<PAGE>
As filed with the Securities and Exchange Commission on June 30, 1999
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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e4L, INC.
(formerly National Media Corporation)
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
13-2658741
(I.R.S. Employer Identification Number)
15821 Ventura Boulevard
5th Floor
Los Angeles, California 91436
(Address of principal executive offices)
Daniel M. Yukelson
Executive Vice President/Finance and Chief Financial Officer, and Secretary
15821 Ventura Boulevard
5th Floor
Los Angeles, California 91436
(Name and address of agent for service)
(818) 461-6400
(Telephone number, including area code, of agent for service)
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, check the following box: \ \
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
investment plans.
Check the following box. \X\
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. \ \______
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
\ \______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.\ \
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed Amount of
Title of Securities Amount to be Maximum Offering Maximum Aggregate Registration
to be Registered Registered Price Per Share Offering Price Fee
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share 130,185 (1) $6.5625/share (2) $854,340.00 (2) $238.00 (2)
</TABLE>
(1) Consists of 130,185 shares of Registrant's Common Stock issuable upon
exercise of warrants.
(2) Based on the average of the high and low trading price of the Registrant's
Common Stock as reported by the New York Stock Exchange on June 28, 1999,
as estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act or until the registration statement shall become effective on
such date as the Securities and Exchange Commission ("SEC"), acting pursuant to
said section 8(a), may determine.
<PAGE>
"The Information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
SUBJECT TO COMPLETION
PROSPECTUS
e4L, Inc.
15821 Ventura Boulevard
5th Floor
Los Angeles, California 91436
(818) 461-6400
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130,185 Shares of Common Stock
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A Selling Stockholder is offering and selling up to 130,185 shares of
common stock. The selling stockholder may acquire the shares of common stock
offered pursuant to this Prospectus upon exercise of warrants.
The selling stockholder may offer the shares of common stock through
public or private transactions, on the New York Stock Exchange, at prevailing
market prices, or at privately negotiated prices.
e4L's common stock is listed on the New York Stock Exchange under the
symbol "ETV." On June 28, 1999, the closing sale price for the common stock, as
quoted on the New York Stock Exchange, was $6.9375 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR
CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS.
------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SHARES OF COMMON
STOCK OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June ___, 1999.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS..............................3
RISK FACTORS...................................................................3
THE COMPANY....................................................................6
RECENT DEVELOPMENTS............................................................7
USE OF PROCEEDS................................................................7
SELLING STOCKHOLDERS...........................................................8
PLAN OF DISTRIBUTION...........................................................9
LEGAL MATTERS..................................................................9
EXPERTS ......................................................................9
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................10
WHERE YOU CAN GET MORE INFORMATION............................................10
</TABLE>
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<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Prospectus discuss future
expectations, contain projections of results of operations or financial
condition or state other "forward-looking" information regarding e4L, Inc. and
subsidiaries ("e4L"). Those statements are subject to known and unknown risks,
uncertainties and other factors that could cause the actual results to differ
materially from those contemplated by the statements. The forward-looking
information is based on various factors and has been derived using numerous
assumptions.
Important factors that may cause e4L's actual results to differ from
projections include, for example,
- the success or failure of our efforts to implement its
business strategies;
- competition for products and media time;
- the ability to raise sufficient capital to expand e4L's
business;
- the ability to develop or obtain rights to successful new
products and ability to exploit alternative distribution
channels such as wholesale/retail and electronic commerce;
- the ability to attract and retain quality employees and
talented performers for e4L's direct response television
programming; and
- other risks which may be described in our future filings
with the SEC.
e4L does not promise, nor is it obligated, to update forward-looking
information to reflect actual results or changes in assumptions or other factors
that could affect those statements.
RISK FACTORS
You should carefully consider each of the following factors and other
information in this prospectus before deciding to invest in shares of e4L's
Common Stock.
RECENT LOSSES; CASH FLOW
e4L incurred significant losses in four of its last five fiscal
years. e4L also reported a net loss of approximately $43.6 million for fiscal
year 1999. Because of e4L's financial condition, e4L developed a
business plan and has begun implementing new initiatives designed to increase
revenue, reduce costs and return it to profitability. In addition, e4L has
entered into a new three year $20.0 million credit facility. However, if the
business plan does not adequately address the circumstances and situations
which resulted in e4L's poor past performance, e4L would be required to seek
alternative forms of financing, the availability of which is uncertain.
NATURE OF THE DIRECT RESPONSE MARKETING AND ELECTRONIC COMMERCE INDUSTRIES
e4L experiences extreme competition for products, customers and media
access in the direct response marketing and electronic commerce industries.
Accordingly, to be successful, e4L must:
Accurately predict consumer needs, market conditions and
competition;
Introduce successful products;
Produce compelling direct response television programs;
Acquire appropriate amounts of media time;
Manage its media time effectively;
Fulfill customer orders timely and efficiently;
Provide courteous and informative customer service;
Maintain adequate vendor relationships and favorable terms;
Enhance successful products to generate additional sales;
Expand the marketing and distribution channels for products;
Expand in existing geographic markets; and
Integrate acquired companies and businesses efficiently.
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e4L's recent operating results were primarily attributable to delays in
product introductions, a lack of successful new products, failure to adequately
leverage global spending and deteriorating economic conditions in the Asian and
South Pacific Rim markets. e4L actively seeks out new products, new sources of
products and alternative distribution channels, including wholesale/retail and
the Internet. e4L cannot be sure that inventors and product manufacturers will
select it to market their products. Significant delays in product introductions
or a lack of successful new products could prevent e4L from selling adequate
amounts of its products and otherwise have a negative effect on e4L's business.
DEPENDENCE AND FOREIGN SALES
e4L markets products to consumers in over 70 countries. In recent years
e4L has derived approximately half of its net revenue from sales to customers
outside the United States and Canada. e4L's largest international markets are
Germany, Asia (primarily Japan) and the South Pacific. The economic downturn in
the Asian and South Pacific Rim regions has had and, for the foreseeable future,
is expected to have, an adverse effect on e4L. e4L's international expansion has
increased its working capital requirements due to the additional time required
to deliver products abroad and receive payment from foreign countries.
While e4L's foreign operations have the advantage of marketing products
that have already proven successful in the United States, as well as successful
direct response television programming produced by other direct marketing
companies with limited media access and distribution capabilities, there can be
no assurance that e4L's foreign operations will continue to generate similar
revenue or operate profitability. Competition in the international marketplace
is increasing rapidly. In addition, e4L is subject to many risks associated with
doing business abroad including: (i.) adverse fluctuations in currency exchange
rates; transportation delays and interruptions; (ii.) political and economic
disruptions; (iii.) the imposition of tariffs and import and export controls;
and (iv.) increased customs or local regulations.
The occurrence of any of these risks could have an adverse
effect on e4L's business.
ENTERING INTO NEW MARKETS
As e4L enters new markets, it is faced with the uncertainty of never
having done business in that country's particular commercial, political and
social environment. Accordingly, despite e4L's best efforts, likelihood of
success is unpredictable for reasons particular to each new market. It is also
possible that, despite e4L's apparently successful entrance into a new market,
some unforeseen circumstance could arise which would limit e4L's ability to
continue to do business, operate profitability or to expand in that new market.
DEPENDENCE ON SUCCESSFUL PRODUCTS; UNPREDICTABLE MARKET LIFE; INVENTORY
MANAGEMENT AND PRODUCT RETURNS
e4L is dependent on its continuing ability to introduce successful new
products to supplement or replace existing products as they mature through their
product life cycles. e4L's five most successful products each year typically
account for a substantial amount of e4L's annual net revenue. Generally, e4L's
successful products change from year to year. Accordingly, e4L's future results
of operations depend on its ability to introduce successful products
consistently and to capture the full revenue potential of each product at all
stages of consumer marketing and distribution channels during the product's life
cycle.
In addition to a supply of successful new products, e4L's revenue and
results of operations depend on a positive customer response to its direct
response television programming, the effective management of product inventory
and other factors. Customer response to e4L's programming depends on many
variables, including the appeal of products being marketed, the effectiveness of
the direct response television programming, the availability of competing
products and the timing and frequency of program airings. There can be no
assurance that e4L's programming will receive market acceptance.
e4L must have an adequate supply of inventory to meet consumer demand.
Most of e4L's products have a limited market life, so it is extremely important
that e4L generate maximum sales during this time period. If production delays or
shortages, poor inventory management or inadequate cash flow prevent e4L from
maintaining sufficient inventory, e4L could lose potential product sales, which
may never be recouped. In addition, unanticipated obsolescence of a product may
occur or problems may arise regarding regulatory, intellectual property, product
liability or other issues which adversely affect future sales of a product even
though e4L may still hold a large quantity of the product in inventory.
Accordingly, e4L's ability to maintain systems and procedures to effectively
manage its inventory is of critical importance to e4L's cash flow and results of
operations.
The average United States and international market life of a product is
less than two years. Generally, products generate their most significant revenue
in their first year of sales. In addition, e4L must adapt to market conditions
and competition as well as other factors which may shorten a product's life
cycle and adversely affect e4L's results of operations.
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e4L offers a limited money-back guarantee on all of its products if
the customer is not fully satisfied. Accordingly, e4L's results of operations
may be adversely affected by product returns under e4L's guarantee, its
product warranty or otherwise. Although e4L establishes reserves against
product returns which it believes are adequate based on product mix and
returns history, there can be no assurance that e4L will not experience
unexpectedly high levels of product returns which exceed the reserves for
that product. If product returns do exceed reserves, e4L's results of
operations would be adversely affected.
DEPENDENCE ON THIRD PARTY MANUFACTURERS AND SERVICE PROVIDERS
Substantially all of e4L's products are manufactured by other domestic
and foreign companies. In addition, e4L utilizes other companies to fulfill
orders placed for e4L's products and to provide telemarketing services. If e4L's
suppliers are unable, either temporarily or permanently, to deliver products to
e4L in time to fulfill sales orders, it could have a material adverse effect on
e4L's results of operations. Moreover, because the time from the initial
approval of a product by e4L's product development department until the first
sale of a product must be short, e4L must be able to cause its product
manufacturers to quickly produce high-quality, reasonably priced products for
e4L to sell. However, because e4L's primary product manufacturers are foreign
companies which require longer lead times for products, any delay in production
or delivery would adversely affect sales of the product and e4L's results of
operations. In addition, utilization of foreign manufacturers further exposes
e4L to the general risks of doing business abroad.
