<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 23, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
SOURCE MEDIA, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 4825 13-3700438
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
5400 LBJ FREEWAY, SUITE 680
DALLAS, TEXAS 75240
(972) 701-5400
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
-------------------------
TIMOTHY P. PETERS
CHIEF EXECUTIVE OFFICER
AND CHAIRMAN OF THE BOARD
5400 LBJ FREEWAY, SUITE 680
DALLAS, TEXAS 75240
(972) 701-5400
(Name, address, including zip code, and telephone number, including area code,
of Registrant's agent for service)
-------------------------
Copies of Communication to:
MICHAEL L. BENGTSON, ESQ.
MARK C. GUNNIN, ESQ.
JANE E. RAST, ESQ.
1200 SAN JACINTO TOWER
98 SAN JACINTO BOULEVARD
AUSTIN, TEXAS 78701
(512) 469-6100
-------------------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
=========================================================================================
Proposed Maximum
Title of Each Class of Aggregate Offering Amount of
Securities to be Registered(1) Price(1)(2) Registration Fee(3)
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<S> <C> <C> <C>
Common Stock, $.001 par value per share . . . $25,595,970.00 $7,756.35
=========================================================================================
</TABLE>
(1) The Common Stock being registered consists of: (i) 447,000 shares
underlying warrants issued in a Rule 144A offering in October 1997 and
(ii) 2,326,500 shares underlying warrants issued by the Company pursuant
to a Registration Statement on Form S-1 on June 30, 1993. In accordance
with Rule 416 under the Securities Act, this Registration Statement also
covers such indeterminate number of additional shares as may become
issuable upon exercise of such warrants to prevent dilution from stock
splits, stock dividends or similar transactions.
(2) In accordance with Rule 457(o) under the Securities Act of 1933, the
number of shares being registered and the proposed maximum offering price
per share are not included in this table.
(3) Calculated in accordance with Rule 457(f) under the Securities Act of
1933, as amended.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
securities and exchange commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED APRIL , 1998
2,773,500 SHARES
SOURCE MEDIA, INC.
Common Stock
-------------------------
This Prospectus relates to the public offering of up to 2,773,500
shares (the "Shares") of Common Stock, $.001 par value per share ("Common
Stock"), of Source Media, Inc., a Delaware corporation (the "Company"), which
may be offered from time to time by certain shareholders of the Company
identified under the caption "Selling Shareholders" or by pledgees, donees,
transferees or other successors in interest (the "Selling Shareholders"). The
Shares being offered hereby are (i) 447,000 shares issuable upon the exercise
of warrants issued in a Rule 144A offering in October 1997 (the "October 1997
Warrants") and (ii) 2,326,500 shares issuable upon the exercise of warrants
issued by the Company pursuant to a Registration Statement on Form S-1 on June
30, 1993 (the "Public Warrants" and, together with the October 1997 Warrants,
the "Warrants"). The Company will receive no part of the proceeds of sales of
the Shares offered hereby, although it will receive proceeds from any exercises
of the Warrants.
The Shares may be offered by the Selling Shareholders from time to
time in one or more transactions as described under "Plan of Distribution." To
the extent required, the number of Shares to be sold, the name of the Selling
Shareholder(s), the purchase price, the name of any agent or broker-dealer, and
any applicable commissions, discounts or other items constituting a
compensation to such agent or broker-dealer with respect to a particular
offering will be set forth in a supplement or supplements to this Prospectus
(each, a "Prospectus Supplement"). The aggregate proceeds to the Selling
Shareholder(s) from the sale of the Shares offered from time to time hereby
will be the purchase price of the Shares sold less commissions, discounts and
other compensation, if any, paid by the Selling Shareholder(s) to any agent or
broker-dealer. The price at which any of the Shares may be sold, and the
commissions, if any, paid in connection with any such sale, are unknown and may
vary from transaction to transaction. The Company will pay all expenses
incident to the offering and sale of the Shares to the public other than any
commissions and discounts of underwriters, dealers or agents and any transfer
taxes. See "Selling Shareholders" and "Plan of Distribution."
The Common Stock is traded on the Nasdaq National Market under the
trading symbol "SRCM." On April , 1998, the last reported sales price of the
Common Stock on the Nasdaq National Market was $ per share.
-------------------------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON
PAGE 4 HEREOF.
