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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 30, 1999
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e4L, INC.
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(Exact name of registrant as specified in charter)
Delaware I-6715 13-2658741
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(State or Other Juris- (Commission File Number) (IRS Employer Identi-
diction of Incorporation) fication No.)
15821 Ventura Boulevard, 5th Floor, Los Angeles, CA 91436
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(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code 818-461-6400
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(Former name or former address, if changed since last report.)
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Exhibit Index appears on Page 4 hereof.
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ITEM 5. OTHER EVENTS.
On August 30, 1999, e4L, Inc. ("e4L") consummated a transaction
pursuant to which three institutional investors (the "Series F Investors")
purchased $5 million of e4L's newly-created Series F Convertible Preferred Stock
(the "Series F Preferred Stock").
The Series F Preferred Stock is convertible into the number of
shares of e4L common stock as is determined by dividing (i) the aggregate
stated value of the shares of Series F Preferred Stock being converted by
(ii) $4.7125 per share, the average closing trading price of the e4L common
stock on the New York Stock Exchange for the five trading days prior to
closing. The Series F Preferred Stock accrues a premium of 4% per annum which
is required to be paid in cash at the time of conversion of the Series F
Preferred Stock. In connection with the issuance of the Series F Preferred
Stock, e4L issued warrants (the "e4L Warrants") to purchase an aggregate of
50,000 shares of e4L common stock to the Series F Investors. The e4L Warrants
are exercisable until August 26, 2004 at an exercise price of $4.7125 per
share of e4L common stock (subject to adjustment in certain circumstances).
e4L also issued to the Series F Investors warrants to purchase 100,000 common
units (the "BuyItNow Warrants") of BuyItNow.com, LLC, a subsidiary of e4L.
The BuyItNow Warrants are exercisable until August 26, 2004 at an exercise
price equal to the greater of (i) $5.00 per unit or (ii) the price per unit
at which BuyItNow receives equity financing of at least $10,000,000.
Copies of the Certificate of Designations, Preferences and Rights of
the Series F Preferred Stock, the form of e4L Warrant, the form of BuyItNow
Warrant, the Registration Rights Agreement and the Securities Purchase Agreement
executed in connection with the transaction are attached hereto as Exhibits 4.1,
4.2, 4.3, 10.1 and 10.2, respectively, and are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits
4.1 Certificate of Designations, Preferences and Rights of the
Series F Convertible Preferred Stock.
4.2 Form of e4L Warrant issued in connection with the Series F
Convertible Preferred Stock.
4.3 Form of BuyItNow Warrant issued in connection with the Series
F Convertible Preferred Stock.
10.1 Registration Rights Agreement, dated as of August 27, 1999,
by and among e4L and the Series F Investors.
10.2 Securities Purchase Agreement, dated as of August 27, 1999,
among e4L and the Series F Investors.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
e4L, INC.
(Registrant)
Date: September 8, 1999 By: /s/ Daniel M. Yukelson
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Name: Daniel M. Yukelson
Title: Executive Vice President/Finance
and Chief Financial Officer
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EXHIBIT INDEX
NO.
4.1 Certificate of Designations, Preferences and Rights of the Series F
Convertible Preferred Stock.
4.2 Form of e4L Warrant issued in connection with the Series F Convertible
Preferred Stock.
4.3 Form of BuyItNow Warrant issued in connection with the Series F
Convertible Preferred Stock.
10.1 Registration Rights Agreement, dated as of August 27, 1999, by and
among e4L and the Series F Investors.
10.2 Securities Purchase Agreement, dated as of August 27, 1999, among e4L
and the Series F Investors.
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EXHIBIT 4.1
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CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS
OF
SERIES F PREFERRED STOCK
OF
e4L, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
e4L, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "CORPORATION"), hereby certifies that the following
resolutions were adopted by the Board of Directors of the Corporation pursuant
to authority of the Board of Directors as required by Section 151 of the
Delaware General Corporation Law.
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "BOARD OF DIRECTORS" or the "BOARD")
in accordance with the provisions of its Certificate of Incorporation and
Bylaws, each as amended and restated through the date hereof, the Board of
Directors hereby authorizes a series of the Corporation's previously authorized
Preferred Stock, par value $.01 per share (the "PREFERRED STOCK"), and hereby
states the designation and number of shares, and fixes the relative rights,
preferences, privileges, powers and restrictions thereof as follows:
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I. DESIGNATION AND AMOUNT
The designation of this series, which consists of 20,000 shares of
Preferred Stock, is the Series F Preferred Stock (the "SERIES F PREFERRED
STOCK") and the face amount shall be One Thousand U.S. Dollars ($1,000.00) per
share (the "FACE AMOUNT").
II. CERTAIN DEFINITIONS
For purposes of this Certificate of Designation, the following terms
shall have the following meanings:
A. "CONVERSION PRICE" means $4.7125, subject to adjustment as
provided herein.
B. "ISSUANCE DATE" means the date of the closing under that
certain Securities Purchase Agreement by and among the
Corporation and the purchasers named therein with respect to
the issuance of the Series F Preferred Stock (the "SECURITIES
PURCHASE AGREEMENT").
C. "N" means the number of days from, but excluding, the Issuance
Date.
D. "PREMIUM" means an amount equal to (.04)x(N/365)x(1,000).
III. CONVERSION
A. CONVERSION AT THE OPTION OF THE HOLDER. (i) Subject to the
limitations set forth in subparagraph (ii) below, at any time after the earlier
of (i) the 60th day after the Issuance Date and (ii) the date on which a
registration statement covering the resale of the Common Stock (as hereinafter
defined) issuable upon conversion of the Series F Preferred Stock is declared
effective by the Securities and Exchange Commission, each holder of shares of
Series F Preferred Stock may, at any time and from time to time, convert (an
"OPTIONAL CONVERSION") each of its shares of Series F Preferred Stock into a
number of fully paid and nonassessable shares of the Corporation's common stock,
par value $.01 per share ("COMMON STOCK") determined in accordance with the
following formula:
1,000
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CONVERSION PRICE
The Corporation shall be required, upon receipt of a Notice of Conversion (as
defined below) or in the event of a Required Conversion at Maturity (as defined
below), to redeem the Premium subject to such conversion for a sum of cash equal
to the amount of the Premium being so redeemed. All cash redemption payments
hereunder shall be paid in lawful money of the United States of America at such
address for the holder as appears on the record books of the Corporation (or at
such other address as such holder shall hereafter give to the Corporation by
written notice).
(ii) Notwithstanding anything herein to the contrary, no
holder of Series F Preferred Stock may effect an Optional Conversion as to a
number of shares of Series F Preferred Stock less than the lesser of (A) 100
shares or (B) the number of shares of Series F Preferred Stock then held by such
holder.
B. MECHANICS OF CONVERSION. In order to effect an Optional Conversion,
a holder shall: (x) fax (or otherwise deliver) a copy of the fully executed
notice of conversion in the form attached hereto (a
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"NOTICE OF CONVERSION") to the Corporation or the transfer agent for the Common
Stock and (y) surrender or cause to be surrendered the original certificates
representing the Series F Preferred Stock being converted (the "PREFERRED STOCK
CERTIFICATES"), duly endorsed, along with a copy of the Notice of Conversion as
soon as practicable thereafter to the Corporation or the transfer agent. The
Corporation shall not be obligated to issue shares of Common Stock upon a
conversion unless either the Preferred Stock Certificates are delivered to the
Corporation or the transfer agent as provided above, or the holder notifies the
Corporation or the transfer agent that such certificates have been lost, stolen
or destroyed and delivers the documentation to the Corporation required by
Article XI.B hereof.
(i) DELIVERY OF COMMON STOCK UPON CONVERSION. Upon the
surrender of Preferred Stock Certificates from a holder of Series F Preferred
Stock accompanied by a Notice of Conversion, the Corporation shall, no later
than the later of (a) the third business day following the receipt of the Notice
of Conversion and (b) the second business day following the date of such
surrender (or, in the case of lost, stolen or destroyed certificates, after
provision of indemnity pursuant to Article XI.B) (the "DELIVERY PERIOD"), issue
and deliver to the holder or its nominee (x) that number of shares of Common
Stock issuable upon conversion of such shares of Series F Preferred Stock being
converted and (y) a certificate representing the number of shares of Series F
Preferred Stock not being converted, if any. If the Corporation's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program, and so long as the certificates therefor do not
bear a legend and the holder thereof is not obligated to return such certificate
for the placement of a legend thereon, the Corporation shall cause its transfer
agent to electronically transmit the Common Stock issuable upon conversion to
the holder by crediting the account of the holder or its nominee with DTC
through its Deposit Withdrawal Agent Commission system ("DTC TRANSFER"). If the
aforementioned conditions to a DTC Transfer are not satisfied, the Corporation
shall deliver to the holder physical certificates representing the Common Stock
issuable upon conversion. Further, a holder may instruct the Corporation to
deliver to the holder physical certificates representing the Common Stock
issuable upon conversion in lieu of delivering such shares by way of DTC
Transfer.
(ii) TAXES. The Corporation shall pay any and all taxes which
may be imposed upon it with respect to the issuance and delivery of the shares
of Common Stock upon the conversion of the Series F Preferred Stock.
(iii) NO FRACTIONAL SHARES. If any conversion of Series F
Preferred Stock would result in the issuance of a fractional share of Common
Stock, such fractional share shall be disregarded and the number of shares of
Common Stock issuable upon conversion of the Series F Preferred Stock shall be
rounded up or down, as the case may be, to the nearest whole number of shares.
IV. RESERVATION OF SHARES OF COMMON STOCK
RESERVED AMOUNT. Upon the initial issuance of the shares of Series F
Preferred Stock, the Corporation shall reserve sufficient shares of the
authorized but unissued shares of Common Stock for issuance upon conversion of
all issued Series F Preferred Stock and thereafter the number of authorized but
unissued shares of Common Stock so reserved (the "RESERVED AMOUNT") shall at all
times be sufficient to provide for the conversion of the Series F Preferred
Stock outstanding at the then current Conversion Price thereof.