DEPENDENCE OF MEDIA ACCESS; EFFECTIVE MANAGEMENT OF MEDIA TIME
e4L must have access to media time to televise its direct response
programming on cable and broadcast networks, network affiliates and local
stations. e4L purchases a significant amount of media time to from cable
television and satellite networks, which assemble programming for transmission
to cable system operators. If demand for air time increases, cable system
operators and broadcasters may limit the amount of time available for these
broadcasts. Larger multiple cable system operators have begun selling 'dark'
time, (i.e., the hours during which a network does not broadcast its own
programming) to third parties which may cause prices for such media to rise.
Significant increases in the cost of media time or significant limitations in
e4L's access to media could adversely impact e4L. In addition, periodic world
events may limit e4L's access to media time and reduce the number of persons
viewing e4L's direct response television programming in one or more markets,
which would adversely impact e4L for these periods.
Recently, international media suppliers have begun to negotiate for
fixed media rates and minimum revenue guarantees, each of which increase e4L's
cost of media and risk.
In addition to acquiring adequate amounts of media time, e4L's business
depends on its ability to manage efficiently its acquisitions of media time, by
analyzing the need for, and making purchases of, long term media and spot media.
e4L must also properly allocate its available air time among its current library
of infomercials. Whenever e4L makes advance purchases and commitments to
purchase media time, it must manage the media time effectively, because the
failure to do so could negatively affect e4L's business. If e4L cannot use all
of the media time it has acquired, it attempts to sell its excess media time to
others. However, there can be no assurance that e4L will be able to use or sell
its excess media time.
In April 1998, e4L began leasing a twenty-four hour satellite
transponder, the Eutelstat Satellite, which broadcasts across Europe. e4L has
incurred significant start-up costs in connection with the transponder lease.
If e4L is unable to sell the remaining transponder media time, e4L's results
of operations could be adversely affected. During the year ended March 31,
1999, e4L has determined that the satellite contract is unfavorable, as it
has estimated that it will be unable to recover certain costs relating to its
lease, accordingly, e4L's results of operations included $5.3 million of
unusual changes attributable to this lease.
LITIGATION AND REGULATORY ACTIONS
There have been many lawsuits against companies in the direct marketing
industry. In recent years, e4L has been involved in significant legal
proceedings and regulatory actions by the Federal Trade Commission ("FTC") and
Consumer Products Safety Commission ("CPSC"), which have resulted in significant
costs and charges to e4L. In addition, e4L, its wholly-owned subsidiary,
Positive Response Television, Inc., and its chief executive officer, are subject
to FTC consent orders which require them to submit periodic compliance reports
to the FTC. Any additional FTC or CPSC violations or significant new litigation
could have an adverse effect on e4L's business.
In August 1998, e4L received notice from the New York Stock Exchange
("NYSE") that it did not meet the NYSE's standards for continued listing.
Representatives from e4L met with the NYSE staff and proposed actions to the
NYSE designed to restore its compliance with the listing standards. The NYSE
reviewed e4L's compliance plan and informed e4L that, while it would continue to
monitor e4L's compliance plan and performance, no action by the NYSE was
presently contemplated. If e4L's common stock is delisted from trading on the
NYSE, it would have severe negative effects for e4L and its stockholders.
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<PAGE>
PRODUCT LIABILITY CLAIMS
Products sold by e4L may expose it to potential liability from damages
claims by users of the products. In certain instances, e4L is able to obtain
contractual indemnification rights against these liabilities from the
manufacturers of the products. In addition, e4L generally requires its
manufacturers to carry product liability insurance. However, e4L cannot be
certain that manufacturers will maintain this insurance or that their coverage
will be adequate to cover all claims. In addition, e4L cannot be certain that it
will be able to maintain its insurance coverage or obtain additional coverage on
acceptable terms, or that its insurance will provide adequate coverage against
all claims.
COMPETITION
e4L competes directly with companies that generate sales from direct
response television programs and other direct marketing and electronic commerce
companies. e4L also competes with a large number of consumer product retailers,
many of which have substantially greater financial, marketing and other
resources than e4L. Some of these retailers have recently begun, or indicated
that they intend to begin, selling products through direct response marketing
methods, including sales in various e-commerce channels, such as via the
Internet. e4L also competes with companies that make imitations of e4L's
products at substantially lower prices, which may be sold in the same
distribution channels as e4L's own products.
DEPENDENCE ON KEY PERSONNEL
e4L's executive officers have substantial experience and expertise in
direct response sales and marketing, electronic commerce and media. In
particular, e4L is highly dependent on certain of its employees responsible for
product development and production of direct response televisions programming.
If any of these individuals leave e4L, e4L's business could be negatively
affected.
YEAR 2000 ISSUES
The operation of e4L's business is dependent on its management
information systems, computer hardware, software programs and operating systems.
Computer technology is used in several key areas of e4L's business, including
merchandise purchasing, inventory management, pricing, sales, shipping and
financial reporting, as well as in various administrative functions. e4L has
been evaluating its computer technology to identify potential Year 2000
compliance problems and has begun an implementation process with respect
thereto. It is anticipated that modification or replacement of some of e4L's
computer technology will be necessary to enable e4L's computer to recognize the
Year 2000. e4L does not expect that the costs associated with achieving Year
2000 compliance will have a significant effect on its business. In addition, e4L
is also dependent on third-party suppliers and vendors and will be vulnerable to
such parties failures to address and resolve their Year 2000 issues. While e4L
is not aware of any known third party problems that will not be corrected, e4L
has limited information concerning the Year 2000 readiness of third parties. If
management is incorrect, Year 2000 problems could have a negative effect on e4L
and its business.
SEASONALITY
e4L's revenue varies throughout the year. e4L's revenue has
historically been highest in its third and fourth fiscal quarters and lower in
its first and second fiscal quarters due to fluctuations in the number of
television viewers. These seasonal trends have been and may continue to be
affected by the timing and success of new product offerings and the potential
growth in e4L's wholesale/retail electronic commerce businesses.
CONVERTIBLE SECURITIES; SHARES FOR FUTURE SALE
Sales of a substantial number of shares of e4L's common stock in the
public market could adversely affect the market price of e4L's common stock.
There are currently 32.4 million shares of e4L's common stock outstanding,
nearly all of which are freely tradable. In addition, approximately 47.6
million shares of e4L's common stock are currently reserved for issuance upon
the exercise of outstanding options and warrants and the conversion of
convertible preferred stock. For example, approximately 17.3 million shares
of common stock will be issued to holders of e4L's Series D Convertible
Preferred Stock (based on a conversion price of $1.073125 per share) and
approximately 13.3 million shares of common stock will be issued to holders
of e4L's Series E Convertible Preferred Stock (based on a conversion price of
$1.50 per share).
THE COMPANY
e4L is principally engaged in the use of direct response transactional
television programming, also known as infomercials, wholesale/retail
distribution and electronic commerce, to sell consumer products. e4L manages all
phases of direct marketing for the majority of its consume products in both the
United States and international markets, including
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product selection and development, manufacturing by third parties, production
and broadcast of infomercials, order processing and fulfillment and customer
service.
e4L is engaged in direct marketing of consumer products in the United
States through its wholly-owned subsidiary, Quantum North America, Inc.
(formerly Media Arts International, Ltd. and d/b/a e4L North America), which e4L
acquired in 1986, and internationally through its wholly-owned subsidiaries:
Quantum International Limited, which e4L acquired in 1991; Quantum Prestige
Limited, through which e4L operates in New Zealand and in all Asian countries
other than Japan; Quantum International (Japan) Company Limited, which e4L
formed in June 1995; and Suzanne Paul Holdings Pty Limited and its operating
subsidiaries which e4L acquired in July 1996. e4L produces television
programming through e4L Television (formerly d/b/a DirectAmerica Corporation),
which e4L acquired in October 1995.
e4L is a Delaware corporation, with its principal executive offices
located at 15821 Ventura Boulevard, 5th Floor, Los Angeles, California 91436,
and its telephone number is (818) 461-6400.
RECENT DEVELOPMENTS
On June 7, 1999, e4L consummated an agreement with BuyItNow, Inc.
("BuyItNow") pursuant to which e4L and BuyItNow have formed a new global
electronic commerce entity, BuyItNow.com LLC ("BuyItNow LLC"). BuyItNow LLC was
formed through the contribution by BuyItNow of substantially all of its assets
and liabilities; and the contribution by e4L of, among other things, e4L's (i.)
on-line business of "As Seen On TV" products, and (ii.) promotion of the new
entity within e4L programs. Concurrent with the consummation of this agreement,
e4L issued 500,000 warrants to purchase e4L common stock (the "Common Stock") to
BuyItNow. Concurrent with the closing, Clear Channel Communications, Inc.,
acquired a 5.4% equity interest in BuyItNow LLC in exchange for $12.5 million in
radio broadcast media. On June 28, 1999, Xoom.com, Inc. and Shop.com, Inc.
acquired an aggregate 5.4% equity interest in BuyItNow LLC in exchange for $15
million of Internet media. In exchange for its contribution to BuyItNow, LLC,
e4L currently owns 48.7% of the equity of BuyItNow, LLC .
Members of e4L management will participate as members of the BuyItNow
LLC Board of Directors and Management Committee. Stephen C. Lehman, e4L's
Chairman and Chief Executive Officer, will serve as BuyItNow LLC's Chairman of
the Board of Directors, and Daniel M. Yukelson, e4L's Executive Vice President
and Chief Financial Officer, will serve as its Chief Financial Officer. Messrs.
Lehman and Eric R. Weiss, e4L's Vice Chairman and Chief Operating Officer, will
serve on BuyItNow LLC's board of directors.
USE OF PROCEEDS
e4L will not receive any proceeds from the sale of the shares of Common
Stock offered by the Selling Stockholder pursuant to this Prospectus. The
Selling Stockholder will remit the exercise price of the warrants in connection
with an exercise of such securities. e4L will use the proceeds from such warrant
exercises for working capital purposes.