-------------------------
The Securities and Exchange Commission (the "Commission") may take the
view that, under certain circumstances, the Selling Shareholders and any
broker-dealers or agents that participate with the Selling Shareholders in the
distribution of the Shares may be deemed to be "underwriters" within the
meaning of the Securities Act. Commissions, discounts or concessions received
by any such broker-dealer or agent may be deemed to be underwriting commissions
under the Securities Act. The Company and the Selling Shareholders have agreed
to certain indemnification arrangements. See "Plan of Distribution."
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of this Prospectus is April , 1998
<PAGE> 3
Except as otherwise specified, (a) all references to Source or the
Company include Source Media, Inc. and its wholly-owned subsidiaries, IT
Network, Inc. ("IT Network"), Interactive Channel, Inc. ("Interactive
Channel"), SMI Holdings, Inc. ("Holdings") and Interactive Channel Technologies
Inc. ("ICT", formerly known as Cableshare Inc.), and (b) all references to
Source's activities, results of operations or financial condition prior to June
23, 1995 relate to Holdings.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. Such reports, proxy and information
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, NW, Washington, D.C. 20549, and at the following
Regional Offices of the Commission: New York Regional Office, Seven World
Trade Center, Suite 1300, New York, New York 10048 and Chicago Regional Office,
Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material may be obtained by mail at prescribed rates
from the Public Reference Section of the Commission at Judiciary Plaza, 450
Fifth Street, NW, Washington, D.C. 20549. The Commission maintains a Web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
address of the site is http://www.sec.gov. The Common Stock of the Company is
listed on the Nasdaq National Market, and such reports, proxy and information
statements and other information concerning the Company may be inspected at the
offices of Nasdaq Operations, 1735 K Street, NW, Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Shares offered hereby,
reference is hereby made to the Registration Statement. The Registration
Statement may be inspected at the public reference facilities maintained by the
Commission at the addresses set forth in the preceding paragraph. The Company
has filed the Registration Statement electronically with the Commission via the
Commission's Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.
Statements contained herein concerning any document filed as an exhibit are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirely by such reference. The Company intends
to distribute to its shareholders annual reports containing audited financial
statements and will make available copies of quarterly reports for the first
three quarters of such fiscal year containing unaudited interim financial
information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company
pursuant to the Exchange Act are hereby incorporated by reference in this
Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997;
(2) All other documents filed by the Company pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the fiscal
year covered by the annual report referred to in (1) above;
and
(3) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A, filed with the Commission
on June 10, 1993.
All reports and other documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the completion or termination of this
offering shall be deemed to be incorporated by reference into this Prospectus,
to the extent required, and to be a part of this Prospectus from the date of
filing of such reports and documents.
Any statement contained in a document incorporated by reference into
this Prospectus shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modified or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each
person, including any beneficial owner, to whom a copy of this Prospectus has
been delivered, upon written or oral request of such person, a copy of any or
all of the foregoing documents incorporated by reference into this Prospectus
(other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be submitted in writing to W. Scott Bedford, Chief Financial Officer,
5400 LBJ Freeway, Suite 680, Dallas, Texas 75240 or by telephone at (972)
701-5400.
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<PAGE> 4
THE COMPANY
Source provides on-demand information, services and programming
through the telephone and can provide such information services and programming
through cable television over the Company's proprietary digital operating
systems through its two operating subsidiaries, IT Network and Interactive
Channel. Interactive Channel can provide on-demand information and services
and Internet access to the cable television industry over existing cable
infrastructure and telephone lines, with the addition of an advanced-analog or
digital set-top box.
IT Network provides voice information services through telephone
directories and newspapers and also provides related support services to
certain Yellow Pages directory and newspaper publishers participating with the
Company in offering voice information services ("Publisher Partners"). The
Company sells advertising and provides related support services to advertising
clients who pay to sponsor and deliver a promotional message before and after
the delivery of the voice information.
Interactive Channel's Cable SuperSites Network ("Cable SuperSites")
can supply programming and services allowing a subscriber to access on-demand
local and national news, weather, sports and school information, view
programming guides, purchase goods, browse the Internet, send and receive
e-mail and access a variety of other offerings over existing cable
infrastructure and telephone lines, with the addition of an advanced-analog or
digital set-top box. Cable SuperSites can allow the Company or cable system
operators to sell interactive advertising space on cable screens using text,
voice and pictures. Cable SuperSites can be broadcast by cable operators
utilizing the Company's proprietary two-way operating system, SourceWare.