V. REQUIRED CONVERSION
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Each share of Series F Preferred Stock issued and outstanding on the
third (3rd) anniversary of the Issuance Date (the "MATURITY DATE") automatically
shall be converted into shares of Common Stock on such date in accordance with
the conversion formula set forth in Paragraph A of Article III (the "REQUIRED
CONVERSION AT MATURITY"). If the Required Conversion at Maturity occurs, the
Corporation and the holders of Series F Preferred Stock shall follow the
applicable conversion procedures set forth in Paragraph B of this Article IV;
PROVIDED, HOWEVER, that the holders of Series F Preferred Stock are not required
to deliver a Notice of Conversion to the Corporation or its transfer agent.
VI. RANK
All shares of the Series F Preferred Stock shall rank (i) prior to the
Corporation's Common Stock and Series A Junior Participating Preferred Stock;
(ii) prior to any class or series of capital stock of the Corporation hereafter
created (unless, with the consent of the holders of Series F Preferred Stock
obtained in accordance with Article X hereof, such class or series of capital
stock specifically, by its terms, ranks senior to or PARI PASSU with the Series
F Preferred Stock) (collectively with the Common Stock, "JUNIOR SECURITIES");
(iii) PARI PASSU with any class or series of capital stock of the Corporation
hereafter created (with the consent of the holders of Series F Preferred Stock
obtained in accordance with Article X hereof) specifically ranking, by its
terms, on parity with the Series F Preferred Stock (the "PARI PASSU
SECURITIES"); and (iv) junior to (a) the Series B Convertible Preferred Stock of
the Corporation, (b) the Series D Convertible Preferred Stock of the
Corporation, (c) the Series E Convertible Preferred Stock of the Corporation,
and (d) any class or series of capital stock of the Corporation hereafter
created (with the consent of the holders of Series F Preferred Stock obtained in
accordance with Article X hereof) specifically ranking, by its terms, senior to
the Series F Preferred Stock (collectively, the "SENIOR SECURITIES"), in each
case as to distribution of assets upon liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary.
VII. LIQUIDATION PREFERENCE
A. If the Corporation shall commence a voluntary case under the U.S.
Federal bankruptcy laws or any other applicable bankruptcy, insolvency or
similar law, or consent to the entry of an order for relief in an involuntary
case under any law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of the Corporation
or of any substantial part of its property, or make an assignment for the
benefit of its creditors, or admit in writing its inability to pay its debts
generally as they become due, or if a decree or order for relief in respect of
the Corporation shall be entered by a court having jurisdiction in the premises
in an involuntary case under the U.S. Federal bankruptcy laws or any other
applicable bankruptcy, insolvency or similar law resulting in the appointment of
a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Corporation or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and any such decree or
order shall be unstayed and in effect for a period of sixty (60) consecutive
days and, on account of any such event, the Corporation shall liquidate,
dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve
or wind up, including, but not limited to, the sale or transfer of all or
substantially all of the Corporation's assets in one transaction or in a series
of related transactions (a "LIQUIDATION EVENT"), no distribution shall be made
to the holders of any Junior Securities upon liquidation, dissolution or winding
up unless prior thereto the holders of shares of Series F Preferred Stock shall
have received the Liquidation Preference with respect to each share. If, upon
the occurrence of a Liquidation Event, the assets and funds available for
distribution among the holders of the Series F Preferred Stock and holders of
PARI PASSU Securities shall be insufficient to permit the payment to such
holders of the preferential amounts payable thereon, then the entire assets and
funds of the Corporation legally available for distribution to the Series F
Preferred Stock and the PARI PASSU Securities shall be distributed ratably among
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such shares in proportion to the ratio that the Liquidation Preference payable
on each such share bears to the aggregate Liquidation Preference payable on all
such shares.
B. The purchase or redemption by the Corporation of stock of any
class, in any manner permitted by law, shall not, for the purposes hereof, be
regarded as a liquidation, dissolution or winding up of the Corporation. Neither
the consolidation or merger of the Corporation with or into any other entity nor
the sale or transfer by the Corporation of less than substantially all of its
assets shall, for the purposes hereof, be deemed to be a liquidation,
dissolution or winding up of the Corporation.
C. The "LIQUIDATION PREFERENCE" with respect to a share of Series
F Preferred Stock means an amount equal to the Face Amount thereof plus the
accrued Premium thereon through the date of final distribution. The Liquidation
Preference with respect to any PARI PASSU Securities shall be as set forth in
the Certificate of Designation filed in respect thereof.
VIII. ADJUSTMENTS TO THE CONVERSION PRICE
The Conversion Price shall be subject to adjustment from time to time
as follows:
A. DILUTIVE ISSUANCES.
(i) ADJUSTMENT OF CONVERSION PRICE. Except as otherwise
provided in Article VIII.B and Article VIII.C, if and whenever after the
Issuance Date the Corporation issues or sells, or in accordance with
subparagraph (ii) below is deemed to have issued or sold, any shares of Common
Stock for no consideration or for a consideration per share less than the Market
Price (as hereinafter defined) on the date of issuance (a "DILUTIVE ISSUANCE"),
then effective immediately upon the Dilutive Issuance, the Conversion Price will
be adjusted in accordance with the following formula:
C' = C x O + P/M
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CSDO
where:
C' = the adjusted Conversion Price;
C = the then current Conversion Price;
M = the then current Market Price (as defined in
subparagraph (v) below);
O = the number of shares of Common Stock
outstanding immediately prior to the
Dilutive Issuance;
P = the aggregate consideration, calculated
as set forth in subparagraph (ii) below,
received by the Corporation upon such
Dilutive Issuance; and
CSDO = the total number of shares of Common Stock
Deemed Outstanding (as defined in
subparagraph (v) below) immediately after
the Dilutive Issuance.
(ii) EFFECT ON CONVERSION PRICE OF CERTAIN EVENTS. For
purposes of determining the adjusted Conversion Price under Section 4(a) hereof,
the following will be applicable:
(a) ISSUANCE OF RIGHTS OR OPTIONS. If the
Corporation in any manner issues or grants any warrants, rights or options,
whether or not immediately exercisable, to subscribe for or to purchase Common
Stock or other securities exercisable, convertible into or exchangeable for
Common
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Stock ("CONVERTIBLE SECURITIES") (such warrants, rights and options to
purchase Common Stock or Convertible Securities are hereinafter referred to as
"OPTIONS") and the price per share for which Common Stock is issuable upon the
exercise of such Options is less than the Market Price on the date of issuance
("BELOW MARKET OPTIONS"), then the maximum total number of shares of Common
Stock issuable upon the exercise of all such Below Market Options (assuming full
exercise, conversion or exchange of Convertible Securities, if applicable) will,
as of the date of the issuance or grant of such Below Market Options, be deemed
to be outstanding and to have been issued and sold by the Corporation for such
price per share. For purposes of the preceding sentence, the "price per share
for which Common Stock is issuable upon the exercise of such Below Market
Options" is determined by dividing (i) the total amount, if any, received or
receivable by the Corporation as consideration for the issuance or granting of
all such Below Market Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the exercise of all such
Below Market Options, plus, in the case of Convertible Securities issuable upon
the exercise of such Below Market Options, the minimum aggregate amount of
additional consideration payable upon the exercise, conversion or exchange
thereof at the time such Convertible Securities first become exercisable,
convertible or exchangeable, by (ii) the maximum total number of shares of
Common Stock issuable upon the exercise of all such Below Market Options
(assuming full conversion of Convertible Securities, if applicable). No further
adjustment to the Conversion Price will be made upon the actual issuance of such
Common Stock upon the exercise of such Below Market Options or upon the
exercise, conversion or exchange of Convertible Securities issuable upon
exercise of such Below Market Options.
(b) ISSUANCE OF CONVERTIBLE SECURITIES. If the
Corporation in any manner issues or sells any Convertible Securities, whether or
not immediately convertible (other than where the same are issuable upon the
exercise of Options) and the price per share for which Common Stock is issuable
upon such exercise, conversion or exchange is less than the Market Price on the
date of issuance, then the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities will, as of the date of the issuance of such Convertible Securities,
be deemed to be outstanding and to have been issued and sold by the Corporation
for such price per share. For the purposes of the preceding sentence, the "price
per share for which Common Stock is issuable upon such exercise, conversion or
exchange" is determined by dividing (i) the total amount, if any, received or
receivable by the Corporation as consideration for the issuance or sale of all
such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the exercise, conversion
or exchange thereof at the time such Convertible Securities first become
exercisable, convertible or exchangeable, by (ii) the maximum total number of
shares of Common Stock issuable upon the exercise, conversion or exchange of all
such Convertible Securities. No further adjustment to the Conversion Price will
be made upon the actual issuance of such Common Stock upon exercise, conversion
or exchange of such Convertible Securities.
(c) CHANGE IN OPTION PRICE OR CONVERSION RATE.
If there is a change at any time in (i) the amount of additional consideration
payable to the Corporation upon the exercise of any Options; (ii) the amount of
additional consideration, if any, payable to the Corporation upon the exercise,
conversion or exchange of any Convertible Securities; or (iii) the rate at which
any Convertible Securities are convertible into or exchangeable for Common Stock
(other than under or by reason of provisions designed to protect against
dilution), the Conversion Price in effect at the time of such change will be
readjusted to the Conversion Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold.
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(d) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If, in any case, the total number of shares of Common
Stock issuable upon exercise of any Option or upon exercise, conversion or
exchange of any Convertible Securities is not, in fact, issued and the rights to
exercise such Option or to exercise, convert or exchange such Convertible
Securities shall have expired or terminated, the Conversion Price then in effect
will be readjusted to the Conversion Price which would have been in effect at
the time of such expiration or termination had such Options or Convertible
Securities, to the extent outstanding immediately prior to such expiration or
termination (other than in respect of the actual number of shares of Common
Stock issued upon exercise or conversion thereof), never been issued.
(e) CALCULATION OF CONSIDERATION RECEIVED. If
any Common Stock, Options or Convertible Securities are issued, granted or sold
for cash, the consideration received therefor for purposes of this Article VIII
will be the amount received by the Corporation therefor, before deduction of
reasonable commissions, underwriting discounts or allowances or other reasonable
expenses paid or incurred by the Corporation in connection with such issuance,
grant or sale. In case any Common Stock, Options or Convertible Securities are
issued or sold for a consideration part or all of which shall be other than
cash, the amount of the consideration other than cash received by the
Corporation will be the fair market value of such consideration, except where
such consideration consists of securities, in which case the amount of
consideration received by the Corporation will be the Market Price thereof as of
the date of receipt. In case any Common Stock, Options or Convertible Securities
are issued in connection with any merger or consolidation in which the
Corporation is the surviving corporation, the amount of consideration therefor
will be deemed to be the fair market value of such portion of the net assets and
business of the non-surviving corporation as is attributable to such Common
Stock, Options or Convertible Securities, as the case may be. The fair market
value of any consideration other than cash or securities will be determined in
good faith by an investment banker or other appropriate expert of national
reputation selected by the Corporation and reasonably acceptable to the holder
of the Series F Preferred Stock, with the costs of such appraisal to be borne by
the Corporation.