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SELLING STOCKHOLDERS
The following table sets forth the name of the Selling Stockholder, the
number of shares of Common Stock beneficially owned by the Selling Stockholder
as of June 30, 1999, and the number of shares of Common Stock which may be
offered for sale pursuant to this Prospectus by the Selling Stockholder. The
Offered Shares may be offered from time to time by the Selling Stockholder named
below. See "Plan of Distribution." However, the Selling Stockholder is under no
obligation to sell all or any portion of the shares of Common Stock offered
hereby, nor is the Selling Stockholder obligated to sell such shares of Common
Stock immediately under this Prospectus. Because the Selling Stockholder may
sell all or part of the shares of Common Stock offered hereby, no estimate can
be given as to the number of shares of Common Stock that will be held by the
Selling Stockholder upon termination of any offering made hereby.
Pursuant to Rule 416(a) under the Securities Act, the shares of Common
Stock issuable in respect of the warrants are subject to adjustment by reason of
stock splits, stock dividends and other similar transactions in the Common
Stock.
<TABLE>
<CAPTION>
Common Shares Beneficially
Owned After Offering (1)
Number of Common -------------------------
Shares Beneficially Common Shares Percent of
Name of Selling Stockholder Owned Prior to Offering Offered Hereby Number Outstanding
- ----------------------------------------- ------------------------- ------------------ -------------- ------------------
<S> <C> <C> <C> <C>
Lehman Brothers Inc. 162,685 130,185 32,500 *
</TABLE>
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* Less than one percent.
(1) Assumes the sale of all shares of Common Stock offered hereby. e4L is
not aware of any plans of the Selling Stockholder to dispose of its
Common Stock.
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PLAN OF DISTRIBUTION
The shares of Common Stock are being offered on behalf of the Selling
Stockholder and e4L will not receive any proceeds from the Offering. The shares
of Common Stock may be sold or distributed from time to time by the Selling
Stockholder, or by pledgees, donees or transferees of, or other successors in
interest to, the Selling Stockholder, directly to one or more purchasers
(including pledgees) or through brokers, dealers or underwriters who may act
solely as agent or may acquire such shares as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices, which may be subject to
change. The sale of the shares of Common Stock may be effected in one or more of
the following methods: (i) ordinary brokers' transactions, which may include
long or short sales; (ii) transactions involving cross or block trades or
otherwise on the NYSE; (iii) purchases by brokers, dealers or underwriters as
principal and resale by such purchasers for their own accounts pursuant to this
Prospectus; (iv) "at the market" to or through market makers or into established
trading markets, including direct sales to purchasers or sales effected through
agents; (vi) any combination of the foregoing, or by any other legally available
means. In addition, the Selling Stockholder or its successor in interest may
enter into hedging transactions with broker-dealers who may engage in short
sales of shares of Common Stock in the course of hedging the position they
assume with the Selling Stockholder. The Selling Stockholder or its successor in
interest may also enter into option or other transactions with broker-dealers
that require the delivery by such broker-dealers of the shares of Common Stock,
which shares of Common Stock may be resold thereafter pursuant to this
Prospectus. There can be no assurance that all or any of the shares of Common
Stock will be issued to, or sold by, the Selling Stockholder.
Brokers, dealers, underwriters or agents participating in the sale of
the shares of Common Stock as agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholder and/or
purchasers of the Common Stock for whom such broker-dealers may act as agent, or
to whom they may sell as principal, or both (which compensation to a particular
broker-dealer may be less than or in excess of customary commissions). The
Selling Stockholder and any broker-dealers or other persons who act in
connection with the sale of the Common Stock hereunder may be deemed to be
"Underwriters" within the meaning of the Securities Act, and any commission they
receive and proceeds of any sale of such shares may be deemed to be underwriting
discounts and commissions under the Securities Act. Neither e4L nor the Selling
Stockholder can presently estimate the amount of such compensation. e4L knows of
no existing arrangements between the Selling Stockholder and any other
stockholders, broker, dealer, underwriter or agent relating to the sale or
distribution of the shares of Common Stock.
The Selling Stockholder and any other persons participating in the sale
or distribution of the Common Stock will be subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Common Stock by the
Selling Stockholder or any other such persons. The foregoing may affect the
marketability of the Common Stock.
e4L will pay substantially all of the expenses incident to the
registration, offering and sale of the Common Stock to the public other than
commissions or discounts of underwriters, broker-dealers or agents. e4L has also
agreed to indemnify the Selling Stockholder and certain related persons against
certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been
passed upon for e4L by e4L's outside legal counsel, Klehr, Harrison, Harvey,
Branzburg & Ellers LLP, Philadelphia, Pennsylvania.
EXPERTS
The consolidated financial statements and schedule of e4L, Inc.
appearing in e4L's Annual Report (Form 10-K) for the year ended March 31, 1999
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 and schedule have been incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
-9-
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows companies to "incorporate by reference" the information
filed with them, which means that e4L can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this Prospectus and information e4L files later with
the SEC will automatically update and supersede this information. e4L
incorporates by reference the documents listed below and any future filings it
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
(a) e4L's Annual Report on Form 10-K for the fiscal year ended March
31, 1999;
(b) The description of e4L's Common Stock contained in e4L's
Registration Statement on Form 8-A, dated August 28, 1990,
including all amendments and reports filed for the purpose of
updating such description.
This Prospectus is part of a registration statement e4L filed with the
SEC. You should rely only on the information or representations provided in this
Prospectus. e4L has authorized no one to provide you with different information.
e4L is not offering or selling these securities in any state where the offer or
sale is not permitted. You should not assume that the information in this
Prospectus is accurate as of any date other than the date stated on the front
cover page of this Prospectus.
e4L will provide without charge to each person to whom this Prospectus
is delivered, upon written or oral request, a copy of any or all of such
documents which are incorporated herein by reference. You should direct your
requests for copies to e4L, Inc., 15821 Ventura Boulevard, 5th Floor, Los
Angeles, California 91436; Attention: Investor Relations, telephone number (818)
461-6400, facsimile number (818) 461-6525.
WHERE YOU CAN GET MORE INFORMATION
At your request, e4L will provide you, without charge, a copy of any
exhibits to e4L's Registration Statement. If you would like more information,
write or call e4L at:
e4L, Inc.
Attention: Investor Relations
15821 Ventura Boulevard,5th Floor
Los Angeles, CA 91436
Telephone: (818) 461-6400
Facsimile: (818) 461-6530
e4L's fiscal year ends on March 31. e4L intends to provide to its
stockholders annual reports containing audited financial statements and other
appropriate reports. In addition, e4L files annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read and
copy any reports, statements or other information e4L files at the SEC's public
reference room in Washington, D.C. You can request copies of these documents,
upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
rooms. e4L's SEC filings are also available to the public on the SEC's Internet
site at http\\www.sec.gov.
-10-
<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus in
connection with the offering described herein and, if given or made, such
information or representation must not be relied upon as having been authorized
by e4L or the Selling Stockholder. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy a security other than the shares of
Common Stock offered hereby, nor does it constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that the information contained herein is correct as of any date subsequent to
the date hereof.
130,185 Shares of Common Stock
e4L, INC.
PROSPECTUS
June __, 1999
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized statement of the estimated amounts of all
expenses payable by e4L in connection with the registration of the shares of
Common Stock offered hereby, other than underwriting discounts and commissions:
<TABLE>
<CAPTION>
<S> <C>
Registration Fee--Securities and Exchange Commission................... $ 238.00
*Blue Sky fees and expenses............................................. $ 1,000.00
*Accountants' fees and expenses ........................................ $ 2,500.00
*Legal fees and expenses ............................................... $ 7,500.00
*Printing and EDGAR expenses ........................................... $ 1,000.00
*Miscellaneous ......................................................... $ 2,500.00
-----------
Total ......................................................... $ 14,738.00
===========
-----------
-----------
</TABLE>
- ------------------
* Estimate
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
e4L has adopted in its Certificate of Incorporation and Bylaws the
provisions of Section 102(b)(7) of the Delaware General Corporation Law which
eliminate or limit the personal liability of a director of e4L or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except that this provision shall not eliminate or limit the liability of a
director for any breach of the director's duty of loyalty to e4L or its
stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a known violation of the law, under Section 174 of the
Delaware General Corporation Law, or for any transaction from which the director
derived an improper personal benefit.
Further, e4L's Certificate of Incorporation and Bylaws provide that e4L
shall indemnify all persons whom it may indemnify pursuant to Section 145 of the
Delaware Corporation Law to the full extent permitted therein. Section 145
provides, subject to various exceptions and limitations, that e4L may indemnify
its directors or officers if such director or officer 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 or officer of e4L, or is or was
serving at the request of e4L as a director or officer of another corporation,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of e4L, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The determination of whether indemnification
is proper under the circumstances, unless made by a court, shall be made by a
majority of a quorum of disinterested members of the Board of Directors,
independent legal counsel or the stockholders of e4L. In addition, e4L shall
indemnify its directors or officers to the extent that they have been successful
on the merits or otherwise in defense of any such action, suit or proceeding, or
in the defense of any claim, issue or matter therein, against expenses
(including attorneys' fees) actually and reasonably incurred by them in
connection therewith.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Schedule of Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
<S> <C>
4(1) Warrant, dated May 24, 1999, in favor of Lehman Brothers Inc.
5(1) Opinion and Consent of Klehr, Harrison, Harvey, Branzburg &
Ellers, LLP.
10(1) Settlement Agreement, dated May 14, 1999, between e4L and
Lehman Brothers Inc.
23(1) Consent of Ernst & Young LLP, independent auditors.
</TABLE>
- ----------------
(1) Filed herewith.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(i) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(A) to include any prospectus required by section 10(a)(3)
of the Securities Act;
(B) 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.
(C) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement; provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.
(ii) 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.
