarter, except that no more than 50% of the shares not
subject to the stand-still agreement may be sold in any
such subsequent quarter. Notwithstanding anything to the
contrary contained herein, if during the term of the
stand-still agreement the Company shall agree or there
otherwise occurs a "change in control" of the Company
(other than as contemplated by the Transaction), the
stand-still agreement shall automatically terminate and
the Series D Holders shall thereafter be free to sell any
or all of their Series D Preferred without regard to the
foregoing limitations.
Series D Preferred holders will agree to a fixed
conversion price of $1.07 (as may be adjusted) of the
Series D Preferred. The Series D Holders will agree to
provide the Company with "right of first refusal" with
respect to the sale of any Series D Preferred for a
period of two (2) years after closing of the Purchase.
The foregoing agreement to a fixed conversion price and
right of first refusal shall be effective only upon
closing of the Purchase and shall automatically terminate
upon termination of the Transaction. If either Series D
Holder desires to accept a bona fide offer, the Company
will have the right and option for a determinate period,
subject to written notice, to acquire such Series D
Preferred upon the terms specified in the bona fide
offer. Each Series D Holder shall use its best efforts
to notify the Company of its intention to sell any Series
D Preferred.
Purchaser will have the right to pursue any other
investment opportunities with the Company in its sole
discretion.
Timing: The parties shall use their best efforts to close the
Purchase, subject to final documentation in form and
substance agreeable to the Purchaser and the Series D
Holders, which Purchase transaction shall close on the
date a definitive agreement with respect to the
transactions contemplated by the Letter of Intent dated
July 10,
<PAGE>
1998 is executed and delivered by ACO and the Company.
Nothing contained herein shall be deemed to constitute
the Series D Holders and Purchaser as a "group" for
purposes of the Securities and Exchange Act of 1934, as
amended.
<PAGE>
NM Acquisition Co.
c/o BT Alex. Brown Incorporated
1 South Street
Baltimore, Maryland 21202
July 15, 1998
ValueVision International Inc.
6740 Shady Oak Road
Minneapolis, Minnesota 55344
Attention: Gene McCaffery, Chief Executive Officer
Gentlemen:
NM Acquisition Co., LLC, a newly formed Delaware limited liability company
controlled by Stephen C. Lehman ("ACO"), is considering making an offer to
acquire an equity interest in National Media Corporation, a Delaware
corporation, ("NMC") in accordance with the Letter of Intent dated July 10, 1998
between ACO and NMC (such proposed transaction referred to herein as the
"Transaction"). In order to make such an offer, ACO will need to enter into
suitable arrangements with the substantial creditors and stockholders of NMC,
including ValueVision International Inc. ("ValueVision") as the holder of a $10
million Demand Promissory Note, dated January 5, 1998, payable by NMC (the
"ValueVision Note"). This Letter Agreement is further conditioned upon the
execution of Letter Agreements by First Union Bank and the holders of Series D
shares of NMC, as has been disclosed to ValueVision.
The purpose of this Letter Agreement is to set forth the terms and
conditions of our agreement relevant to ValueVision pursuant to which ACO is
prepared to negotiate definitive agreements with NMC and its creditors and
stockholders to document and consummate the Transaction.
Subject to the terms and conditions herein set forth, we agree to the
following:
A. Term Sheet: ValueVision and ACO will negotiate in good faith and use
best efforts to execute a definitive agreement, substantially incorporating the
terms set forth in the attached Term Sheet (the "ValueVision Agreement"), on or
before August 10, 1998, provided that (i) ACO enters into definitive agreements
with NMC with regard to the Transaction on or before August 10, 1998, and
(ii) the Transaction is consummated before November 15, 1998. Each of
ValueVision and ACO represents to the other of them that it has the bona fide
intention and is legally entitled to enter into the ValueVision Agreement and
each of ValueVision and ACO
<PAGE>
Board of Directors
ValueVision International Inc.
July 15, 1998
acknowledges that the other of them will invest significant time and money
pursuing the Transaction in reliance upon such representation.
B. ValueVision Note:
1. To the extent that the proposed Transaction and the consummation
thereof by ACO and NMC, and any actions of NMC which are necessary or incidental
with respect thereto, constitute or give rise to any Triggering Event, as
defined in the ValueVision Note, or constitute or give rise to any breach
thereof or Event of Default as defined therein, ValueVision waives all of its
rights under the ValueVision Note with respect to such Triggering Event, breach
or Event of Default.
2. ValueVision waives its rights prior to January 1, 1999 to declare
immediately due and payable any of the principal amount outstanding under the
ValueVision Note (the "Principal") to the extent that such rights derive from
the failure of a Loan Party (as defined in the ValueVision Note) to comply with
any covenant or agreement contained in the Merger Agreement.