(f) EXCEPTIONS TO ADJUSTMENT OF CONVERSION
PRICE. No adjustment to the Conversion Price will be made (i) upon the exercise
of any warrants, options or convertible securities issued and outstanding on the
Issuance Date; (ii) upon the grant or exercise of any stock or options which may
hereafter be granted or exercised under any employee benefit plan of the
Corporation now existing or to be implemented in the future; (iii) upon the
issuance of any shares of Series F Preferred Stock or warrants issued or
issuable in accordance with terms of the Securities Purchase Agreement; or (iv)
upon conversion of the Series F Preferred Stock or exercise of the warrants.
(iii) MINIMUM ADJUSTMENT OF CONVERSION PRICE. No adjustment of
the Conversion Price shall be made in an amount of less than 1% of the
Conversion Price in effect at the time such adjustment is otherwise required to
be made, but any such 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 not less than
1% of such Conversion Price.
(iv) CERTAIN EVENTS. If, at any time after the Issuance Date,
any event occurs of the type contemplated by the adjustment provisions of this
Article VIII but not expressly provided for by such provisions, the
Corporation's Board of Directors will make an appropriate adjustment in the
Conversion Price so that the rights of the holders of the Series F Preferred
Stock shall be neither enhanced nor diminished by such event.
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(v) CERTAIN DEFINITIONS.
(a) "COMMON STOCK DEEMED OUTSTANDING" shall mean
the number of shares of Common Stock actually outstanding (not including shares
of Common Stock held in the treasury of the Corporation), plus (x) in the case
of any adjustment required by Article VIII.A resulting from the issuance of any
Options, the maximum total number of shares of Common Stock issuable upon the
exercise of the Options for which the adjustment is required (including any
Common Stock issuable upon the conversion of Convertible Securities issuable
upon the exercise of such Options), and (y) in the case of any adjustment
required by Article VIII.A resulting from the issuance of any Convertible
Securities, the maximum total number of shares of Common Stock issuable upon the
exercise, conversion or exchange of the Convertible Securities for which the
adjustment is required, as of the date of issuance of such Convertible
Securities, if any.
(b) "MARKET PRICE," as of any date, (i) means
the closing sale price for the shares of Common Stock as reported on the New
York Stock Exchange for the trading day immediately preceding such date, or (ii)
if the New York Stock Exchange is not the principal trading market for the
shares of Common Stock, the closing sale prices on the principal trading market
for the Common Stock for the trading day immediately preceding such date, or
(iii) if market value cannot be calculated as of such date on any of the
foregoing bases, the Dilutive Market Price shall be the average fair market
value as reasonably determined by an investment banking firm selected by the
Corporation and reasonably acceptable to the holders of the Series F Preferred
Stock, with the costs of the appraisal to be borne by the Corporation. The
manner of determining the Dilutive Market Price of the Common Stock set forth in
the foregoing definition shall apply with respect to any other security in
respect of which a determination as to market value must be made hereunder.
B. STOCK SPLITS, STOCK DIVIDENDS, ETC. If at any time on or afte
the Issuance Date, the number of outstanding shares of Common Stock is increased
by a stock split, stock dividend, combination, reclassification or other similar
event, the Conversion Price shall be proportionately reduced, or if the number
of outstanding shares of Common Stock is decreased by a reverse stock split,
combination or reclassification of shares, or other similar event, the
Conversion Price shall be proportionately increased. In such event, the
Corporation shall notify the Corporation's transfer agent of such change on or
before the effective date thereof.
C. ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC. If, at any tim
after the Issuance Date, there shall be (i) any reclassification or change of
the outstanding shares of 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, or as a
result of a subdivision or combination), (ii) any consolidation or merger of the
Corporation with any other entity (other than a merger in which the Corporation
is the surviving or continuing entity and its capital stock is unchanged), (iii)
any sale or transfer of all or substantially all of the assets of the
Corporation or (iv) any share exchange pursuant to which all of the outstanding
shares of Common Stock are converted into other securities or property (each of
(i) - (iv) above being a "CORPORATE CHANGE"), then the holders of Series F
Preferred Stock shall thereafter have the right to receive upon Conversion, in
lieu of the shares of Common Stock otherwise issuable, such shares of stock,
securities and/or other property as would have been issued or payable in such
Corporate Change with respect to or in exchange for the number of shares of
Common Stock which would have been issuable upon Conversion had such Corporate
Change not taken place, and in any such case, appropriate provisions shall be
made with respect to the rights and interests of the holders of the Series F
Preferred Stock to the end that the provisions hereof (including, without
limitation, provisions for adjustment of the Conversion Price and of the number
of shares of Common Stock issuable upon conversion of the Series F Preferred
Stock) shall thereafter be applicable, as nearly
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as may be practicable in relation to any shares of stock or securities
thereafter deliverable upon the conversion thereof.
D. NOTICE OF ADJUSTMENTS. Upon the occurrence of each adjustment
or readjustment of the Conversion Price pursuant to this Article VIII, the
Corporation, at its expense, shall promptly compute such adjustment or
readjustment and prepare and furnish to each holder of Series F Preferred Stock
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series
F Preferred Stock, furnish to such holder a like certificate setting forth (i)
such adjustment or readjustment, (ii) the Conversion Price at the time in effect
and (iii) the number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon conversion of a
share of Series F Preferred Stock.
IX. VOTING RIGHTS
The holders of the Series F Preferred Stock have no voting power
whatsoever, except as otherwise provided by the Delaware General Corporation Law
(the "BUSINESS CORPORATION LAW"), in this Article IX and in Article X below.
To the extent that under the Business Corporation Law the vote of the
holders of the Series F Preferred Stock, voting separately as a class or series,
as applicable, is required to authorize a given action of the Corporation, the
affirmative vote or consent of the holders of at least a majority-in-interest of
the shares of the Series F Preferred Stock represented at a duly held meeting at
which a quorum is present or by written consent of majority-in-interest of the
shares of Series F Preferred Stock (except as otherwise may be required under
the Business Corporation Law) shall constitute the approval of such action by
the class. To the extent that under the Business Corporation Law holders of the
Series F Preferred Stock are entitled to vote on a matter with holders of Common
Stock, voting together as one class, each share of Series F Preferred Stock
shall be entitled to a number of votes equal to the number of shares of Common
Stock into which it is convertible on the record date for the taking of such
vote of shareholders.
X. PROTECTION PROVISIONS
So long as any shares of Series F Preferred Stock are outstanding, the
Corporation shall not without first obtaining the approval (by vote or written
consent, as provided by the Business Corporation Law) of the holders of (i) all
of the then outstanding shares of Series F Preferred Stock with respect to
subsection (a) below or (ii) at least 67% of the then outstanding shares of
Series F Preferred Stock with respect to subsections (b) through (h) below:
(a) alter or change the rights, preferences or privileges
of the Series F Preferred Stock;
(b) alter or change the rights, preferences or privileges
of any capital stock of the Corporation so as to affect adversely the Series F
Preferred Stock;
(c) create any new class or series of capital stock
having a preference over the Series F Preferred Stock as to distribution of
assets upon liquidation, dissolution or winding up of the Corporation (as
previously defined in Article VII hereof, "SENIOR SECURITIES");
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<PAGE>
(d) create any new class or series of capital stock
ranking PARI PASSU with the Series F Preferred Stock as to distribution of
assets upon liquidation, dissolution or winding up of the Corporation (as
previously defined in Article VII hereof, "PARI PASSU SECURITIES");
(e) increase the authorized number of shares of Series F
Preferred Stock;
(f) issue any shares of Senior Securities or PARI PASSU
Securities;
(g) issue any shares of Series F Preferred Stock other
than pursuant to the Securities Purchase Agreement; or
(h) redeem, or declare or pay any cash dividend or
distribution on, any Junior Securities.
Notwithstanding the foregoing, no change pursuant to this Article XIII shall be
effective to the extent that, by its terms, it applies to less than all of the
holders of shares of Series F Preferred Stock then outstanding.
XI. MISCELLANEOUS
A. CANCELLATION OF SERIES F PREFERRED STOCK. If any shares of
Series F Preferred Stock are converted pursuant to Article III, the shares so
converted shall be canceled, shall return to the status of authorized, but
unissued preferred stock of no designated series, and shall not be issuable by
the Corporation as Series F Preferred Stock.
B. LOST OR STOLEN CERTIFICATES. Upon receipt by the Corporatio
of (i) evidence of the loss, theft, destruction or mutilation of any Preferred
Stock Certificate(s) and (ii) (y) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to the Corporation, or (z) in the case of
mutilation, upon surrender and cancellation of the Preferred Stock
Certificate(s), the Corporation shall execute and deliver new Preferred Stock
Certificate(s) of like tenor and date. However, the Corporation shall not be
obligated to reissue such lost or stolen Preferred Stock Certificate(s) if the
holder contemporaneously requests the Corporation to convert such Series F
Preferred Stock.
C. STATUS AS STOCKHOLDER. Upon submission of a Notice of
Conversion by a holder of Series F Preferred Stock, (i) the shares covered
thereby shall be deemed converted into shares of Common Stock and (ii) the
holder's rights as a holder of such converted shares of Series F Preferred Stock
shall cease and terminate, excepting only the right to receive certificates for
such shares of Common Stock and to any remedies available at law or in equity to
such holder because of a failure by the Corporation to comply with the terms of
this Certificate of Designation.
D. WITHHOLDING TAX. Notwithstanding anything herein to the
contrary, the Corporation may condition the making of any distribution (as such
term is defined under applicable tax law) in respect of any share of Series F
Preferred Stock on the holder of such share of Series F Preferred Stock
depositing with the Corporation an amount of cash sufficient to enable the
Corporation to satisfy its withholding tax obligations with respect to such
distribution.