(iii) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(iv) For purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section 13(a) or 15(d)
of the Exchange Act that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on this 30th day of
June, 1999.
e4L, INC
BY: /s/ Stephen C. Lehman
---------------------------------------------
Stephen C. Lehman, Chairman of the Board of
Directors and Chief Executive Officer
POWER OF ATTORNEY
Each of the undersigned officers and directors of e4L, Inc. whose signature
appears below hereby appoints Stephen C. Lehman and Daniel M. Yukelson as true
and lawful attorney-in-fact for the undersigned with full power of substitution,
to execute in his name and on his behalf in each capacity stated below, any and
all amendments (including post-effective amendments) to this Registration
Statement as the attorney-in-fact shall deem appropriate, and to cause to be
filed any such amendment (including exhibits thereto and other documents in
connection therewith) to this Registration Statement with the Securities and
Exchange Commission, as fully and to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact, or any of them, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 30th day of June, 1999.
<TABLE>
<CAPTION>
Signature Title(s)
<S> <C>
/s/ Stephen C. Lehman Chairman of the Board of Directors and Chief
- ---------------------------- Executive Officer
Stephen C. Lehman
/s/ Daniel M. Yukelson Executive Vice President/Finance and Chief
- ---------------------------- Financial Officer, and Secretary
Daniel M. Yukelson
/s/ Stuart D. Buchalter Director
- ----------------------------
Stuart D. Buchalter
/s/ Robert W. Crawford Director
- ----------------------------
Robert W. Crawford
/s/ John W. Kirby President and Director
- ----------------------------
John W. Kirby
/s/ David E. Salzman Director
- ----------------------------
David E. Salzman
/s/ Andrew M. Schuon Director
- ----------------------------
Andrew M. Schuon
/s/ Eric R. Weiss Vice Chairman of the Board of Directors and
- ---------------------------- Chief Operating Officer
Eric R. Weiss
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
4 Warrant, dated May 24, 1999, in favor of Lehman Brothers Inc.
5 Opinion and Consent of Klehr, Harrison, Harvey, Branzburg &
Ellers, LLP.
10 Settlement Agreement, dated May 14, 1999, between e4L and Lehman
Brothers Inc.
23 Consent of Ernst & Young LLP, independent auditors.
</TABLE>
<PAGE>
EXHIBIT 4
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
No. WLB-1 May 24, 1999
e4L, INC.
COMMON STOCK PURCHASE WARRANT
Warrant to Purchase 130,106 Shares of Common Stock
Expiring May 23, 2004
THIS CERTIFIES THAT, in consideration of the release of certain claims
by Lehman Brothers Inc. ("Lehman") against e4L, Inc. (formerly known as
"National Media Corporation"), a Delaware corporation (the "Company"), pursuant
to that certain Settlement Agreement, dated as of May 14, 1999 ("Settlement
Agreement"), by and between the Company and Lehman ("Lehman"), Lehman or its
successors or assigns (collectively, the "Warrant Holder"), at any time and from
time to time, subject to the vesting schedule set forth in Section 2 hereto, on
any Business Day on or prior to 5:00 p.m., Pacific Time, on May 23, 2004 (the
"Expiration Date") is entitled to subscribe for and purchase from the Company,
one hundred thirty thousand one hundred six (130,106) shares of Common Stock at
a price per share equal to the Exercise Price (as defined below); provided that
the number of shares of Common Stock issuable upon any exercise of this Warrant
and the Exercise Price shall be adjusted and readjusted from time to time in
accordance with Section 5.
(a) CERTAIN DEFINITIONS.
The following terms, as used herein, have the following
meanings:
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by, or is under
common control with such Person.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Closing Price" means, for any trading day with respect to
each share of Common Stock, (a) the last reported sale price on such day on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if no such reported sale takes place on any such day,
the average of the closing bid and asked prices thereon, as reported in THE WALL
<PAGE>
STREET JOURNAL, or (b) if such Common Stock shall not be listed or admitted to
trading on a national securities exchange, the last reported sales price on the
NASDAQ National Market System or, if no such reported sale takes place on any
such day, the average of the closing bid and asked prices thereon, as reported
in THE WALL STREET JOURNAL, or (c) if such Common Stock shall not be quoted on
such National Market System nor listed or admitted to trading on a national
securities exchange, then the average of the closing bid and asked prices, as
reported by THE WALL STREET JOURNAL for the over-the-counter market, or (d) if
there is no public market for such Common Stock the fair market value of a share
of such Common Stock as determined in good faith by the Board of Directors of
the Company after consultation with an independent investment bank of national
repute (whose report will be made available to the Warrant Holder prior to such
determination of fair market value); PROVIDED that if clause (a), (b), or (c)
applies and no price is reported in THE WALL STREET JOURNAL for any trading day,
then the price reported in THE WALL STREET JOURNAL for the most recent prior
trading day shall be deemed to be the price reported for such trading day.
"Commission" means the Securities and Exchange Commission or
any other Federal agency administering the Securities Act at the time.
"Common Stock" means the Company's currently authorized class
of common stock, $.01 par value, and stock of any other class or other
consideration into which such currently authorized class of common stock may
hereafter have been changed.
"Exchange Act" means the Securities Exchange Act of 1934, or
any successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such successor Federal statute.
"Exercise Price" means $1.50 per share, as may be adjusted
from time to time pursuant to Section 5.
"Market Price" on any day means the unweighted average of the
daily Closing Prices per share of Common Stock for the 20 consecutive trading
days prior to such date; PROVIDED that for purposes of the application of
Section 5(b) to a Common Stock Distribution pursuant to a public offering
registered under the Securities Act, "Market Price" means the Closing Price per
share of Common Stock for the trading day preceding the effective date of the
registration statement with respect to such public offering.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Securities Act" means the Securities Act of 1933, or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such successor Federal statute.
"Warrant Shares" means the one hundred thirty thousand one
hundred six (130,106) shares of Common Stock issued or issuable upon exercise of
this Warrant, as adjusted from time to time pursuant to Section 5.
<PAGE>
(b) EXERCISE OF WARRANT.
The Warrant Holder may exercise this Warrant in whole or in
part, at any time or from time to time, subject to the immediately succeeding
sentence, on any Business Day on or prior to the Expiration Date, by delivering
to the Company a duly executed notice (a "Notice of Exercise") in the form of
Annex A hereto at the election of the Warrant Holder, either (a) by receiving
from the Company the number of Warrant Shares as to which this Warrant is being
exercised and paying to the Company the Exercise Price for each such Warrant
Share by wire transfer of immediately available funds to the account of the
Company in an amount equal to the product of (i) the Exercise Price times (ii)
the number of Warrant Shares as to which the Warrant is being exercised or (b)
by receiving from the Company the number of Warrant Shares equal to (i) the
number of Warrant Shares as to which this Warrant is being exercised minus (ii)
the number of Warrant Shares having a value equal to the product of (x) the
Exercise Price times (y) the number of Warrant Shares as to which this Warrant
is being exercised, divided by the average of the Closing Price on the five
conservative trading days immediately prior to the date of such exercise. This
Warrant shall vest and become exercisable on or after the Closing Date (as
defined in the Settlement Agreement).
As soon as practicable but not later than five Business Days
after the Company shall have received such Notice of Exercise and payment, the
Company shall execute and deliver or cause to be executed and delivered, in
accordance with such Notice of Exercise, a certificate or certificates
representing the number of shares of Common Stock specified in such Notice of
Exercise, issued in the name of the Warrant Holder. This Warrant shall be deemed
to have been exercised and such share certificate or certificates shall be
deemed to have been issued, and such Warrant Holder shall be deemed for all
purposes to have become a holder of record of shares of Common Stock, as of the
date that such Notice of Exercise and payment shall have been received by the
Company.
The Warrant Holder shall surrender this Warrant Certificate to
the Company when it delivers the Notice of Exercise, and in the event of a
partial exercise of the Warrant, the Company shall execute and deliver to the
Warrant Holder, at the time the Company delivers the share certificate or
certificates issued pursuant to such Notice of Exercise, a new Warrant
Certificate for the unexercised section of the Warrant, but in all other
respects identical to this Warrant Certificate.
Each certificate for Warrant Shares issued upon exercise of
this Warrant, unless at the time of exercise such Warrant Shares are registered
under the Securities Act, shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
Any certificate for Warrant Shares issued at any time in exchange or
substitution for any certificate bearing such legend (unless at that time such
Warrant Shares are registered under the Securities Act) shall also bear such
legend unless, in the written opinion of counsel selected by the holder of such
certificate (who may be an employee of such holder), which counsel and opinion
shall be reasonably acceptable to the Company, the Warrant Shares represented
thereby need no longer be subject to restrictions on resale under the Securities
Act.
<PAGE>
The Company shall not be required to issue fractions of shares
of Common Stock upon an exercise of the Warrant. If any fraction of a share
would, but for this restriction, be issuable upon an exercise of the Warrant, in
lieu of delivering such fractional share, the Company shall pay to the Warrant
Holder, in cash, an amount equal to the same fraction times the Closing Price on
the trading day immediately prior to the date of such exercise.
The Company shall pay all expenses, taxes and owner charges
payable in connection with the preparation, issuance and delivery of
certificates for the Warrant Shares and any new Warrant Certificates, except
that if the certificates for the Warrant Shares or the new Warrant Certificates
are to be registered in a name or names other than the name of the Warrant
Holder, funds sufficient to pay all transfer taxes payable as a result of such
transfer shall be paid by the Warrant Holder at the time of its delivery of the
Notice of Exercise or promptly upon receipt of a written request by the Company
for payment.
(c) INVESTMENT REPRESENTATION.
(1) By accepting the Warrant, the Warrant Holder represents
that it is acquiring the Warrant for its own account for investment purposes and
not with the view to any sale or distribution, and that the Warrant Holder will
not offer, sell or otherwise dispose of the Warrant or the Warrant Shares except
under circumstances as will not result in a violation of applicable securities
laws.
(2) The Common Stock issuable upon exercise of this Warrant
will be registered on Form S-3 with the Commission pursuant to the terms of the
Settlement Agreement.
(d) VALIDITY OF WARRANT AND ISSUANCE OF SHARES.
The Company represents and warrants that this Warrant has been
duly authorized and is validly issued.
The Company further represents and warrants that on the date
hereof it is duly authorized and reserved, and the Company hereby agrees that it
will at all times until the Expiration Date have duly authorized and reserved,
such number of shares of Common Stock as will be sufficient to permit the
exercise in full of the Warrant, and that all such shares are and will be duly
authorized and, when issued upon exercise of the Warrant, will be validly
issued, fully paid and non-assessable, and free and clear of all security
interests, claims, liens, equities and other encumbrances.