SourceWare can enable any cable television system equipped with a compatible
advanced analog or digital set-top box to deliver two-way, on-demand
programming with the touch of a television remote. In less than one second,
Cable SuperSites can allow subscribers to access interactive programming
delivered over the cable system to their television.
The Company's operations are conducted through its subsidiaries, IT
Network, Inc., Interactive Channel, Inc. and Interactive Channel Technologies
Inc. Holdings was incorporated in Colorado on July 19, 1988 and reincorporated
in Texas in 1991. On June 23, 1995, Holdings merged with a wholly-owned
subsidiary of HB Communications Acquisition Corp. ("HBAC"), a public company
formed in Delaware for the purpose of acquiring a company engaged in the
communications industry, with Holdings surviving as a wholly-owned subsidiary
of HBAC (the "Merger"). In connection with the Merger, HBAC changed its name to
Source Media, Inc., and the outstanding common stock and preferred stock of
Holdings were converted into common stock of the Company. On January 14, 1997,
Source acquired all of the outstanding shares of ICT that it did not already
own in exchange for 1,390,000 shares of common stock, making ICT a wholly-owned
subsidiary of the Company. ICT owns the patented technology utilized by Source
for the Cable SuperSites and provides research and development services for
Source. In October 1997, Holdings formed IT Network and Interactive Channel as
wholly-owned operating subsidiaries.
The Company is a Delaware corporation whose principal executive
offices are located at 5400 LBJ Freeway, Suite 680, Dallas, Texas 75240, and
whose telephone number is (972) 701-5400.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE
CONTAIN FORWARD-LOOKING STATEMENTS THAT HAVE BEEN MADE PURSUANT TO THE
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ESTIMATES AND
PROJECTIONS ABOUT THE COMPANY'S INDUSTRY, MANAGEMENT'S BELIEFS AND ASSUMPTIONS
MADE BY MANAGEMENT. WORDS SUCH AS "ANTICIPATES," "EXPECTS," "INTENDS,"
"PLANS," "BELIEVES," "SEEKS," "ESTIMATES" AND VARIATIONS OF SUCH WORDS AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS.
THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO
CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT;
THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR
FORECASTED IN ANY SUCH FORWARD-LOOKING STATEMENTS. SUCH RISKS AND
UNCERTAINTIES INCLUDE THOSE NOTED IN THE DOCUMENTS INCORPORATED HEREIN BY
REFERENCE, INCLUDING THOSE SET FORTH IN THE ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1997 (THE "FORM 10-K") UNDER "BUSINESS-RISK
FACTORS." UNLESS REQUIRED BY LAW, THE COMPANY UNDERTAKES NO OBLIGATION TO
UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE. HOWEVER, INVESTORS SHOULD CAREFULLY
REVIEW THE RISK FACTORS AND OTHER INFORMATION SET FORTH IN THE REPORTS AND
OTHER DOCUMENTS THE COMPANY FILES FROM TIME TO TIME WITH THE COMMISSION.
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<PAGE> 5
RISK FACTORS
THE SHARES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A HIGH
DEGREE OF RISK. THE RISK FACTORS AND OTHER INFORMATION CONTAINED IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
1997 ARE INCORPORATED BY REFERENCE HEREIN. SEE "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE." SUCH RISK FACTORS AND OTHER INFORMATION SHOULD BE
CONSIDERED CAREFULLY BEFORE PURCHASING THE OFFERED SHARES.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares. All proceeds from the sale of the Shares will be for the account of
the Selling Shareholders, as described below. See "Selling Shareholders" and
"Plan of Distribution" below.
SELLING SHAREHOLDERS
The following table sets forth, as of the date of this Prospectus, the
name of each of the Selling Shareholders, the number of Shares that each such
Selling Shareholder owns as of such date, the number of Shares owned by each
Selling Shareholder that may be offered for sale from time to time by this
Prospectus, and the number of Shares to be held by each such Selling
Shareholder assuming the sale of all of the Shares offered hereby. The Selling
Shareholders may also be pledgees, donees, transferees or other successors in
interest that receive shares from the Selling Shareholders listed below. To
the Company's knowledge, no Selling Shareholder has had any relationship with
the Company or any of its predecessors or affiliates within the past three
years. The Company may amend or supplement this Prospectus from time to time
to update the disclosure set forth herein.