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<PAGE>
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation this __ day of August __, 1999.
e4L, INC.
By:
-----------------------------------------
Name:
Title:
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<PAGE>
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Series F Preferred Stock)
The undersigned hereby irrevocably elects to convert ____________
shares of Series F Preferred Stock (the "CONVERSION"), represented by stock
certificate No(s). ___________ (the "PREFERRED STOCK CERTIFICATES") into shares
of common stock ("COMMON STOCK") of e4L, Inc. (the "CORPORATION") according to
the conditions of the Certificate of Designations, Preferences and Rights of
Series F Convertible Preferred Stock (the "CERTIFICATE OF DESIGNATION"), as of
the date written below. If securities are to be issued in the name of a person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto. No fee will be charged to the holder for any conversion,
except for transfer taxes, if any. A copy of each Preferred Stock Certificate is
attached hereto (or evidence of loss, theft or destruction thereof).
The Corporation shall electronically transmit the Common Stock issuable
pursuant to this Notice of Conversion to the account of the undersigned or its
nominee (which is _______________) with DTC through its Deposit Withdrawal Agent
Commission System ("DTC TRANSFER").
The undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable to the undersigned upon conversion of
the Series F Preferred Stock shall be made pursuant to registration of the
Common Stock under the Securities Act of 1933, as amended (the "ACT"), or
pursuant to an exemption from registration under the Act and otherwise in
accordance with all applicable securities laws.
/ / In lieu of receiving the shares of Common Stock issuable pursuant to
this Notice of Conversion by way of DTC Transfer, the undersigned
hereby requests that the Corporation issue and deliver to the
undersigned physical certificates representing such shares of Common
Stock.
Date of Conversion:
----------------------------------
Applicable Conversion Price:
-------------------------
Number of Shares of
Common Stock to be Issued:
---------------------------
Signature:
-------------------------------------------
Name:
------------------------------------------------
Address:
-------------------------------------------
-------------------------------------------
<PAGE>
EXHIBIT 4.2
-----------
VOID AFTER 5:00 P.M. NEW YORK CITY
TIME ON AUGUST 26, 2004
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Purchase Shares of
------------
Common Stock, par value $.01 per share
Date: August 27, 1999
e4L, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, __________ or its registered
assigns, is entitled to purchase from e4L, INC., a corporation organized under
the laws of the State of Delaware (the "COMPANY"), at any time or from time to
time during the period specified in Section 2 hereof, ________________________
_____________________ (_________) fully paid and nonassessable shares of the
Company's common stock, par value $.01 per share (the "COMMON STOCK"), at an
exercise price per share (the "EXERCISE PRICE") equal to $4.7125. The number of
shares of Common Stock purchasable hereunder (the "WARRANT SHARES") and the
Exercise Price are subject to adjustment as provided in Section 4 hereof. The
term "WARRANTS" means this Warrant and the other warrants of the Company to
purchase shares of the Common Stock issued pursuant to that certain Securities
Purchase Agreement, dated as of the date hereof, by and among the Company and
the other signatories thereto (the "SECURITIES PURCHASE AGREEMENT").
<PAGE>
This Warrant is subject to the following terms, provisions, and
conditions:
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR
SHARES. Subject to the provisions hereof, including, without limitation, the
limitations contained in Section 7 hereof, this Warrant may be exercised by the
holder hereof, in whole or in part, by the surrender of this Warrant, together
with a completed exercise agreement in the form attached hereto (the "EXERCISE
AGREEMENT"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), and upon (i)
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company, of the Exercise Price for the Warrant
Shares specified in the Exercise Agreement or (ii) if the holder is permitted to
effect a Cashless Exercise (as defined in Section 11(c) hereof) pursuant to
Section 11(c) hereof, delivery to the Company of a written notice of an election
to effect a Cashless Exercise for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to the
holder hereof, as the record owner of such shares, as of the close of business
on the date on which this Warrant shall have been surrendered, the completed
Exercise Agreement shall have been delivered, and payment shall have been made
for such shares as set forth above or, if such date is not a business date, on
the next succeeding business date. Certificates for the Warrant Shares so
purchased, representing the aggregate number of shares specified in the Exercise
Agreement, shall be delivered to the holder hereof within a reasonable time
after this Warrant shall have been so exercised (the "DELIVERY PERIOD"). The
certificates so delivered shall be in such denominations as may be requested by
the holder hereof and shall be registered in the name of such holder or such
other name as shall be designated by such holder. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised.
2. PERIOD OF EXERCISE.
(a) This Warrant is exercisable, at any time or from time to
time on or after the earlier of (i) the 60th day after the date of initial
issuance of this Warrant (the "ISSUE DATE") and (ii) the date on which a
registration statement covering the resale of the Warrant Shares is declared
effective by the Securities and Exchange Commission and before 5:00 p.m., New
York City time on, August 26, 2004 (the "EXERCISE PERIOD").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued, fully
paid, and nonassessable and free from all taxes, liens, claims and encumbrances.
(b) RESERVATION OF SHARES. During the Exercise Period, the
Company shall at all times have authorized, and reserved for the purpose of
issuance upon exercise of this Warrant, a sufficient number of shares of Common
Stock to provide for the exercise in full of this Warrant.
(c) LISTING. The Company shall promptly secure the listing of
the shares of Common Stock issuable upon exercise of this Warrant upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed or become listed (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain, so long as
any other shares
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<PAGE>
of Common Stock shall be so listed, such listing of all shares of Common Stock
from time to time issuable upon the exercise of this Warrant; and the Company
shall so list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of, any other shares
of capital stock of the Company issuable upon the exercise of this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.
(d) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon
any entity succeeding to the Company by merger, consolidation, or acquisition of
all or substantially all of the Company's assets.
4. ANTIDILUTION PROVISIONS. The Exercise Price and the number of
Warrant Shares issuable hereunder and for which this Warrant is then exercisable
pursuant to Section 2 hereof shall be subject to adjustment from time to time as
provided in this Section 4.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded up
or down to the nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE. Except as otherwise provided
in Sections 4(c) and 4(e) hereof, if and whenever after the Issue Date the
Company issues or sells, or in accordance with Section 4(b) hereof is deemed to
have issued or sold, any shares of Common Stock for no consideration or for a
consideration per share less than the Market Price (as hereinafter defined) on
the date of issuance (a "DILUTIVE ISSUANCE"), then effective immediately upon
the Dilutive Issuance, the Exercise Price will be adjusted in accordance with
the following formula:
E' = E x O + P/M
---------
CSDO
where:
E' = the adjusted Exercise Price;
E = the then current Exercise Price;
M = the then current Market Price (as defined
in Section 4(1));
O = the number of shares of Common Stock
outstanding immediately prior to the
Dilutive Issuance;
P = the aggregate consideration, calculated as
set forth in Section 4(b) hereof, received
by the Company upon such Dilutive Issuance;
and
CSDO = the total number of shares of Common Stock
Deemed Outstanding (as defined in Section
4(j)) immediately after the Dilutive
Issuance.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes
of determining the adjusted Exercise Price under Section 4(a) hereof, the
following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the
Company in any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable, to subscribe for or to purchase Common Stock or
other securities exercisable, convertible into or exchangeable for Common Stock
("CONVERTIBLE SECURITIES") (such warrants, rights and options to purchase Common
Stock or Convertible Securities are hereinafter referred to as "OPTIONS") and
the price per share for which Common Stock is issuable upon the exercise of such
Options is less than the Market Price on the date of issuance ("BELOW MARKET
OPTIONS"), then the maximum total number of shares of Common Stock issuable upon
the exercise of all such Below Market Options (assuming full exercise,
conversion or exchange of
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<PAGE>
Convertible Securities, if applicable) will, as of the date of the issuance or
grant of such Below Market Options, be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. For purposes of the
preceding sentence, the "price per share for which Common Stock is issuable upon
the exercise of such Below Market Options" is determined by dividing (i) the
total amount, if any, received or receivable by the Company as consideration for
the issuance or granting of all such Below Market Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the exercise of all such Below Market Options, plus, in the case of
Convertible Securities issuable upon the exercise of such Below Market Options,
the minimum aggregate amount of additional consideration payable upon the
exercise, conversion or exchange thereof at the time such Convertible Securities
first become exercisable, convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the exercise of all such Below
Market Options (assuming full conversion of Convertible Securities, if
applicable). No further adjustment to the Exercise Price will be made upon the
actual issuance of such Common Stock upon the exercise of such Below Market
Options or upon the exercise, conversion or exchange of Convertible Securities
issuable upon exercise of such Below Market Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the
Company in any manner issues or sells any Convertible Securities, whether or not
immediately convertible (other than where the same are issuable upon the
exercise of Options) and the price per share for which Common Stock is issuable
upon such exercise, conversion or exchange (as determined pursuant to Section
4(b)(ii)(B) if applicable) is less than the Market Price on the date of
issuance, then the maximum total number of shares of Common Stock issuable upon
the exercise, conversion or exchange of all such Convertible Securities will, as
of the date of the issuance of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of the preceding sentence, the "price per share for
which Common Stock is issuable upon such exercise, conversion or exchange" is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or exchange thereof at
the time such Convertible Securities first become exercisable, convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities. No further adjustment to the Exercise Price will be made upon the
actual issuance of such Common Stock upon exercise, conversion or exchange of
such Convertible Securities.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE.
If there is a change at any time in (i) the amount of additional consideration
payable to the Company upon the exercise of any Options; (ii) the amount of
additional consideration, if any, payable to the Company upon the exercise,
conversion or exchange of any Convertible Securities; or (iii) the rate at which
any Convertible Securities are convertible into or exchangeable for Common Stock
(other than under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at the time of such change will be
readjusted to the Exercise Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If, in any case, the total number of shares of Common
Stock issuable upon exercise of any Option or upon exercise, conversion or
exchange of any Convertible Securities is not, in fact, issued and the rights to
exercise such Option or to exercise, convert or exchange such Convertible
Securities shall have expired or terminated, the Exercise Price then in effect
will be readjusted to the Exercise Price which would have been in effect at the
time of such expiration or termination had such Option or Convertible
Securities, to
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<PAGE>
the extent outstanding immediately prior to such expiration or termination
(other than in respect of the actual number of shares of Common Stock issued
upon exercise or conversion thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If
any Common Stock, Options or Convertible Securities are issued, granted or sold
for cash, the consideration received therefor for purposes of this Warrant will
be the amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable expenses
paid or incurred by the Company in connection with such issuance, grant or sale.