(e) ANTIDILUTION PROVISIONS.
The Exercise Price in effect at any time, and the number of
Warrant Shares that may be purchased upon any exercise of the Warrant, shall be
subject to change or adjustment as follows:
(1) COMMON STOCK REORGANIZATION. If the Company shall
subdivide its outstanding shares of Common Stock into a greater number of
shares, by way of stock split, stock dividend or otherwise, or consolidate its
outstanding shares of Common Stock into a smaller number of shares (any such
event being herein called a "Common Stock Reorganization"), then (i) the
Exercise Price shall be adjusted, effective immediately after the effective date
of such Common Stock Reorganization, to a price determined by multiplying the
Exercise Price in effect immediately prior to such effective date by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
on such effective date before giving effect to such Common Stock Reorganization
and the denominator of which shall be the number of shares of
<PAGE>
Common Stock outstanding after giving effect to such Common Stock
Reorganization, and (ii) the number of shares of Common Stock subject to
purchase upon exercise of this Warrant shall be adjusted, effective at such
time, to a number determined by multiplying the number of shares of Common Stock
subject to purchase immediately before such Common Stock Reorganization by a
fraction, the numerator of which shall be the number of shares outstanding after
giving effect to such Common Stock Reorganization and the denominator of which
shall be the number of shares of Common Stock outstanding immediately before
giving effect to such Common Stock Reorganization.
(2) COMMON STOCK DISTRIBUTION.
(a) If the Company shall issue, sell or otherwise
distribute any shares of Common Stock, other than pursuant to a Common Stock
Reorganization (which is governed by Section 5(a)) (any such event, including
any event described in paragraphs (ii) and (iii) below, being herein called a
"Common Stock Distribution"), for a consideration per share less than the Market
Price immediately prior to such Common Stock Distribution then, effective upon
such Common Stock Distribution, the Exercise Price shall be reduced to a price
determined by multiplying the Exercise Price by a fraction, the numerator of
which shall be the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such Common Stock Distribution multiplied by the Market
Price, plus (B) the consideration, if any, received by the Company upon such
Common Stock Distribution, and the denominator of which shall be the product of
(1) the total number of shares of Common Stock outstanding immediately after
such Common Stock Distribution multiplied by (2) the Market Price.
If any Common Stock Distribution shall require an adjustment
to the Exercise Price pursuant to the foregoing provisions of this Section 5(b),
including by operation of paragraph (ii) or (iii) below, then, effective at the
time such adjustment is made, the number of shares of Common Stock subject to
purchase upon exercise of this Warrant shall be increased to a number determined
by multiplying the number of shares of Common Stock subject to purchase
immediately before such Common Stock Distribution by a fraction, the numerator
of which shall be the Exercise Price in effect immediately prior to such event
and the denominator of which shall be the Exercise Price as adjusted in
accordance with this Section 5(b). In computing adjustments under this
paragraph, fractional interests in Common Stock shall be taken into account to
the nearest one-thousandth of a share.
Subject to Section 5(e) below, the provisions of this Section
5(b), including by operation of paragraph (ii) or (iii) below, shall not operate
to increase the Exercise Price or reduce the number of shares of Common Stock
subject to purchase upon exercise of this Warrant.
(b) If the Company shall issue, sell, distribute or
otherwise grant in any manner (including by assumption) any rights to subscribe
for or to purchase, or any warrants or options for the purchase of Common Stock
or any stock or securities convertible into or exchangeable for Common Stock
(such rights, warrants or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called "Convertible
Securities"), whether or not such Options or the rights to convert or exchange
any such Convertible Securities in respect of such Options are immediately
exercisable or exercisable prior to the Expiration Date, and the price per share
for which Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities in respect of such Options
(determined by dividing (x) the aggregate amount, if any, received or receivable
by the Company as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the Company upon
the exercise of all such Options, plus, in the case of Options to acquire
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon issuance or sale of such Convertible
Securities and
<PAGE>
upon the conversion or exchange thereof, by (y) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options at such price) shall be less than the Market Price
immediately prior to the granting of such Options then, for purposes of Section
5(b)(i), the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon the exercise of such Options
shall be deemed to have been issued as of the date of granting of such Options
and thereafter shall be deemed to be outstanding and the Company shall be deemed
to have received as consideration of such price per share, determined as
provided above, therefor. Except as otherwise provided in paragraph (iv) below,
no additional adjustment of the Exercise Price shall be made upon the actual
exercise of such Options or upon conversion or exchange of such Convertible
Securities.
(c) If the Company shall issue, sell or otherwise
distribute (including by assumption) any Convertible Securities, whether or not
the rights to exchange or convert thereunder are immediately exercisable or
exercisable prior to the Expiration Date, and the price per share for which
Common Stock is issuable upon the conversion or exchange of such Convertible
Securities (determined by dividing (x) the aggregate amount received or
receivable by the Company as consideration for the issuance, sale or
distribution of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the conversion
or exchange thereof, by (y) the maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities)
shall be less than the Market Price immediately prior to such issuance, sale or
distribution then, for purposes of Section 5(b)(i), the total maximum number of
shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued as of the date of the
issuance, sale or distribution of such Convertible Securities thereafter shall
be deemed to be outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided above, therefor.
Except as otherwise in paragraph (iv) below, no additional adjustment of the
Exercise Price shall be made upon the actual conversion or exchange of such
Convertible Securities.
(d) If (x) the purchase price provided for in any
Option referred to in Section 5(b)(ii) or the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities referred
to in Sections 5 (b)(ii) or 5(b)(iii) or the rate at which any Convertible
Securities referred to in Sections 5(b)(ii) or 5(b)(iii) are convertible into or
exchangeable for Common Stock shall change at any time (other than under or by
reason of provisions designed to protect against dilution upon an event which
results in a related adjustment pursuant to this Section 5), or (y) any of such
Options or Convertible Securities shall have terminated, lapsed or expired, the
Exercise Price then in effect shall forthwith be readjusted (effective only with
respect to any exercise of this Warrant after such readjustment) to the Exercise
Price which would then be in effect had the adjustment made upon the issuance,
sale, distribution or grant of such Options or Convertible Securities been made
based upon such changed purchase price, additional consideration or conversion
rate, as the case may be (in the case of any event referred to in clause (x) of
this paragraph (iv)) or had such adjustment not been made (in the case of any
event referred to in clause (y) of this paragraph (iv)).
(e) If the Company shall pay a dividend or make any
other distribution upon any capital stock of the Company payable in Common
Stock, Options or Convertible Securities, other than pursuant to a Common Stock
Reorganization (which is governed by Section 5(a)), then, for purposes of this
Section 5(b), such Common Stock, Options or Convertible Securities shall be
deemed to have been issued or sold without consideration.
<PAGE>
(f) If any shares of Common Stock, Options or
Convertible Securities shall be issued, sold or distributed for cash, the
consideration received thereof shall be deemed to be the amount received by the
Company therefor, without any deduction therefrom of any expenses incurred in
connection therewith. If any shares of Common Stock, Options or Convertible
Securities shall be issued, sold or distributed for a consideration other than
cash, the amount of the consideration other than cash received by the Company
shall be deemed to be the fair market value of such consideration at the time of
its receipt by the Company as determined in good faith by the Board of Directors
of the Company, without any deduction of any expenses incurred in connection
therewith. If any shares of Common Stock, Options or Convertible Securities
shall be issued in connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor shall be deemed to
be the fair market value of such portion of the assets and business of the
non-surviving corporation as shall be attributable to such Common Stock, Options
or Convertible Securities, as the case may be, at the time of the merger as
determined in good faith by the Board of Directors of the Company. If any
Options shall be issued in connection with the issuance and sale of other
securities of the Company, together comprising one integral transaction in which
no specific consideration is allocated to such Options by the parties thereto,
such Options shall be deemed to have been issued without consideration.
(3) SPECIAL DIVIDENDS. If the Company shall issue or
distribute to all holders of shares of Common Stock evidences of indebtedness,
any other securities of the Company or any cash, property or other assets
(excluding (i) a Common Stock Reorganization, (ii) a Common Stock Distribution,
(iii) quarterly cash dividends paid in the ordinary course of business, or (iv)
any purchase, redemption or other acquisition by the Company of shares of Common
Stock owned by any individual shareholder owning fewer than 100 shares), whether
or not accompanied by a purchase, redemption or other acquisition of shares of
Common Stock (any such nonexcluded event being herein called a "Special
Dividend"), the (x) the Exercise Price shall be decreased, effective immediately
after the effective date of such Special Dividend, to a price determined by
multiplying the Exercise Price then in effect by a fraction, the numerator of
which shall be the Market Price immediately prior to such effective date less
any cash and the then fair market value, as determined in good faith by the
Board of Directors of the Company, of any evidences of indebtedness, securities
or property or other assets issued or distributed in such Special Dividend with
respect to one share of Common Stock, and the denominator of which shall be the
Market Price immediately prior to such effective date, and (y) the number of
shares of Common Stock subject to purchase upon exercise of this Warrant shall
be increased to a number determined by multiplying the number of shares of
Common Stock subject to purchase immediately before such Special Dividend by a
fraction, the numerator of which shall be the Exercise Price in effect
immediately before such Special Dividend and the denominator of which shall be
the Exercise Price in effect immediately after such Special Dividend. A
reclassification of the Common Stock (other than a change in par value, or from
par value to no par value or from no par value to par value) into shares of
Common Stock and shares of any other class of stock shall be deemed to be a
distribution by the Company to the holders of its Common Stock of such shares of
such other class of stock and, if the outstanding shares of Common Stock shall
be changed into a larger or smaller number of shares of Common Stock as part of
such reclassification, a Common Stock Reorganization.