<TABLE>
<CAPTION>
Shares Beneficially Shares Being
Selling Owned Prior to the Offered
Shareholder Offering (1) ------------
--------------- -----------------------
Number Percent
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</TABLE>
[To Be Filed By Amendment]
- --------------------
(1) The number and percentage of shares beneficially owned is determined
in accordance with Rule 13d-3 of the Exchange Act, and the information
is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as
to which the individual has sole or shared voting power or investment
power and also any shares which the individual has the right to
acquire within 60 days of the date of this Prospectus through the
exercise of any stock option or other right. Unless otherwise
indicated in the footnotes, each person has sole voting and investment
power (or shares such power with his or her spouse) with respect to
the shares shown as beneficially owned.
This Prospectus also covers the possible resale of the Shares by
certain other currently unknown persons who may become owners of such Shares as
a result of their acquisition of Warrants. Each such transferee of a Selling
Shareholder is hereby deemed to be a Selling Shareholder for purposes of making
resales of Shares using this Prospectus. To the extent required by applicable
law, information about any such transferees shall be set forth in an
appropriate supplement to this Prospectus.
The Selling Shareholders may offer and sell all or a portion of the
Shares from time to time but are under no obligation to offer or sell any of
the Shares. See "Plan of Distribution." Because the Selling Shareholders may
sell all, none or any part of the Shares from time to time, no estimate can be
given as to the number of shares that will be beneficially owned by the Selling
Shareholders upon termination of any offering or as to the percentage of the
total outstanding shares of Common Stock that any Selling Shareholder will
beneficially own after termination of any offering.
-4-
<PAGE> 6
PLAN OF DISTRIBUTION
The Shares covered by this Prospectus may be offered and sold from
time to time by the Selling Shareholders. The Selling Shareholders will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale. The Selling Shareholders may sell the Shares
being offered hereby on the Nasdaq National Market, or otherwise, at prices and
under terms then prevailing or at prices related to the then current market
price or at negotiated prices. The Shares may be sold by one or more of the
following means of distribution: (a) a block trade in which the broker-dealer
so engaged will attempt to sell Shares as agent, but may position and resell a
portion of the block as principal to facilitate the transaction; (b) purchases
by a broker-dealer as principal and resale by such broker-dealer for its own
account pursuant to this Prospectus; (c) an over-the-counter distribution in
accordance with the rules of the Nasdaq National Market; (d) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (e)
in privately negotiated transactions. To the extent required, this Prospectus
may be amended and supplemented from time to time to describe a specific plan
of distribution. In connection with distributions of the Shares or otherwise,
the Selling Shareholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in
short sales of the Company's Common Stock in the course of hedging the
positions they assume with Selling Shareholders. The Selling Shareholders may
also sell the Company's Common Stock short and redeliver the Shares to close
out such short positions. The Selling Shareholders may also enter into option
or other transactions with broker-dealers or other financial institutions which
require the delivery to such broker-dealer or other financial institution of
Shares offered hereby, which Shares such broker-dealer or other financial
institution may resell pursuant to this Prospectus (as supplemented or amended
to reflect such transaction). The Selling Shareholders may also pledge Shares
to a broker-dealer or other financial institution, and, upon a default, such
broker-dealer or other financial institution, may effect sales of the pledged
Shares pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). In addition, any Shares that qualify for sale pursuant to Rule
144 may be sold under Rule 144 rather than pursuant to this Prospectus.
In effecting sales, brokers, dealers or agents engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
Selling Shareholders in amounts to be negotiated prior to the sale. Such
brokers or dealers and any other participating brokers or dealers may be deemed
to be "underwriters" within the meaning of the Securities Act in connection
with such sales, and any such commissions, discounts or concessions may be
deemed to be underwriting discounts or commissions under the Securities Act.
The Company will pay all expenses incident to the offering and sale of the
Shares to the public other than any commissions and discounts of underwriters,
dealers or agents and any transfer taxes.
In order to comply with the securities laws of certain states, if
applicable, the Shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Company has advised the Selling Shareholders that the
anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of Shares in the market and to the activities of the Selling Shareholders
and their affiliates. In addition , the Company will make copies of this
Prospectus available to the Selling Shareholders and has informed them of the
need for delivery of copies of this Prospectus to purchasers at or prior to the
time of any sale of the Shares offered hereby. The Selling Shareholders may
indemnify any broker-dealer that participates in transactions involving the
sale of the shares against certain liabilities, including liabilities arising
under the Securities Act.