In case any Common Stock, Options or Convertible Securities are issued or sold
for a consideration part or all of which shall be other than cash, the amount of
the consideration other than cash received by the Company will be the fair
market value of such consideration, except where such consideration consists of
securities, in which case the amount of consideration received by the Company
will be the Market Price thereof as of the date of receipt. In case any Common
Stock, Options or Convertible Securities are issued in connection with any
merger or consolidation in which the Company is the surviving corporation, the
amount of consideration therefor will be deemed to be the fair market value of
such portion of the net assets and business of the non-surviving corporation as
is attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair market value of any consideration other than cash or
securities will be determined in good faith by an investment banker or other
appropriate expert of national reputation selected by the Company and reasonably
acceptable to the holder hereof, with the costs of such appraisal to be borne by
the Company.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE.
No adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities issued and outstanding on the Issue
Date; (ii) upon the grant or exercise of any stock or options which may
hereafter be granted or exercised under any employee benefit plan of the Company
now existing or to be implemented in the future; (iii) upon the issuance of any
shares of Series F Preferred Stock or warrants issued or issuable in accordance
with terms of the Securities Purchase Agreement; or (iv) upon conversion of the
Series F Preferred Stock or exercise of the warrants.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the
Company, at any time after the Issue Date, subdivides (by any stock split, stock
dividend, recapitalization, reorganization, reclassification or otherwise) its
shares of Common Stock into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company, at
any time after the Issue Date, combines (by reverse stock split,
recapitalization, reorganization, reclassification or otherwise) its shares of
Common Stock into a smaller number of shares, then, after the date of record for
effecting such combination, the Exercise Price in effect immediately prior to
such combination will be proportionately increased.
(d) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Section 4, the number of
shares of Common Stock issuable upon exercise of this Warrant and for which this
Warrant is or may become exercisable shall be adjusted by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock issuable or for which this Warrant is or
may become exercisable (as applicable) upon exercise of this Warrant immediately
prior to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.
(e) CONSOLIDATION, MERGER OR SALE. In case of any
consolidation of the Company with, or merger of the Company into any other
corporation, or in case of any sale or conveyance of all or substantially all of
the assets of the Company other than in connection with a plan of complete
liquidation
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<PAGE>
of the Company at any time during the Exercise Period, then as a condition of
such consolidation, merger or sale or conveyance, adequate provision will be
made whereby the holder of this Warrant will have the right to acquire and
receive upon exercise of this Warrant in lieu of the shares of Common Stock
immediately theretofore acquirable upon the exercise of this Warrant, such
shares of stock, securities, cash or assets as were issued or payable with
respect to or in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of this Warrant had such
consolidation, merger or sale or conveyance not taken place. In any such case,
the Company will make appropriate provision to insure that the provisions of
this Section 4 hereof will thereafter be applicable as nearly as may be in
relation to any shares of stock or securities thereafter deliverable upon the
exercise of this Warrant.
(f) NOTICE OF ADJUSTMENT. Upon the occurrence of any event
which requires any adjustment of the Exercise Price, then, and in each such
case, the Company shall give notice thereof to the holder of this Warrant, which
notice shall state the Exercise Price resulting from such adjustment and the
increase or decrease in the number of Warrant Shares purchasable at such price
upon exercise, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
(g) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such 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 not less than 1% of such
Exercise Price.
(h) NO FRACTIONAL SHARES. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant, but the Company shall pay a
cash adjustment in respect of any fractional share which would otherwise be
issuable in an amount equal to the same fraction of the Market Price of a share
of Common Stock on the date of such exercise.
(i) CERTAIN EVENTS. If, at any time after the Issue Date, any
event occurs of the type contemplated by the adjustment provisions of this
Section 4 but not expressly provided for by such provisions, the Company will
give notice of such event as provided in Section 4(f) hereof, and the Company's
Board of Directors will make an appropriate adjustment in the Exercise Price and
the number of shares of Common Stock acquirable upon exercise of this Warrant so
that the rights of the holder shall be neither enhanced nor diminished by such
event.
(j) CERTAIN DEFINITIONS.
(i) "COMMON STOCK DEEMED OUTSTANDING" shall mean
the number of shares of Common Stock actually outstanding (not including shares
of Common Stock held in the treasury of the Company), plus (x) in the case of
any adjustment required by Section 4(a) resulting from the issuance of any
Options, the maximum total number of shares of Common Stock issuable upon the
exercise of the Options for which the adjustment is required (including any
Common Stock issuable upon the conversion of Convertible Securities issuable
upon the exercise of such Options), and (y) in the case of any adjustment
required by Section 4(a) resulting from the issuance of any Convertible
Securities, the maximum total number of shares of Common Stock issuable upon the
exercise, conversion or exchange of the Convertible Securities for which the
adjustment is required, as of the date of issuance of such Convertible
Securities, if any.
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<PAGE>
(ii) "MARKET PRICE," as of any date, (i) means
the volume weighted average sale price for the shares of Common Stock as
reported on the New York Stock Exchange for the trading day immediately
preceding such date, or (ii) if the New York Stock Exchange is not the principal
trading market for the shares of Common Stock, the volume weighted average sale
prices on the principal trading market for the Common Stock for the trading day
immediately preceding such date, or (iii) if market value cannot be calculated
as of such date on any of the foregoing bases, the Market Price shall be the
average fair market value as reasonably determined by an investment banking firm
selected by the Company and reasonably acceptable to the holder, with the costs
of the appraisal to be borne by the Company. The manner of determining the
Market Price of the Common Stock set forth in the foregoing definition shall
apply with respect to any other security in respect of which a determination as
to market value must be made hereunder.
(iii) "COMMON STOCK," for purposes of this Section
4, includes the Common Stock and any additional class of stock of the Company
having no preference as to dividends or distributions on liquidation, provided
that the shares purchasable pursuant to this Warrant shall include only Common
Stock in respect of which this Warrant is exercisable, or shares resulting from
any subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 4(e) hereof, the stock or other securities or
property provided for in such Section.
5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
6. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
7. TRANSFER AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights
granted to the holder hereof are transferable, in whole or in part, upon
surrender of this Warrant, together with a properly executed assignment in the
form attached hereto, at the office or agency of the Company referred to in
Section 9 below, PROVIDED, HOWEVER, that any transfer or assignment shall be
subject to the conditions set forth in Section 7(d) hereof and to the provisions
of Sections 2(f) and 2(g) of the Securities Purchase Agreement. Until due
presentment for registration of transfer on the books of the Company, the
Company may treat the registered holder hereof as the owner and holder hereof
for all purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 8 hereof are assignable only in
accordance with the provisions of that certain Registration Rights Agreement,
dated as of the date hereof, by and among the Company and the other signatories
thereto (the "REGISTRATION RIGHTS AGREEMENT").
(b) REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and, in the case of any such loss, theft,
-7-
<PAGE>
or destruction, upon delivery of an indemnity agreement reasonably satisfactory
in form and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(c) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of
this Warrant in connection with any transfer or replacement as provided in this
Section 7, this Warrant shall be promptly canceled by the Company.
(d) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time
of the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the Securities
Act and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such exercise, transfer, or exchange, (i)
that the holder or transferee of this Warrant, as the case may be, furnish to
the Company a written opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such exercise, transfer, or exchange may be
made without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute and
deliver to the Company an investment letter in form and substance acceptable to
the Company and (iii) that the transferee be an "ACCREDITED INVESTOR" as defined
in Rule 501(a) promulgated under the Securities Act; PROVIDED that no such
opinion, letter, status as an "accredited investor" shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act.
8. REGISTRATION RIGHTS. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement, including the right to assign such rights to certain assignees, as
set forth therein.
9. NOTICES. Any notices required or permitted to be given under the
terms of this Warrant shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier, or by confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
-8-
<PAGE>
If to the Company:
e4L, Inc.
15821 Ventura Boulevard, 5th Floor
Los Angeles, CA 91436
Telecopy: (818) 461-6530
Attn: Daniel M. Yukelson
with a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
260 S. Broad Street
Philadelphia, PA 19102
Telecopy: (215) 568-6603
Attn: William W. Matthews, III, Esquire
If to the holder, at such address as such holder shall have provided in writing
to the Company, or at such other address as such holder furnishes by notice
given in accordance with this Section 9.
10. GOVERNING LAW; JURISDICTION. This Warrant shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware.
11. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may only
be amended by an instrument in writing signed by the Company and the holder
hereof.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the
several Sections of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.
(c) CASHLESS EXERCISE. Notwithstanding anything to the
contrary contained in this Warrant, if the resale of the Warrant Shares by the
holder is not then registered pursuant to an effective registration statement
under the Securities Act, this Warrant may be exercised at any time after the
first anniversary of the Issue Date until the end of the Exercise Period, by
presentation and surrender of this Warrant to the Company at its principal
executive offices with a written notice of the holder's intention to effect a
cashless exercise, including a calculation of the number of shares of Common
Stock to be issued upon such exercise in accordance with the terms hereof (a
"CASHLESS EXERCISE"). In the event of a Cashless Exercise, in lieu of paying the
Exercise Price in cash, the holder shall surrender this Warrant for that number
of shares of Common Stock determined by multiplying the number of Warrant Shares
to which it would otherwise be entitled by a fraction, the numerator of which
shall be the difference between the
-9-
<PAGE>
Market Price of a share of the Common Stock on the date of exercise and the
Exercise Price, and the denominator of which shall be such Market Price per
share of Common Stock.
(d) BUSINESS DAY. For purposes of this Warrant, the term
"business day" means any day, other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by
law, regulation or executive order to close.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-10-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
e4L, INC.
By:
---------------------------------------
Name:
----------------------------------
Title:
----------------------------------
<PAGE>
FORM OF EXERCISE AGREEMENT
(TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WARRANT)
To: e4L, Inc.