(4) CAPITAL REORGANIZATION. If there shall be any
consolidation or merger to which the Company is a party, other than a
consolidation or a merger of which the Company is the continuing corporation and
which does not result in any reclassification of, or change (other than a Common
Stock Reorganization) in, outstanding shares of Common Stock, or any sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety, or any recapitalization of the Company (any such event being called a
"Capital Reorganization"), then, effective upon the effective date of such
Capital Reorganization, the Warrant holder shall no
<PAGE>
longer have the right to purchase Common Stock, but shall have instead the right
to purchase, upon exercise of this Warrant, the kind and amount of shares of
stock and other securities and property (including cash) which the Warrant
Holder would have owned or have been entitled to receive pursuant to such
Capital Reorganization if the Warrant had been exercised immediately prior to
the effective date of such Capital Reorganization. As a condition to effecting
any Capital Reorganization, the Company or the successor or surviving
corporation, as the case may be, shall execute and deliver to each Warrant
Holder an agreement as to the Warrant Holder's rights in accordance with this
Section 5(d), providing, to the extent of any right to purchase equity
securities hereunder, for subsequent adjustments as nearly equivalent as may be
practicable to the adjustments provided for in this Section 5. The provisions of
this Section 5(d) shall similarly apply to successive Capital Reorganizations.
(5) ADJUSTMENT RULES.
(a) Any adjustments pursuant to this Section 5 shall
be made successively whenever any event referred to herein shall occur, except
that, notwithstanding any other provision of this Section 5, no adjustment shall
be made to the number of Warrant Shares to be delivered to the Warrant Holder
(or to the Exercise Price) if such adjustment represents less than 1% of the
number of Warrant Shares previously required to be so delivered, but any lesser
adjustment shall be carried forward and shall be made at the time and together
with the next subsequent adjustment which together with any adjustments so
carried forward shall amount to 1% or more of the number of Warrant Shares to be
so delivered.
(b) No adjustments shall be made pursuant to this
Section 5 in respect of (x) the issuance of Warrant Shares upon exercise of the
Warrant; (y) the issuance, sale or grant or exercise before or after the date
hereof by the Company to any director, officer, consultant or employee of the
Company or any Affiliate of the Company of any Common Stock or of any option,
bonus or other award exercisable into Common Stock approved by the Board of
Directors of the Company or any duly authorized committee thereof; or (z) any
securities of the Company which are issued and outstanding as at the date hereof
or are issued pursuant to the Stock Purchase Agreement (including, without
limitation, the issuance of any Series E Preferred Stock) or the Consulting
Agreement.
(c) If the Company shall take a record of the holders
of its Common Stock for any purpose referred to in this Section 5, then (x) such
record date shall be deemed to be the date of the issuance, sale, distribution
or grant in question and (y) if the Company shall legally abandon such action
prior to effecting such action, no adjustment shall be made pursuant to this
Section 5 in respect of such action.
(d) Upon the expiration without being exercised of
any rights, options, warrants or conversion or exchange of any rights, options,
warrants or conversion or exchange privileges for which an adjustment has been
made pursuant to this Warrant, the Exercise Price and the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall, upon such
expiration, be readjusted and shall thereafter, upon any future exercise, be
such as they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (A) the only
shares of Common Stock so issued were the shares of such Common Stock, if any,
actually issued or sold upon the exercise of such rights, options, warrants or
conversion or exchange rights and (B) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon such
exercise plus the consideration, if any, actually received by the Company for
issuance, sale or grant of all such rights, options, warrants or conversion or
exchange rights whether or not exercised; provided, that no such readjustment
shall have the effect of increasing the Exercise Price by an amount, or
decreasing the number of shares purchasable upon exercise of each Warrant by a
number, in
<PAGE>
excess of the amount or number of the adjustment initially made in respect to
the issuance, sale or grant of such rights, options, warrants or conversion or
exchange rights.
(6) PROCEEDINGS PRIOR TO ANY ACTION REQUIRING ADJUSTMENT. As a
condition precedent to the taking of any action which would require an
adjustment pursuant to this Section 5, the Company shall take any action which
may be necessary, including obtaining regulatory approvals or exemptions, in
order that the Company may thereafter validly and legally issue as fully paid
and nonassessable all shares of Common Stock which the Warrant Holder is
entitled to receive upon exercise of the Warrant.
(7) NOTICE OF ADJUSTMENT. Not less than 10 days prior to the
record date or effective date, as the case may be, of any action which requires
or might require an adjustment or readjustment pursuant to this Section 5, the
Company shall give notice to each Warrant Holder of such event, describing such
event in reasonable detail and specifying the record date or effective date, as
the case may be, and, if determinable, the required adjustment and computation
thereof. If the required adjustment is not determinable as the time of such
notice, the Company shall give notice to each Warrant Holder of such adjustment
and computation as soon as reasonably practicable after such adjustment becomes
determinable.
(f) REGISTRATION OF WARRANT SHARES.
Subject to Section 3(b) hereof, neither the Warrant nor the
Warrant Shares have been registered with the Commission under the Securities Act
or qualified for sale pursuant to any state blue sky law, and neither may be
sold or transferred without such registration or qualification, except pursuant
to an exemption therefrom. No rights shall be hereby granted which are in
violation of applicable securities laws or regulations.
(g) TRANSFER OF WARRANT.
This Warrant is transferable; PROVIDED that no transfer shall
be made that (a) transfers Warrants exercisable into fewer than 10,000 Warrant
Shares, (b) does not comply with all applicable federal and state securities
laws or (c) would require registration or qualification of the Warrant pursuant
to the Securities Act or any applicable state blue sky law; and PROVIDED FURTHER
that the Warrant Holder upon transfer of the Warrant must deliver to the Company
a duly executed Warrant Assignment in the form of Annex B hereto, with funds
sufficient to pay any transfer tax imposed in connection with such assignment
(if any) and upon surrender of this Warrant Certificate to the Company. The
Company shall execute and deliver a new Warrant Certificate or Certificates in
the form of this Warrant Certificate with appropriate changes to reflect such
Assignment, in the name or names of the assignee or assignees specified in the
fully executed Warrant Assignment or other instrument of assignment and, if the
Warrant Holder's entire interest is not being transferred or assigned, in the
name of the Warrant Holder, and this Warrant Certificate shall promptly be
cancelled. Any transfer or exchange of this Warrant Certificate shall be without
charge to the Warrant Holder (except as provided above with respect to transfer
taxes, if any) and any new Warrant Certificate or Certificates issued shall be
dated the date hereof. The terms "Warrant" and "Warrant Holder" as used herein
include all Warrants into which this Warrant (or any successor Warrant) may be
exchanged or issued in connection with the transfer or assignment of this
Warrant any successor Warrant and the holders of those Warrants, respectively.
(h) REGISTRATION OF COMMON STOCK; RULE 144.
The Company hereby agrees that, in accordance with the
provisions of the Settlement Agreement, it will file any reports required to be
filed by it under the Securities Act,
<PAGE>
the Exchange Act or the rules and regulations adopted by the Commission
thereunder and that it will use all reasonable efforts to cooperate with each
Warrant Holder and each holder of Warrant Shares in supplying such information
concerning the Company as may be necessary for such Warrant Holder or holder to
complete and file any information reporting forms currently or hereafter
required by the Commission as a condition to the availability of an exemption
from the Securities Act for the sale of any Warrants or Warrant Shares. The
Company also agrees that it will take such further action, and supply such
information (including the information specified by Rule 144A(d)(4) under the
Securities Act) as any Warrant Holder may reasonably request to the extent
required from time to time to enable the Warrant Holder to sell Warrant Shares
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 or 144A under the Securities Act, as such Rules
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission. Upon the request of the Warrant Holder, the Company
will deliver to the Warrant Holder a written statement that it has complied with
such reporting requirements.
Any other provision of this Warrant notwithstanding, the
Company shall not be obligated under any circumstances to cause this Warrant to
be listed or quoted on NASDAQ National Market System, any national securities
exchange or any other trading system or market, or to be registered under the
Securities Act.
(i) LOST, MUTILATED OR MISSING WARRANT CERTIFICATES.
Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
the case of loss, theft or destruction, upon receipt of indemnification
satisfactory to the Company, or, in the case of mutilation, upon surrender and
cancellation of the mutilated Warrant Certificate, the Company shall execute and
deliver a new Warrant Certificate of like tenor and representing the right to
purchase the same aggregate number of Warrant Shares. The recipient of any such
Warrant Certificate shall reimburse the Company for all reasonable expenses
incidental to the replacement of such lost, mutilated or missing Warrant
Certificate.
(j) SUCCESSORS AND ASSIGNS.
All the provisions of this Warrant by or for the benefit of
the Company or the Warrant Holder shall bind and inure to the benefit of their
respective successors and assigns.
(k) NOTICES.
Any notice or other communication hereunder shall be in
writing and shall be sufficient if sent by first-class mail or courier, postage
prepaid, and addressed as follows: (a) if to the Company, e4L, Inc., c/o e4L
Television, 15821 Ventura Blvd., Suite 570, Encino, California 91436 Attention:
Eric R. Weiss, Vive Chairman and Chief Operating Officer; (b) if to the Warrant
Holder, Lehman Brothers Inc., 3 World Financial Center, New York, New York 10285
Attention: William A. Olshan, Esq. and Robert Catania; and (c) if to any party,
addressed to such address as such party may hereafter specify to the Company, in
the case of any communication to be provided by the Company, or to each Warrant
Holder, in the case of any communication to be provided by the Warrant Holder,
for the purpose of notice hereunder.
(l) WAIVERS; AMENDMENTS.
Any provision of this Warrant may be amended, modified or
waived with (but only with) the written consent of the Company and the holder or
holders of Warrants representing at least 51% of the shares of Common Stock
issuable upon exercise of all outstanding Warrants;
<PAGE>
PROVIDED that no such amendment, modification or waiver shall, without the
written consent of the Company and each Warrant Holder, (a) change the number of
Warrant Shares issuable upon exercise of the Warrants or the Exercise Price or
(b) amend, modify or waive the provisions of this Section 12. Any amendment,
modification or waiver effected in compliance with this Section 12 shall be
binding upon the Company and each Warrant Holder. The Company shall give notice
as soon as reasonably practicable to each Warrant Holder of any amendment,
modification or waiver effected in compliance with this Section 12. No failure
or delay of the Company or any Warrant Holder in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereon or the exercise of any other right or power. No notice or demand on the
Company in any case shall entitle the Company to any other or future notice or
demand in similar or other circumstances. The rights and remedies of the Company
and each Warrant Holder hereunder are cumulative and not exclusive of any rights
or remedies which it would otherwise have.