At the time a particular offer of Shares is made, if required, a
Prospectus Supplement will be distributed that will set forth the number of
Shares being offered and the terms of the offering, including the name of any
underwriter, dealer or agent, the purchase price paid by any underwriter, any
discount, commission and other item constituting compensation, any discount,
commission or concession allowed or reallowed or paid to any dealer, and the
proposed selling price to the public.
The sale of Shares by the Selling Shareholders is subject to
compliance by the Selling Shareholders with certain contractual restrictions
with the Company. There can be no assurance that the Selling Shareholders will
sell all or any of the Shares.
The Company has agreed to indemnify certain of the Selling
Shareholders and any person controlling such Selling Shareholders against
certain liabilities, including liabilities under the Securities Act. Such
Selling Shareholders have agreed to indemnify the Company and certain related
persons against certain liabilities, including liabilities under the Securities
Act.
The Company intends to keep the Registration Statement of which this
Prospectus constitutes a part effective until the earlier to occur of (i) June
23, 2000, and (ii) the sale of all the Shares covered hereby; provided, that
the Company in its sole discretion may terminate the effectiveness of such
Registration Statement prior to the end of such time periods. The
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<PAGE> 7
Company intends to de-register any of the Shares not sold by the Selling
Shareholders at the end of such time period; however, any unsold shares will be
freely tradable subject to compliance with Rule 144 of the Securities Act.
VALIDITY OF THE SHARES
The validity of the Shares offered hereby will be passed upon by
Thompson & Knight, P.C., Austin, Texas, counsel to the Company.
EXPERTS
The Consolidated Financial Statements of Source Media, Inc. appearing
in Source Media, Inc.'s Annual Report (Form 10-K) for the year ended December
31, 1997, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of that firm as
experts in accounting and auditing.
-6-
<PAGE> 8
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE BY THIS
PROSPECTUS TO GIVE ANY INFORMATION OR TO MAKE REPRESENTATIONS NOT CONTAINED IN
THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY SELLING SHAREHOLDER OR BY ANY OTHER PERSON. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITY OTHER THAN THE SHARES OFFERED HEREBY, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SHARES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL
TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE OF OR OFFER TO SELL THE SHARES MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . .
Incorporation of Certain Documents By Reference . . . . . . . . . . . .
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disclosure Regarding Forward-Looking Statements . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . .
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . .
Validity of the Shares . . . . . . . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
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<PAGE> 9
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company will pay all expenses incident to the offering and sale to
the public of the shares being registered other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes. Such
expenses are set forth in the following table. All of the amounts shown are
estimates except the Securities and Exchange Commission ("SEC") registration
fee.
<TABLE>
<S> <C>
SEC registration fee . . . . . . . . . . . . . . . $ 7,756.35
Nasdaq National Market listing fee . . . . . . . .
Legal fees and expenses . . . . . . . . . . . . . . 5,000.00
Accounting fees and expenses . . . . . . . . . . .
Miscellaneous expenses . . . . . . . . . . . . . . 10,000
-------------
Total . . . . . . . . . . . . . . . . . . $
=============
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("Section 145")
permits indemnification of directors, officers, agents and controlling persons
of a corporation under certain conditions and subject to certain limitations.
Article Eighth of the Company's Certificate of Incorporation (Exhibit 3.1
hereto) and Section 5.1 of the Company's Bylaws (Exhibit 3.2 hereto) provide
for the indemnification of directors, officers and other authorized
representatives of the Company to the maximum extent permitted by the Delaware
General Corporation Law. Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a director, officer or agent of the corporation or another enterprise if
serving at the request of the corporation. Depending on the character of the
proceeding, a corporation may indemnify against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding if the person
indemnified acted in good faith and in a manner he reasonably believed to be in
or not opposed to, the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. In the case of an action by or in the right of the
corporation, no indemnification may be made with respect to any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the court of chancery or the
court in which such action or suit was brought shall determine that despite the
adjudication of liability such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper. Section 145
further provides that to the extent a director or officer of a corporation has
been successful in the defense of any action, suit or proceeding referred to
above or in the defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
The Company's Bylaws permit it to purchase insurance on behalf of any
such person against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
Company would have the power to indemnify him against such liability under the
foregoing provision of the Bylaws.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
----------- -------------------------
<S> <C> <C>
5.1 -- Opinion of Thompson & Knight, P.C., counsel
for the Registrant.*
23.1 -- Consent of Thompson & Knight, P.C. (included
as a part of Exhibit 5)
23.2 -- Consent of Ernst & Young LLP
24 -- Powers of Attorney (included at pages II
3-4).*
</TABLE>
-------------------------
* Filed herewith.