15821 Ventura Boulevard, 5th Floor
Los Angeles, CA 91436
Telecopy: (818) 461-6530
Attn: Daniel M. Yukelson
The undersigned hereby irrevocably exercises the right to purchase
_____________ shares of the Common Stock of National Media Corporation, a
corporation organized under the laws of the State of Delaware (the "COMPANY"),
evidenced by the attached Warrant, and herewith makes payment of the Exercise
Price with respect to such shares in full, all in accordance with the conditions
and provisions of said Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws, and agrees that the following legend
may be affixed to the stock certificate for the Common Stock hereby subscribed
for if resale of such Common Stock is not registered or if Rule 144 is
unavailable:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
(ii) The undersigned requests that stock certificates for such shares
be issued, and a Warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant in the name of the Holder and delivered to the
undersigned at the address set forth below:
Dated:
------------------------ ----------------------------------
Signature of Holder
----------------------------------
Name of Holder (Print)
Address:
----------------------------------
----------------------------------
----------------------------------
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:
NAME OF ASSIGNEE ADDRESS NO OF SHARES
- ---------------- ------- ------------
, and hereby irrevocably constitutes and appoints ______________
________________________ as agent and attorney-in-fact to transfer said Warrant
on the books of the within-named corporation, with full power of substitution in
the premises.
Dated: _____________________, ____,
In the presence of
- ------------------
Name:
--------------------------------------------
Signature:
----------------------------------
Title of Signing Officer or Agent (if any):
----------------------------------
Address:
----------------------------------
----------------------------------
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant.
<PAGE>
EXHIBIT 4.3
-----------
VOID AFTER 5:00 P.M. NEW YORK CITY
TIME ON AUGUST 26, 2004
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Purchase ________ Common Units
of Buyitnow.com, LLC owned by e4L, Inc.
Date: August 27, 1999
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, _____________________ or its
registered assigns, is entitled to purchase from e4L, INC., a corporation
organized under the laws of the State of Delaware (the "COMPANY"), at any time
or from time to time during the period specified in Section 2 hereof,
________________________________ (____) common units (the "WARRANT SHARES") of
Buyitnow.com, LLC ("BUYITNOW") at an exercise price per share (the "EXERCISE
PRICE") equal to the greater of (i) $5.00 or (ii) the price per share at which
Buyitnow receives equity financing of at least an aggregate of $10,000,000. The
number of Warrant Shares and the Exercise Price are subject to adjustment as
provided in Section 4 hereof. The term "WARRANTS" means this Warrant and the
other warrants of the Company to purchase common units of Buyitnow issued
pursuant to that certain Securities Purchase Agreement, dated as of the date
hereof, by and among the Company and the other signatories thereto (the
"SECURITIES PURCHASE AGREEMENT"). In addition, the holder of this Warrant has
certain rights as set forth in Section 8 hereof in the event of a change of
control of Buyitnow.
This Warrant is subject to the following terms, provisions, and
conditions:
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
Subject to the provisions hereof, including, without limitation, the limitations
contained in Section 4 hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "EXERCISE
AGREEMENT"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such
<PAGE>
other office or agency of the Company as it may designate by notice to the
holder hereof), and upon payment to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company, of the
Exercise Price for the Warrant Shares specified in the Exercise Agreement. The
Warrant Shares so purchased shall be deemed to be sold to the holder hereof as
of the close of business on the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been delivered, and
payment shall have been made for such shares as set forth above or, if such date
is not a business date, on the next succeeding business date. The Company shall
use its best efforts to deliver the certificates for the Warrant Shares so
purchased within a reasonable time after this Warrant shall have been so
exercised. If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the holder a new Warrant representing
the number of shares with respect to which this Warrant shall not then have been
exercised.
2. PERIOD OF EXERCISE.
(a) This Warrant is exercisable, at any time or from time to
time during the period (the "EXERCISE PERIOD") beginning on the 180th day after
the closing of an initial public offering of Buyitnow, and ending at 5:00 p.m.,
New York City time on, August 26, 2004 (the "EXPIRATION DATE").
3. ANTIDILUTION PROVISION. The Exercise Price and the number of
Warrant Shares which may be purchased hereunder shall be subject to adjustment
from time to time as provided in this Section 3.
(a) SUBDIVISION OR COMBINATION OF COMMON STOCK. If Buyitnow at
any time after the date of the initial issuance of this Warrant (the "ISSUE
DATE"), subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) its common units into a greater
number of shares, then, after the date of record for effecting such subdivision,
the Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced. If Buyitnow, at any time after the Issue Date, combines
(by reverse stock split, recapitalization, reorganization, reclassification or
otherwise) its common units into a smaller number of shares, then, after the
date of record for effecting such combination, the Exercise Price in effect
immediately prior to such combination will be proportionately increased.
4. TRANSFER AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights
granted to the holder hereof are transferable, in whole or in part, upon
surrender of this Warrant, together with a properly executed assignment in the
form attached hereto, at the office or agency of the Company referred to in
Section 5 below, PROVIDED, HOWEVER, that any transfer or assignment shall be
subject to the conditions set forth in Section 4(d) hereof and to the provisions
of Sections 2(f) and 2(g) of the Securities Purchase Agreement. Until due
presentment for transfer on the books of the Company, the Company may treat the
registered holder hereof as the owner and holder hereof for all purposes, and
the Company shall not be affected by any notice to the contrary.
(b) REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and, in the case of any such loss, theft, or
destruction, upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(c) CANCELLATION. Upon the surrender of this Warrant in
connection with any transfer or replacement as provided in this Section 4, this
Warrant shall be promptly canceled by the Company.
-2-
<PAGE>
(d) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time
of the surrender of this Warrant in connection with any exercise, transfer, or
exchange of this Warrant, this Warrant (or, in the case of any exercise, the
Warrant Shares issuable hereunder), shall not be registered under the Securities
Act and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such exercise, transfer, or exchange, (i)
that the holder or transferee of this Warrant, as the case may be, furnish to
the Company a written opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such exercise, transfer, or exchange may be
made without registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute and
deliver to the Company an investment letter in form and substance acceptable to
the Company and (iii) that the transferee be an "ACCREDITED INVESTOR" as defined
in Rule 501(a) promulgated under the Securities Act; PROVIDED that no such
opinion, letter, status as an "accredited investor" shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act.
5. NOTICES. Any notices required or permitted to be given under the
terms of this Warrant shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier, or by confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
e4L, Inc.
15821 Ventura Boulevard, 5th Floor
Los Angeles, CA 91436
Telecopy: (818) 461-6530
Attn: Daniel M. Yukelson
with a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
260 S. Broad Street
Philadelphia, PA 19102
Telecopy: (215) 568-6603
Attn: William W. Matthews, III, Esquire
If to the holder, at such address as such holder shall have provided in writing
to the Company, or at such other address as such holder furnishes by notice
given in accordance with this Section 9.
6. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in the State of Delaware.
7. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may only
be amended by an instrument in writing signed by the Company and the holder
hereof.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the
several Sections of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.
-3-
<PAGE>
(c) BUSINESS DAY. For purposes of this Warrant, the term
"business day" means any day, other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by
law, regulation or executive order to close.
8. SALE OF BUYITNOW.
(a) PAYMENT BY THE COMPANY. So long as the Exercise Period
shall not have commenced, in case of any consolidation of Buyitnow with, or
merger of Buyitnow into any other corporation, or in case of any sale or
conveyance of all of the outstanding units of Buyitnow or all or substantially
all of its assets other than in connection with a plan of complete liquidation
of Buyitnow (collectively, a "CHANGE OF CONTROL TRANSACTION") at any time after
the third (3rd) anniversary of the Issue Date and prior to the Expiration Date,
the Company shall pay to the holder of this Warrant pursuant to and in
accordance with Section 8(b), an amount of cash or other consideration (the
"BUYITNOW BUYOUT PAYMENT") determined in accordance with the following formula:
B = W x ( (C / N) - E)
Where:
B = The amount of the Buyitnow Buyout Payment, which payment
shall be in the same form (i.e., cash or non-cash) as the
consideration which the Company receives for its Buyitnow
common units pursuant to the Change of Control Transaction.
W = The number of Warrant Shares issuable upon exercise of this
Warrant on the date of consummation of the Change of Control
Transaction.
C = The Value (as defined below) of the consideration received
by the Company in the Change of Control Transaction.
N = The number of common units of Buyitnow held by the Company
immediately prior to the consummation of the Change of Control
Transaction.
E = The Exercise Price of this Warrant on the date of
consummation of the Change of Control Transaction.
(b) BUYITNOW BUYOUT PAYMENT. Within ten (10) business days
after the consummation of a Change of Control Transaction, the Company shall
provide written notice (the "BUYOUT NOTICE") to the holder of this Warrant
stating that a Change of Control Transaction has occurred, along with a
calculation of the amount of the payment (and the form of the consideration
thereof) which the holder of this Warrant may receive. If the holder of this
Warrant desires to receive such payment, such holder shall submit to the
Company, within ten (10) business days after receipt of the Buyout Notice, this
Warrant and a written notice which indicates that the holder of this Warrant
desires to receive the Buyitnow Buyout Payment. Subject to any applicable time
and/or other restrictions imposed upon the Company by the documents relating to
the Change of Control Transaction, the Company shall pay the Buyitnow Buyout
Payment to the holder of this Warrant within ten (10) business days after
receipt of this Warrant, the aforementioned notice and the receipt by the
Company of the full consideration which the Company is entitled to receive in
connection with the Change of Control Transaction.
-4-
<PAGE>
(c) STATUS OF WARRANT. Upon tender of this Warrant in
accordance with Section 8(b), this Warrant shall be null and void and of no
further force and effect, except as to the right of the holder to receive the
Buyitnow Buyout Payment.
(d) DEFINITIONS. For purposes of this Section 8,
"VALUE" means (i) with respect to cash, the amount thereof
and (ii) with respect to consideration other than cash, the fair market value of
such consideration, except where such consideration consists of securities, in
which case the amount of consideration will be the Market Price thereof as of
the date of the consummation of the Change of Control Transaction. The fair
market value of any consideration other than cash or securities will be
determined in good faith by an investment banker or other appropriate expert of
national reputation selected by the Company and reasonably acceptable to the
holder hereof, with the costs of such appraisal to be borne by the Company.