3. If ValueVision is or becomes entitled to make a demand for repayment
of the Principal, or the Principal becomes immediately due and payable, under
the ValueVision Note, prior to January 1, 1999, and if NMC fails to repay the
ValueVision Note in accordance with its terms, ValueVision agrees that its right
to elect payment in common stock of NMC, pursuant to Section 2.9 of the
ValueVision Note, shall be limited to $2.5 million prior to January 1, 1999,
after which time any remaining unpaid amounts may be the subject of such an
election.
4. ValueVision represents to ACO that: (a) ValueVision has no knowledge
that the ValueVision Note is now in default; (b) ValueVision has made no demand
for repayment thereof; and (c) ValueVision has no knowledge that any such demand
may be made as of the date of this letter.
5. For the purposes of Section 6.a.(5) of the ValueVision Note, the
Amended and Restated Loan Agreement shall be deemed to be amended by the Letter
Agreement of even date hereto between NMC and First Union Bank. To the extent
that the Amended and Restated Loan is paid off prior to the ValueVision Note,
the parties hereto agree that the ValueVision Note will be amended to contain
the covenants contained in the Amended and Restated Loan Agreement.
C. Confidentiality: ValueVision agrees to maintain confidentiality of
the terms of, and existence of, this Letter Agreement and of ACO's proposal to
NMC, subject to the applicable
<PAGE>
Board of Directors
ValueVision International Inc.
July 15, 1998
rules and regulations promulgated under the Securities Act of 1933 and the
Securities Exchange Act of 1934 and any order of any court or regulatory body
(the "Securities Laws"). Subject to the requirement of the Securities Laws,
each of the terms and conditions of this Letter Agreement (including, without
limitation, any drafts of definitive documentation), the terms of ACO's proposal
to NMC, and ACO's identity are confidential and ACO's willingness to execute
definitive agreements for the Transaction is expressly conditioned upon
ValueVision not issuing any press release or disclosing such information to
anyone; provided, however, ValueVision may disclose such information to its
legal and financial advisors in connection with their evaluation of the
Transaction, and provided, further, that such advisors are, prior to receipt of
such information, informed of the confidential nature of such information and
agree to be bound by the nondisclosure provisions hereof. The terms of this
paragraph C shall be of no further force or effect upon publication of such
information by NMC or ACO.
D. General:
1. This Letter Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to choice of
law principles.
2. This Letter Agreement may be amended, modified or supplemented
only by a written instrument executed by all of the parties to this Letter.
3. This Letter Agreement may be executed in one or more
counterparts, each of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
4. Neither this Letter Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding and following sentence, this Letter Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns. If ValueVision assigns the
ValueVision Note pursuant to Section 7.o thereof, ACO consents to the assignment
of this Letter Agreement to such assignee of the ValueVision Note.
5. This Letter Agreement shall terminate on the earlier of (i) the
signing of definitive agreements regarding the Transaction and (ii) August 10,
1998.
<PAGE>
Board of Directors
ValueVision International Inc.
July 15, 1998
Please acknowledge your understanding of and agreement to the terms of this
Letter Agreement by signing and dating the enclosed copy of this letter and
returning one fully executed copy to the undersigned.
We look forward to moving expeditiously to consummate the Transaction and
the ValueVision Agreement contemplated hereby. Please feel free to call me if
there are any questions or comments.
Very truly yours,
NM ACQUISITION CO., LLC
By: /s/
---------------------------------------
Stephen C. Lehman
ACCEPTED AND AGREED TO
this 15th day of July, 1998
VALUEVISION INTERNATIONAL, INC.
By: /s/
------------------------------
Its:
------------------------------
<PAGE>
NM ACQUISITION CO., LLC ("LLC")
Proposed Term Sheet
Parties: National Media Corporation ("NMC" or "Borrower") and
ValueVision International ("Lender").
Term and amortization: The ValueVision Note (as defined in the preceding
Letter Agreement) shall continue to be due January 1
1999.
Interest: Interest shall remain at the Norwest Bank's prime rate of
interest plus one and one-half percent (1-1/2%) and shall
be payable quarterly.
Warrants: NMC shall reduce the exercise price of that certain
Warrant dated November 24, 1995, issued to Lender to
purchase 500,000 shares of NMC common stock, to
$2.74 per share and such Warrant shall continue to
have the same maturity date.
Set-Off: NMC shall have the right to appropriate and apply to
the payment of interest due to Lender, pursuant to
the ValueVision Note, any amounts owing by
ValueVision to NMC. To the extent of such set-off,
ValueVision shall not be required to pay any amounts
owing under the Telemarketing Agreement.