II-1
<PAGE> 10
ITEM 17. UNDERTAKINGS.
A. Undertaking Pursuant to Rule 415.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by Section
10(a)(3) Securities Act of 1933 (the
"Securities Act");
(ii) to reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar value
of securities offered would not exceed that
which was registered) and any deviation from
the low or high end of the estimated maximum
offering range may be reflected in the form
of prospectus filed with the SEC pursuant to
Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a
20% change in the maximum aggregate offering
price set forth in the "Calculation of
Registration Fee" table in the effective
Registration Statement;
(iii) to include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability
under the Securities Act, each such post- effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of this offering.
B. Undertaking Regarding Filings Incorporating Subsequent
Exchange Act Documents By Reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Undertaking in Respect of Indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the SEC such
indemnification, is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
D. Undertaking Pursuant to Rule 430A.
The undersigned Registrant hereby undertakes that:
II-2
<PAGE> 11
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of the
prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purposes of determining any liability under
the Securities Act, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-3
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dallas, State of Texas, on this 23rd day of
April, 1998.
SOURCE MEDIA, INC.
By: /s/ Timothy P. Peters
----------------------------------
Timothy P. Peters
Chairman of the Board and Chief
Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors and
officers of Source Media, Inc., a Delaware corporation, which is filing a
Registration Statement on Form S-3 with the Securities and Exchange Commission,
Washington, D.C. 20549 under the provisions of the Securities Act of 1933,
hereby constitute and appoint W. Scott Bedford and Timothy P. Peters, each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign such Registration Statement and any or all
amendments, including post-effective amendments, to the Registration Statement,
including a Prospectus or an amended Prospectus therein and any registration
statement for the same offering that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act, and all other documents in connection
therewith to be filed with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact as
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1993, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Timothy P. Peters Chairman of the Board and Chief Executive Officer April 23, 1998
- ----------------------------------------- (Principal Executive Officer)
Timothy P. Peters
/s/ W. Scott Bedford Chief Financial Officer, Treasurer and Director April 23, 1998
- ----------------------------------------- (Principal Financial and Accounting Officer)
W. Scott Bedford
Director April 23, 1998
- -----------------------------------------
David L. Kuykendall
/s/ James L. Greenwald Director April 23, 1998
- -----------------------------------------
James L. Greenwald
/s/ Michael J. Marocco Director April 23, 1998
- -----------------------------------------
Michael J. Marocco
/s/ Robert H. Alter Director April 23, 1998
- -----------------------------------------
Robert H. Alter
/s/ Robert J. Cresci Director April 23, 1998
- -----------------------------------------
Robert J. Cresci
/s/ Barry Rubenstein Director April 23, 1998
- -----------------------------------------
Barry Rubenstein
</TABLE>
II-4
<PAGE> 13
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
5.1 Opinion of Thompson & Knight, P.C., counsel
for the Registrant.
23.2 Consent of Ernst & Young LLP
<PAGE> 1
EXHIBIT 5.1
April 23, 1998
Source Media, Inc.
5400 LBJ Freeway, Suite 680
Dallas, Texas 75240
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined the Registration Statement on From S-3 to be filed by
you with the Securities and Exchange Commission on or about the date hereof
(the "Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of up to 2,773,500 shares of your Common
Stock (the "Shares"). All of the Shares are issued and outstanding and may be
offered for sale for the benefit of the selling shareholders named in the
Registration Statement. We understand that the Shares are to be sold from time
to time in the over-the-counter-market at prevailing prices or as otherwise
described in the Registration Statement. As your legal counsel, we have also
examined the proceedings taken by you in connection with the issuance of the
Shares.
It is our opinion that the Shares when issued upon the valid exercise
of the Warrants against valid payment therefor shall be validly issued, fully
paid and non-assessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name under the
caption "Validity of the Shares" appearing in the Prospectus constituting a
part of the Registration Statement, and any amendments thereto.
Very truly yours,
THOMPSON & KNIGHT
A Professional Corporation
By: /s/ Michael L. Bengtson
----------------------------------
Michael L. Bengtson, Shareholder
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3 No. 333- ) and related Prospectus
of Source Media, Inc. for the registration of 2,773,500 shares of its common
stock and to the incorporation by reference therein of our report dated
February 13, 1998, with respect to the consolidated financial statements of
Source Media, Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1997, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Dallas, Texas
April 21, 1998