(m) MISCELLANEOUS.
(1) The Warrant shall not entitle the Warrant Holder, prior to
the exercise of the Warrant, to any rights as a shareholder of the Company.
(2) The Company shall pay all reasonable expenses of the
Warrant Holder, including reasonable fees and disbursements of counsel, in
connection with the preparation of the Warrant, any waiver or consent hereunder
or any amendment or modification hereof.
(3) In case any one or more of the provisions contained in
this Warrant shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
(4) Without limiting the rights of the Company and the Warrant
Holder to pursue all other legal and equitable rights available to such party
for the other parties' failure to perform its obligations hereunder, the Company
and the Warrant Holder each hereto acknowledge and agree that the remedy at law
for any failure to perform any obligations hereunder would be inadequate and
that each shall be entitled to specific performance, injunctive relief or other
equitable remedies in the event of any such failure.
(5) THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF LAW.
(6) Any legal suit, action or proceeding arising out of or
relating to this Warrant will be instituted exclusively in the Delaware Court of
Chancery, County of New Castle, Delaware, or in the United States District
Court, District of Delaware, Wilmington, Delaware, all parties waive any
objection which they may have now or hereafter based upon FORUM NON CONVENIENS
or to the venue of any such suit, action or proceeding, and (c) irrevocably
consents to the jurisdiction of the Delaware State Court of Chancery, County of
New Castle and the United States District Court for the District of Delaware in
any such suit, action or proceeding. The parties further agrees to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the Delaware State Court of Chancery, County
<PAGE>
of New Castle or in the United States District Court for the District of
Delaware and agrees that service of process upon such party, mailed by certified
mail to the such party's address, will be deemed in every respect effective
service of process upon such party, in any suit, action or proceeding. FURTHER,
BOTH THE COMPANY AND THE WARRANT HOLDER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION
TO ENFORCE THIS WARRANT.
(7) The section headings used herein are for convenience of
reference only and shall not be construed in any way to affect the
interpretation of any provisions of the Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed its authorized officer, and its corporate seal to be hereunto affixed,
all as of the day and year first above written.
e4L, INC.
By: /s/ Eric R. Weiss
-------------------------------------
Eric R. Weiss
Vice Chairman, Chief Operating Officer
<PAGE>
ANNEX A
Form of Notice of Exercise
----------------------
To: e4L, Inc.
Reference is made to the Common Stock Purchase Warrant dated May __,
1999. Terms defined therein are used herein as therein defined.
The undersigned, pursuant to the provisions set forth in the Warrant,
hereby irrevocably elects and agrees to purchase _______ shares of Common Stock,
and makes payment herewith in full therefor at the Exercise Price of
$_______ in the following form:
________________________________________.
[If said number of shares is less than all of the shares purchasable hereunder,
the undersigned hereby requests that a new Warrant Certificate representing the
remaining balance of the shares be registered in the name of ___________________
, whose address is
-----------------------
-----------------------
-----------------------]
The undersigned hereby represents that it is exercising the Warrant for
its own account for investment purposes and not with the view to any sale or
distribution and that the Warrant Holder will not offer, sell or otherwise
dispose of the Warrant or any underlying Warrant Shares in violation of
applicable securities laws.
LEHMAN BROTHERS INC.
By:
------------------------------------------
Name:
Title:
3 World Financial Center
New York, New York 10285
<PAGE>
ANNEX B
FORM OF WARRANT ASSIGNMENT
Reference is made to the Common Stock Purchase Warrant, dated May __,
1999, issued by National Media Corporation. Terms defined therein are used
herein as therein defined.
FOR VALUE RECEIVED___________________ (the "Assignor") hereby sells,
assigns and transfers all of the rights of the Assignor as set forth in the
Common Stock Purchase Warrant dated May ___, 1999, with respect to the number of
Warrant Shares covered thereby as set forth below, to the Assignee(s) as set
forth below:
<TABLE>
<CAPTION>
Name(s) of Number of
Assignee(s) Address(es) Warrant Shares
- ----------- ----------- --------------
<S> <C> <C>
- --------------- -------------------- --------------------
- --------------- -------------------- --------------------
</TABLE>
All notices to be given by the Company to the Assignor as Warrant
Holder shall be sent to the Assignee(s) at the above listed address(es), and, if
the number of shares being hereby assigned is less than all of the shares
covered by the Warrant held by the Assignor, then also to the Assignor.
In accordance with Section 7 of the Warrant Certificate, the Assignor
requests that the Company execute and deliver a new Warrant Certificate or
Warrant Certificates in the name or names of the assignee or assignees, as is
appropriate, or, if the number of shares being hereby assigned is less than all
of the shares covered by the Warrant held by the Assignor, new Warrant
Certificates in the name or names of the assignee or the assignees, as is
appropriate, and in the name of the Assignor.
The undersigned represents that the Assignee has represented to the
Assignor that the Assignee is acquiring the Warrant for its own account or the
account of an Affiliate for investment purposes and not with the view to any
sale or distribution, and that the Assignee will not offer, sell or otherwise
dispose of the Warrant or the Warrant Shares except under circumstances as will
not result in a violation of applicable securities laws.
Dated:
----------------------
LEHMAN BROTHERS INC.
By:
---------------------------------------
Name:
Title:
3 World Financial Center
New York, New York 10285
<PAGE>
EXHIBIT 5
[LETTERHEAD OF KLEHR, HARRISON, HARVEY, BRANZBURG & ELLERS LLP]
June 30, 1999
Board of Directors
e4L, Inc.
15821 Ventura Boulevard, 5th Floor
Los Angeles, CA 91436
RE: REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
We have acted as counsel to e4L, Inc., a Delaware corporation (the
"Company"), in connection with the preparation of the Company's Registration
Statement on Form S-3 (the "Registration Statement") being filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"). The Registration Statement relates to the
resale of up to 130,185 shares of the Company's common stock, par value $.01 per
share (the "Shares") issuable upon exercise of warrants (the "Warrants").
In connection with this opinion, we have examined and relied upon the
original or copies of (i) the Certificate of Incorporation and the By-laws of
the Company, (ii) minutes and records of the corporate proceedings with respect
to the issuance of the Shares, and (iii) such other documents as we have deemed
necessary as a basis for the opinion hereinafter set forth.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to any facts material
to the opinions expressed herein that were not independently established or
verified, we have relied upon oral or written statements and representations of
officers and other representatives of the Company and others.
This opinion is limited to the laws of the State of Delaware and we
express no opinion as to the laws of any other jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that the
Shares issuable upon exercise of the Warrants, when issued upon exercise of the
Warrants in accordance with their terms, will be validly issued, fully paid and
non-assessable.
This opinion is being furnished to you solely for your benefit in
connection with the Registration Statement and is not to be used, circulated,
quoted or referred to or relied upon for any other purpose without our express
written permission.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act, or the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Klehr, Harrison, Harvey, Branzburg & Ellers LLP
<PAGE>
EXHIBIT 10
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement"), dated as of May 14, 1999, is
made by and between LEHMAN BROTHERS INC. ("Lehman") and e4L, INC., a Delaware
corporation formerly known as National Media Corporation ("NMC"). Lehman and NMC
are referred to herein as the "Parties."
WHEREAS, pursuant to a July 2, 1997 letter, NMC retained Lehman to provide
certain investment banking services (the "Engagement Letter").
WHEREAS, pursuant to the Engagement Letter, Lehman asserts that it provided
substantial and valuable investment banking services to NMC and Lehman has
demanded payment therefor.
WHEREAS, NMC terminated the Engagement Letter on or about October 23, 1998
and has denied liability for any payment to Lehman thereunder.
WHEREAS, the Parties wish to settle and compromise Lehman's outstanding
payment demand to avoid the time and expense of litigation.
NOW, THEREFORE, in consideration of the foregoing and of the promises
hereinafter contained, the Parties hereby agree as follows:
Ten days following the execution and delivery of this Agreement as provided
in Paragraphs 18 and 19 herein (the "Closing Date"), NMC shall:
Pay to Lehman in cash $344,019, which sum includes $105,841 in
out-of-pocket expenses incurred by Lehman pursuant to the Engagement Letter;
Cause Temporary Media Co., LLC, a Delaware limited liability company
("TMC"), to transfer and assign to Lehman a common stock purchase warrant held
by TMC to purchase, at $1.32 per
<PAGE>
share, an aggregate of 32,500 shares of NMC common stock, $.01 per share par
value (the "TMC Warrant"); and
Issue to Lehman a common stock purchase warrant to purchase, at $1.50 per
share, an aggregate of 130,185 shares of NMC common stock, $.01 per share par
value (the "NMC Warrant").
No later than June 30, 1999, NMC shall file a registration statement (Form
S-3) with the Securities and Exchange Commission ("SEC"), covering the shares of
NMC common stock underlying the NMC Warrant and shall keep such registration
statement and the present registration statement covering the shares of NMC
common stock underlying the TMC Warrant effective with the SEC until Lehman has
sold all of the shares of NMC common stock underlying the NMC Warrant and the
TMC Warrant (the "NMC Shares").
Regarding the sale by Lehman of the NMC Shares, Lehman and NMC agree:
During any 90-day period ("Quarter") immediately subsequent to the Closing
Date, Lehman shall not sell more than 27,115 NMC Shares in the first Quarter and
27,114 NMC Shares in the remaining Quarters;
If, at any time during the first twelve (12) month period following the
Closing Date, the volume weighted average price (as that term is defined by
Bloomberg) of NMC common stock on the New York Stock Exchange ("NYSE") is above
$8.50 per share for a period of three (3) consecutive trading days or more, NMC
may request that Lehman exercise warrants and concurrently sell a designated
number of NMC Shares, which may be in excess of the limitations set forth in
subparagraph 3(a) hereof, (as long as the volume weighted average price is not
less than $8.50 per share). Lehman will use its bests efforts to execute such
trade(s) as soon as is reasonably possible. If Lehman refuses to sell shares at
the volume weighted average price (as long as the volume weighted average price
is not less than $8.50), there shall be no "Guarantee" (as defined in
subparagraph (e) hereof) in effect with respect to such designated number of
shares. Any such request to sell NMC shares underlying the NMC Warrant may only
be effective if and when the
<PAGE>
registration statement to be filed pursuant to paragraph 2 hereof has been
declared effective by the SEC.