Other Investments: LLC will have the right to pursue any other investment
opportunities with NMC in its sole discretion. Nothing
contained in the preceding sentence shall limit
Lender's rights in any way under any agreements with
NMC, including without limitation the ValueVision Note,
nor shall it constitute the consent to any such
investment to the extent Lender's consent is required.
Timing: LLC and Lender shall use their best efforts to close this
transaction subject to final documentation in the form
and substance agreeable to LLC and Lender and LLC's
satisfaction with a response from the Company to LLC's
restructuring proposal. Nothing contained herein shall
be deemed to constitute LLC and Lender as a "group" for
1
<PAGE>
purposes of the Securities and Exchange Act of 1934, as
amended.
2
<PAGE>
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) of 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 approximating $22,000,000,
(the date 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 that written agreement ("ACO Agreement") has been reached between
them representing ACO's acquisition of an equity interest in NMC, accompanied by
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.
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
<PAGE>
timely approve such transactions; (d) there occurs a termination, default or
violation 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 owed 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.
(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
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.
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 affiliate as well as ACO,
on the other hand, shall exchange mutual releases 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 Value Vision 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 Value Vision prior to our receiving full payment as
<PAGE>
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 the terms, covenants,
undertakings 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 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: /s/
------------------------------
Vice President
APPROVED:
NM ACQUISITION CO., LLC
By: /s/
---------------------------------
NATIONAL MEDIA CORPORATION
By: /s/
---------------------------------
cc: Mr. Robert Verrotti
<PAGE>
Exhibit 99
National Media Corporation Signs Letter of Intent With
Investor Group Led by Steve Lehman
PHILADELPHIA, July 16 /PRNewswire/--National Media Corporation (NYSE: NM)
today announced that it has signed a letter of intent with an investor group led
by Stephen C. Lehman, President and Chief Executive Officer of Premiere Radio
Networks, Inc., a subsidiary of Jacor Communications, Inc. It is presently
contemplated that Mr. Lehman's investor group will include Jacor Communications,
Inc. (Nasdaq: JCOR), BT Capital Partners, Inc., a division of Bankers Trust
Corporation, and Gruber/McBain Capital Management.
The letter of intent contemplates that the investor group will invest a
minimum of $30 million, of which $20 million will be invested directly into
National Media Corporation, to be used to repay the Company's bank debt and for
working capital purposes, and $10 million of which will be used to purchase
one-half of the Company's outstanding Series D convertible shares now held by
two other investors. As part of the overall transaction, all Series D shares
will relinquish the floating conversion price feature presently applicable to
such shares. Upon signing of a definitive agreement for the transaction, Mr.
Lehman will assume the title of acting Chief Executive Officer of the Company.
Upon consummation of the transaction, the investor group will control a majority
of the Company's Board.
The execution of a definitive agreement is expected to occur within 30
days. At that time, two other senior executives affiliated with Mr. Lehman will
also become full time consultants to the Company and the investor group will
also designate three members to National Media's Board of Directors, Mr.
Lehman, Andrew M. Schuon and Eric R. Weiss. Mr. Weiss is an experienced media
executive and entertainment attorney. Mr. Schuon is Executive Vice President
and General Manager of Warner Bros. Records and was formerly Executive Vice
President of Programming for MTV.
Robert N. Verratti, Chief Executive Officer of National Media, said, "We
are enthusiastic about the opportunities presented by this team of investors.
They represent an extremely savvy group and have an outstanding track record in
building shareholder value. The recent improvement in our operations will
provide them a solid base upon which to build."
Stephen C. Lehman, who will also become Chairman of the Company upon
consummation of the transaction, said, "National Media Corporation has the
international infrastructure and proven creative talents that make for
tremendous opportunity. We are anxious to expand the existing platform with
Internet alliances and opportunities that benefit from the leverage of National
Media's substantial media expenditures. We believe the intrinsic value of
National Media has been significantly undervalued, given the underlying promise
of its present and future global business."
<PAGE>
The transaction is contingent upon satisfactory completion of due diligence
leading up to the execution of a definitive agreement and upon approval by
National Media Corporation shareholders. The investment is expected to be
completed during the late third or early fourth calendar quarter of 1998.
Jack Kirby, who will remain President of National Media Corporation, said,
"The media contacts, management expertise and creative energies of this investor
group will not only fortify our existing businesses but hasten our entry into
emerging global businesses like the expanding world of Internet sales. Our
skills at finding new, innovative products and creating shows which have
generated enthusiastic consumer response will now be broadened over a much wider
area of opportunity."
The pending acquisition will result in the delay of National Media
Corporation's annual meeting, originally scheduled for August 14. Shareholders
will receive proxy statements calling for their approval of the transaction, as
well as a full slate of directors including a majority to be proposed by the
investor group.
National Media Corporation (NYSE: NM) is the world's largest publicly held
infomercial company. 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.