If during the twelve (12) to eighteen (18) months following the Closing
Date, the volume weighted average price of NMC common stock is above $10.80 for
a period of three (3) consecutive trading days or more, NMC may request that
Lehman exercise warrants and concurrently sell a designated number of NMC
Shares, which may be in excess of the limitations set forth in subparagraph 3(a)
hereof, (as long as the volume weighted average price is not less than $10.80).
Lehman will use its best efforts to execute such trade(s) as soon as is
reasonably possible. If Lehman refuses to sell shares at the volume weighted
average price (as long as the volume weighted average price is not less than
$10.80), there shall be no Guarantee in effect with respect to such designated
number of shares.
Within three business days of the last day of each Quarter on which the
NYSE is open for trading, Lehman shall advise NMC of the (i) number of NMC
Shares sold by it during such Quarter, (ii) the sales price for such NMC Shares,
and (iii) the aggregate sales proceeds received and shall provide NMC with
copies of all applicable trading confirmations substantially in the form of
Exhibit "A" attached hereto.
NMC guarantees to Lehman (the "Guarantee") that it shall receive Aggregate
Proceeds (as herein defined) from the sale of NMC Shares of not less than:
6 months from Closing Date ("First Period"):
TMC Warrants- 32,500 @ $8.50 = $233,350
NMC Warrants- 11,921 @ $8.50 = $83,447
-------
"First Period Guaranteed Proceeds": $316,797
<PAGE>
Between 6 and 12 months from Closing Date
("Second Period"):
NMC Warrants - 45,259 @ $8.50 = $316,813
-------
"Second Period Guaranteed Proceeds": $316,813
Between 12 and 18 months from Closing Date
("Third Period"):
NMC Warrants - 72,926 @ $10.80 = $678,212
-------
"Third Period Guaranteed Proceeds": $678,212
Total "Guaranteed Proceeds" to
be received: $1,311,822
----------
----------
"Aggregate Proceeds" for each two-Quarter period (i.e., the First Period,
Second Period, and/or the Third Period) means the following:
(x) the sum of the cash realized by Lehman on the sale of
NMC Shares for each of those three periods (without
deduction for any commissions or brokerage fees paid to
Lehman but net of the warrant exercise price for the
NMC Shares sold); plus
(y) the aggregate volume weighted average price "in the
money" value of any unsold NMC Shares or unexercised
NMC Warrants or TMC Warrants Lehman was entitled to
sell pursuant to paragraph 3(a) during each of those
three periods, determined by the volume weighted
average price for NMC common stock on the last trading
day on which the NYSE is open in each of the applicable
three periods; plus,
<PAGE>
(z) the number of NMC Shares, if any, but not including any
NMC Shares that are included in the calculation
pursuant to subparagraph (e)(iv)(y) above, as to which
no Guarantee is in effect pursuant to sub-paragraph
3(b) hereof times $8.50 in Period One and Period Two
and $10.80 in Period Three, less the applicable warrant
exercise price.
Notwithstanding the definition of Aggregate Proceeds set forth above,
to the extent NMC Shares have been sold in the First Period or the Second
Period in excess of the number of NMC Shares covered by the Guarantee for
such periods ("Excess Shares"), those Excess Shares shall be applied to the
Guarantee for the Second Period and/or the Third Period. If the NMC shares
underlying the NMC Warrant have not been registered with the SEC by July
30, 1999 so that they may be sold, any such shares shall be excluded from
the above calculation and, within ten (10) business days of a demand from
Lehman, NMC shall repurchase such shares in an amount no greater than
permitted to be sold by paragraph 3(a) herein at the closing price on the
NYSE for NMC Shares on any trading date designated by Lehman in such
notice, but in no event shall the amount paid by NMC be less than $8.50 for
the shares within the Guarantee for the First Period and Second Period and
$10.80 for the shares within the Guarantee for the Third Period.
To the extent that Lehman has not received Aggregate Proceeds of $316,800
by the close of the First Period, within ten (10) days following notification of
the sale of NMC Shares for the First Period pursuant to paragraph 3(d), NMC
shall pay in cash to Lehman the shortfall between $316,800 and the Aggregate
Proceeds received by Lehman.
To the extent that Lehman has not received Aggregate Proceeds of an
additional $316,800 by the close of the Second Period, within ten (10) days
following notification of the sale of NMC
<PAGE>
Shares for the Second Period pursuant to paragraph 3(d), NMC shall pay in cash
to Lehman the shortfall between $316,800 and the Aggregate Proceeds received by
Lehman.
To the extent that Lehman has not received Aggregate Proceeds of an
additional $678,220 by the close of the Third Period, within ten (10) days
following notification of the sale of NMC Shares for the Third Period pursuant
to paragraph 3(d), NMC shall pay in cash to Lehman the shortfall between
$678,220 and the Aggregate Proceeds received by Lehman.
The payment provided for in Paragraph 1 and any payments required by
Paragraphs 4, 5 and 6 shall be made by wire transfer to Lehman as per its
instructions attached hereto as Exhibit "B". Lehman reserves the right to change
its instructions concerning the method of payment or the address to which the
payments shall be directed.
Except for (i) the performance of the obligations created by or arising
out of this Agreement and (ii) paragraphs 8 and 9 of the Engagement Letter, NMC
and Lehman, and each of them, release and discharge each other and their
respective shareholders, directors, officers, agents, employees, predecessors,
successors, subsidiaries, affiliates and assigns from any and all claims or
liabilities, whether or not such claims or liabilities are known or suspected to
exist, relating to or arising out of the Engagement Letter, or any services
provided by or expenses incurred by Lehman pursuant thereto.
The parties acknowledge that each may hereafter discover facts
different from or in addition to those now known or believed to be true
regarding the subject matter of this mutual release and agree that this
Agreement shall remain in full force and effect, notwithstanding the existence
of any such different or additional facts.
Each party hereto represents and warrants that it is the sole
and lawful owner of all right, title and interest in and to all matters to which
the foregoing mutual release refers and that it has not previously assigned or
transferred, or purported to assign or transfer, to any person any released
matter or any portion thereof. The parties, and each of them, shall indemnify
and hold
<PAGE>
harmless the other from and against any claim, demand, liability, expense, or
cause of action based on or arising out of any such assignment or transfer or
purported assignment or transfer.
This Agreement is for the sole purpose of settling the claims of the
parties and it is expressly understood and agreed that this Agreement does not
constitute, or is not evidence of, any admission by NMC of any liability to
Lehman or the validity of any of Lehman's claims pursuant to the Engagement
Letter.
In the event either party breaches its obligations hereunder, or
otherwise breaches the Agreement, the prevailing party shall be entitled to
receive as damages any and all costs, expenses and attorneys' fees incurred by
such prevailing party in enforcing any provision of this Agreement or in
obtaining and enforcing a judgment for any payments not made.
NMC may not assign or otherwise transfer its obligation to make any of
the payments specified in this Agreement, unless Lehman, in its sole discretion
provides express written consent.
The parties agree that the Engagement Letter has been terminated as of
October 23, 1998; that paragraphs 1, 2, 3, 4, 5, 6, 7, 13 and 14 of the
Engagement Letter are of no further force or effect; and that paragraphs 8, 9,
10, 11 and 12 of the Engagement Letter shall remain in effect as per their
respective terms and provisions.
The provisions of this Agreement shall be binding on and inure to the
benefit of Lehman's and NMC's predecessors, parents, subsidiaries, affiliates
and related companies, and any and all past, present and future officers,
owners, directors, trustees, shareholders, employees, agents, successors and
assigns of Lehman and NMC.
This Agreement comprises the entire agreement of settlement between the
Parties and supersedes all prior understandings or agreements among the parties
hereto. Any antecedent or contemporaneous extrinsic representations and
warranties made in the negotiation or preparation of this Agreement are intended
to be merged into this Agreement and are of no further effect. However,
<PAGE>
nothing in the releases included herein alters, modifies or negates the rights
and duties of the Parties under this Agreement.
Each of the Parties represents to the other that it has full power and
authority to enter into this Agreement and the release, that this Agreement and
the release have been authorized by all necessary corporate action, and that the
undersigned officers are duly authorized to execute this Agreement and the
release.
This Agreement shall be governed by the substantive law of the State of
New York without regard to principles of conflicts of laws.
All notices, requests, demands and other communications which are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally, or sent by telecopy or
certified mail, postage prepaid:
If to Lehman, to both of:
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285
Attention: William A. Olshan, Esq.
Telecopy No.: (212) 526-9651
-and-
Lehman Brothers, Inc.
3 World Financial Center
New York, New York 10285
Attn: Robert Catania
Telecopy No.: (212) 526-9338
If to NMC, to:
e4L, Inc.
15821 Ventura Boulevard, 5th Floor
Encino, California 91436
Attn: Daniel M. Yukelson,
Executive Vice President and
Chief Financial Officer
Telecopy No.: (818) 461-6530
<PAGE>
with copy to:
Buchalter, Nemer, Fields & Younger
601 South Figueroa Street, Suite 2400
Los Angeles, California 90017
Attention: Stuart D. Buchalter, Esq.
Telecopy No.: (213) 896-0400
This Agreement may be executed in counterparts and counterparts may be
delivered by facsimile; provided, however, that the Parties will also deliver
originals and execute counterparts to each other by overnight delivery service.
This Agreement shall not be binding or effective until it is signed and
delivered by the Parties. No modification, waiver, supplement or amendment of
this Agreement shall be binding or enforceable unless executed in writing by the
party to be bound thereby.
IN WITNESS WHEREOF the Parties have executed this Agreement by and
through the undersigned officers.
LEHMAN BROTHERS INC.
By: /s/
----------------------------
Name:
Title:
e4L, INC.
By: /s/
----------------------------
Name:
Title:
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of e4L, Inc. for the
registration of 130,185 shares of its common stock and to the incorporation by
reference therein of our report dated June 25, 1999, with respect to the
consolidated financial statements and schedule of e4L, Inc. included in its
Annual Report (Form 10-K) for the year ended March 31, 1999, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Los Angeles, California
June 25, 1999