"MARKET PRICE" means the volume weighted average sale
prices on the principal trading market for a security for the trading day
immediately preceding the date of the consummation of the Change of Control
Transaction, or, if the Market Price cannot be calculated as of such date on the
foregoing basis, the Market Price shall be the fair market value as reasonably
determined by an investment banking firm selected by the Company and reasonably
acceptable to the holder hereof, with the costs of such appraisal to be borne by
the Company.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The Company hereby assigns to the
holder of this Warrant all of its rights with respect to the registration of all
Warrant Shares for which this Warrant may be exercised (which rights are set
forth in the Registration Rights Agreement, dated as of June 7, 1999, among
BuyItNow.com L.L.C., e4L, Inc. and BuyItNow, Inc. (the "Buyitnow Registration
Rights Agreement"), a copy of which is attached hereto as Exhibit A; provided
that the holder of this Warrant assumes the Company's obligations in respect of
the Warrant Shares set forth in the Buyitnow Registration Rights Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-5-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
E4L, INC.
By:
-----------------------------------------
Name:
------------------------------------
Title:
------------------------------------
<PAGE>
FORM OF EXERCISE AGREEMENT
(TO BE EXECUTED BY THE HOLDER IN ORDER TO EXERCISE THE WARRANT)
To: e4L, Inc.
15821 Ventura Boulevard, 5th Floor
Los Angeles, CA 91436
Telecopy: (818) 461-6530
Attn: Daniel M. Yukelson
The undersigned hereby irrevocably exercises the right to purchase
_____________ common units of Buyitnow.com, LLC, evidenced by the attached
Warrant, and herewith makes payment of the Exercise Price with respect to such
shares in full, all in accordance with the conditions and provisions of said
Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws, and agrees that the following legend
may be affixed to the stock certificate for the Common Stock hereby subscribed
for if resale of such Common Stock is not registered or if Rule 144 is
unavailable:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
(ii) The undersigned hereby assumes the Company's obligations under the
Buyitnow Registration Rights Agreement in respect of the Warrant Shares.
(iii) The undersigned requests that stock certificates for such shares
be issued, and a Warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant in the name of the Holder and delivered to the
undersigned at the address set forth below:
Dated:
-------------------- -------------------------------------
Signature of Holder
-------------------------------------
Name of Holder (Print)
Address:
-------------------------------------
-------------------------------------
-------------------------------------
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Common Stock covered thereby set forth
hereinbelow, to:
NAME OF ASSIGNEE ADDRESS NO OF SHARES
- ---------------- ------- ------------
, and hereby irrevocably constitutes and appoints ______________
________________________ as agent and attorney-in-fact to transfer said Warrant
on the books of the within-named corporation, with full power of substitution in
the premises.
Dated: _____________________, ____,
In the presence of
- ------------------
Name:
----------------------------------
Signature:
---------------------------------
Title of Signing Officer or Agent (if any):
---------------------------------
Address:
---------------------------------
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant.
<PAGE>
EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of August
27, 1999 by and among E4L, INC., a corporation organized under the laws of the
State of Delaware , with headquarters located at 15821 Ventura Boulevard, 5th
Floor, Los Angeles, California 91436 (the "COMPANY"), and the undersigned
(together with affiliates, the "INITIAL INVESTORS").
WHEREAS:
1. In connection with the Securities Purchase Agreement of even date
herewith by and between the Company and the Initial Investors (the "SECURITIES
PURCHASE AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Initial Investors Units
consisting of, among other things, (i) shares of its Series F Convertible
Preferred Stock (the "PREFERRED STOCK") that is convertible into shares of the
Company's common stock, par value $.01 per share (the "COMMON STOCK"), upon the
terms and subject to the limitations and conditions set forth in the Certificate
of Designations, Rights and Preferences with respect to such Preferred Stock
(the "CERTIFICATE OF DESIGNATION") and (ii) warrants (the "WARRANTS") to acquire
shares of Common Stock;
2. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investors hereby agree as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have
the following meanings:
(i) "INVESTORS" means the Initial Investors and any
transferees or assignees who agree to become bound by the provisions of this
Agreement in accordance with Section 10 hereof.
(ii) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iii) "REGISTRABLE SECURITIES" means the Conversion Shares
issued or issuable with respect to the Preferred Stock and the Warrant Shares
issued or issuable with respect to the Warrants and any shares of capital stock
issued or issuable, from time to time (with any adjustments), as a distribution
on or in exchange for or otherwise with respect to any of the foregoing.
(iv) "REGISTRATION STATEMENT" means a registration statement
of the Company under the Securities Act.
b. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Securities Purchase
Agreement.
<PAGE>
2. REGISTRATION.
a. MANDATORY REGISTRATION. The Company shall prepare and file
with the SEC on or before the 21st day after the Closing Date (the "Filing
Date") a Registration Statement on Form S-3 (or, if Form S-3 is not then
available, on such form of Registration Statement as is then available to effect
a registration of all of the Registrable Securities, subject to the consent of
the Initial Investors (as determined pursuant to Section 12(j) hereof)) covering
the resale of all of the Registrable Securities, which Registration Statement,
to the extent allowable under the Securities Act and the Rules promulgated
thereunder (including Rule 416), shall state that such Registration Statement
also covers such indeterminate number of additional shares of Common Stock as
may become issuable upon conversion of the Preferred Stock or exercise of the
Warrants to prevent dilution resulting from stock splits, stock dividends or
similar transactions. The Registrable Securities initially set forth in the
Registration Statement shall be allocated to the Investors as set forth in
Section 12(k) hereof. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided to (and subject to the approval of) the Initial Investors and
their counsel, if any, prior to its filing or other submission. The Company
shall use its best efforts to obtain the effectiveness of the Registration
Statement within 60 days after the Closing Date. The Company agrees to request
the effectiveness of the Registration Statement within two (2) business days of
the Securities and Exchange Commission notifying the Company of its ability to
do so.
b. ELIGIBILITY FOR FORM S-3. The Company represents and
warrants that it meets the requirements for the use of Form S-3 for registration
of the sale by the Initial Investors and any other Investor of the Registrable
Securities and the Company shall file all reports required to be filed by the
Company with the SEC in a timely manner so as to maintain such eligibility for
the use of Form S-3.
c. RULE 416. The Company and the Investors each acknowledge
that an indeterminate number of Registrable Securities shall be registered
pursuant to Rule 416 under the Securities Act so as to include in such
Registration Statement any and all Registrable Securities which may become
issuable to prevent dilution resulting from stock splits, stock dividends or
similar transactions.
3. DELAY PERIODS; SUSPENSION OF SALES.
(i) If, at any time prior to the expiration of the
Registration Period (as defined below), in the good faith reasonable judgment of
the Company's Board of Directors, the disposition of Registrable Securities
would require the premature disclosure of material non-public information which
may reasonably be expected to have an adverse effect on the Company, then the
Company shall not be required to maintain the effectiveness of or amend or
supplement the Registration Statement for a period (a "DISCLOSURE DELAY PERIOD")
expiring upon the earlier to occur of (i) the date on which such material
information is disclosed to the public or ceases to be material or (ii) subject
to Section 3(b) hereof, up to thirty (30) calendar days after the date on which
the Company provides a notice to the Investors under Section 4(f) hereof stating
that the failure to disclose such non-public information causes the prospectus
included in the Registration Statement, as then in effect, to include an untrue
statement of a material fact or to omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. For
the avoidance of doubt, in no event shall a Disclosure Delay Period exceed
thirty (30) calendar days.
(ii) The Company will give prompt written notice, in the
manner prescribed by Section 12 hereof, to the Investors of each Disclosure
Delay Period. Advance notice of the Disclosure Delay Period shall be given to
the extent practicable. If practicable, such notice shall estimate the duration
of such Disclosure Delay Period. Each Investor, by accepting Registrable
Securities upon conversion of shares of Preferred Stock, agrees that, upon
receipt of such notice prior to Investor's disposition of all such Registrable
Securities, Investor will forthwith discontinue disposition of such Registrable
Securities
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pursuant to the Registration Statement, and will not deliver any prospectus
forming a part thereof in connection with any sale of such Registrable
Securities until the expiration of such Disclosure Delay Period. In addition,
the provisions of Section 2(b) hereof shall not apply to the Disclosure Delay
Periods. Notwithstanding anything in this Section 3 to the contrary, there shall
not be more than an aggregate of one hundred twenty (120) calendar days in any
twelve (12) month period during which the Company is in a Disclosure Delay
Period nor more than an aggregate of thirty (30) calendar days in any ninety
(90) calendar day period during which the Company is in a Disclosure Delay
Period.
4. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
a. The Company shall prepare promptly and file with the SEC
the Registration Statement required by Section 2(a), and cause such Registration
Statement relating to Registrable Securities to become effective as soon as
practicable after such filing, and keep the Registration Statement effective
pursuant to Rule 415 at all times until such date as is the earlier of (i) the
date on which all of the Registrable Securities have been sold and (ii) the date
on which all of the Registrable Securities (in the reasonable opinion of counsel
to the Company) may be immediately sold to the public without registration under
Rule 144(k) under the Securities Act (the "REGISTRATION PERIOD"), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein and all documents incorporated by reference
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein, or necessary to make the
statements therein not misleading.
b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company covered by the Registration
Statement until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in the Registration Statement.
c. The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the Registration Statement referred
to in Section 2(a), (ii) as promptly as practicable after the date of
effectiveness of the Registration Statement or any amendment thereto, a notice
stating that the Registration Statement or amendment has been declared
effective, and (iii) such number of copies of a prospectus, including a
preliminary prospectus, and all amendments and supplements thereto and such
other documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor.
d. The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as each Investor who holds Registrable Securities being offered
reasonably requests, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions;
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PROVIDED, HOWEVER, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 4(d), (b) subject itself to general taxation in any such jurisdiction,
(c) file a general consent to service of process in any such jurisdiction, (d)
provide any undertakings that cause the Company undue expense or burden, or (e)
make any change in its charter or bylaws, which in each case the Board of
Directors of the Company determines to be contrary to the best interests of the
Company and its stockholders.
e. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor of the happening of any event, of
which the Company has knowledge, as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and use its best
efforts promptly to prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission, and deliver such number
of copies of such supplement or amendment to each Investor as such Investor may
reasonably request.
f. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable moment (including in each
case by amending or supplementing such Registration Statement) and to notify
each Investor who holds Registrable Securities being sold (or, in the event of
an underwritten offering, the managing underwriters) of the issuance of such
order and the resolution thereof (and if such Registration Statement is
supplemented or amended, deliver such number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request).
g. The Company shall permit a single firm of counsel
designated by a majority of the Initial Investors to review the Registration
Statement and all amendments and supplements thereto a reasonable period of time
prior to their filing with the SEC, and not file any document in a form to which
such counsel reasonably objects.
h. The Company shall make generally available to its security
holders as soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Securities Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of the Registration Statement.
i. The Company shall make available for inspection by (i) any
Investor participating in any disposition pursuant to the Registration
Statement, and (ii) one firm of attorneys retained by the Investors, all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the "RECORDS"), as shall be reasonably
deemed necessary by each Inspector to enable each Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence; PROVIDED, HOWEVER, that each Inspector shall
hold in confidence and shall not make any disclosure (except to an Investor) of
any Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (b) the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction, or (c) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall not be required
to disclose any confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality agreements (in
form and substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this
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Section 4(i). Each Investor agrees that it shall, upon learning that disclosure
of such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein shall be deemed to limit the Investors' ability to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
j. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement, or (v) such Investor
consents to the form and content of any such disclosure. The Company agrees that
it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor prior
to making such disclosure, and allow the Investor, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
k. The Company shall use its best efforts to promptly either
(i) cause all the Registrable Securities covered by the Registration Statement
to be listed on the NYSE or the AMEX or another national securities exchange and
on each additional national securities exchange on which securities of the same
class or series issued by the Company are then listed, if any, if the listing of
such Registrable Securities is then permitted under the rules of such exchange,
or (ii) secure the designation and quotation of all the Registrable Securities
covered by the Registration Statement on the Nasdaq and, without limiting the
generality of the foregoing, to arrange for or maintain at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities.
l. The Company shall provide a transfer agent and registrar,
which may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.
m. The Company shall cooperate with the Investors who hold
Registrable Securities being offered to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to the Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, or the Investors may reasonably request and registered in such names as or
the Investors may request after a Registration Statement which includes
Registrable Securities is ordered effective by the SEC, that the Company
deliver, and upon such request, the Company shall cause its legal counsel to
deliver to the transfer agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) an opinion of such counsel in the form attached hereto as EXHIBIT 1.
n. At the request of any Investor, the Company shall prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to a Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary in order to change the plan
of distribution set forth in such Registration Statement.
o. The Company shall comply with all applicable laws related
to a Registration Statement and offering and sale of securities and all
applicable rules and regulations of governmental authorities in connection
therewith (including without limitation the Securities Act and the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated by
the SEC.)
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5. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least five (5)
days prior to the first anticipated filing date of the Registration Statement,
the Company shall notify each Investor of the information the Company requires
from each such Investor.
b. Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.
c. Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 4(e)
or 4(f), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 4(e) or 4(f) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
6. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 4, including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
the fees and disbursements of counsel for the Company shall be borne by the
Company.
7. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify,
hold harmless and defend (i) each Investor who holds such Registrable
Securities, and (ii) the directors, officers, partners, members, employees,
agents and each person who controls any Investor within the meaning of Section
15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), if any, (each, an "INDEMNIFIED PERSON"),
against any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, "CLAIMS") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
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<PAGE>
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other
applicable securities law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
Registrable Securities (the matters in the foregoing clauses (i) through (iii)
being, collectively, "VIOLATIONS"). Subject to the restrictions set forth in
Section 7(c) with respect to the number of legal counsel, the Company shall
reimburse the Investors and each other Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 7(a): (i) shall
not apply to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person expressly for use in the Registration
Statement or any such amendment thereof or supplement thereto, (ii) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld; and (iii) with respect to any preliminary prospectus,
shall not inure to the benefit of any Indemnified Person if the untrue statement
or omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or supplemented,
if such corrected prospectus was timely made available by the Company pursuant
to Section 4(c) hereof, and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise to a
Violation and such Indemnified Person, notwithstanding such advice, used it.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
10.
b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees severally and not jointly
to indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 7(a), the Company, each of its directors, each of
its officers who signs the Registration Statement, its employees, agents and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors or officers or any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an "INDEMNIFIED PARTY"),
against any Claim to which any of them may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in
connection with such Registration Statement; and subject to Section 7(c) such
Investor will reimburse any legal or other expenses (promptly as such expenses
are incurred and are due and payable) reasonably incurred by them in connection
with investigating or defending any such Claim; PROVIDED, HOWEVER, that the
indemnity agreement contained in this Section 7(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld; PROVIDED, FURTHER, HOWEVER, that the Investor shall be liable under
this Agreement (including this Section 7(b) and Section 8) for only that amount
as does not exceed the net proceeds actually received by such Investor as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 10. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 7(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact
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<PAGE>
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, and the Indemnified Party failed to
utilize such corrected prospectus.
c. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 7 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to made against any
indemnifying party under this Section 7, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; PROVIDED, HOWEVER, that such indemnifying party shall not be
entitled to assume such defense and an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential conflicts of interest between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding or the actual or potential defendants in, or targets
of, any such action include both the Indemnified Person or the Indemnified Party
and the indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are different from or in addition
to those available to such indemnifying party. The indemnifying party shall pay
for only one separate legal counsel for the Indemnified Persons or the
Indemnified Parties, as applicable, and such legal counsel shall be selected by
Investors holding a majority-in-interest of the Registrable Securities included
in the Registration Statement to which the Claim relates (with the approval of
the Initial Investors if they hold Registrable Securities included in such
Registration Statement), if the Investors are entitled to indemnification
hereunder, or by the Company, if the Company is entitled to indemnification
hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 7, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 7 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
8. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 7 to the fullest extent permitted by law; PROVIDED, HOWEVER, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 7, (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation, and (iii) contribution (together with any
indemnification or other obligations under this Agreement) by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.
9. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors the benefits of Rule
144 promulgated under the Securities Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:
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a. file with the SEC in a timely manner and make and keep
available all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being understood that nothing herein shall limit the
Company's obligations under Section 4(c) of the Securities Purchase Agreement)
and the filing and availability of such reports and other documents is required
for the applicable provisions of Rule 144; and
b. furnish to each Investor so long as such Investor owns
shares of Preferred Stock, Warrants or Registrable Securities, promptly upon
request, (i) a written statement by the Company that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities under Rule 144 without registration.
10. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
automatically assignable by each Investor to any transferee of all or any
portion of the shares of Preferred Stock or the Registrable Securities if: (i)
the Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company after such
assignment, (ii) the Company is furnished with written notice of (a) the name
and address of such transferee or assignee, and (b) the securities with respect
to which such registration rights are being transferred or assigned, (iii)
following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act
and applicable state securities laws, (iv) the transferee or assignee agrees in
writing for the benefit of the Company to be bound by all of the provisions
contained herein, and (v) such transfer shall have been made in accordance with
the applicable requirements of the Securities Purchase Agreement.
11. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with written consent of the Company and
Investors who hold a majority-in-interest of the Registrable Securities;
provided, further, however, that no consideration shall be paid to an Investor
by the Company in connection with an amendment hereto unless each Investor
similarly affected by such amendment receives a pro-rata amount of consideration
from the Company. Unless an Investor otherwise agrees, each amendment hereto
must similarly affect each Investor. Any amendment or waiver effected in
accordance with this Section 11 shall be binding upon each Investor and the
Company.
12. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
b. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five (5) days after being placed in the mail,
if mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The addresses
for such communications shall be:
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If to the Company:
e4L, Inc.
15821 Ventura Boulevard, 5th Floor
Los Angeles, CA 91436
Telecopy: (818) 461-6530
Attn: Chief Financial Officer
with a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
260 S. Broad Street
Philadelphia, PA 19102
Telecopy: (215) 568-6603
Attn: William W. Matthews, III, Esquire
and if to any Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 12(b).
c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in the State of Delaware. The Company irrevocably consents
to the jurisdiction of the United States federal courts and the state courts
located in the State of Delaware in any suit or proceeding based on or arising
under this Agreement and irrevocably agrees that all claims in respect of such
suit or proceeding may be determined in such courts. The Company irrevocably
waives the defense of an inconvenient forum to the maintenance of such suit or
proceeding. The Company further agrees that service of process upon the Company,
mailed by first class mail shall be deemed in every respect effective service of
process upon the Company in any such suit or proceeding. Nothing herein shall
affect the Investors' right to serve process in any other manner permitted by
law. The Company agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
e. This Agreement, the Securities Purchase Agreement and the
Warrants (including all schedules and exhibits thereto) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. This Agreement, the Securities Purchase Agreement and the Warrants
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.
f. Subject to the requirements of Section 10 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.
-10-
<PAGE>
i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
j. All consents and other determinations to be made by the
Investors or the Initial Investors pursuant to this Agreement shall be made by
the Investors or the Initial Investors holding a majority of the Registrable
Securities (determined as if all shares of Preferred Stock then outstanding had
been converted into or exercised for Registrable Securities) held by all
Investors or Initial Investors, as the case may be.
k. The initial number of Registrable Securities included on
any Registration Statement and each increase (if any) to the number of
Registrable Securities included thereon shall be allocated pro rata among the
Investors based on the number of Registrable Securities held by each Investor at
the time of such establishment or increase, as the case may be. In the event an
Investor shall sell or otherwise transfer any of such holder's Registrable
Securities, each transferee shall be allocated a pro rata portion of the number
of Registrable Securities included on a Registration Statement for such
transferor. Any shares of Common Stock included on a Registration Statement and
which remain allocated to any person or entity which does not hold any
Registrable Securities shall be allocated to the remaining Investors, pro rata
based on the number of shares of Registrable Securities then held by such
Investors. For the avoidance of doubt, the number of Registrable Securities held
by any Investor shall be determined as if all shares of Preferred Stock and
Warrants then outstanding were converted into or exercised for Registrable
Securities.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
E4L, INC.
By: /s/
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Name:
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Title:
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INITIAL INVESTORS:
RS PACIFIC PARTNERS
By: /s/
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By:
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Name:
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Title:
------------------------------------
RS EMERGING GROWTH PARTNERS LP
By: /s/
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By:
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Name:
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Title:
------------------------------------
RS PREMIUM PARTNERS LP
By /s/
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By:
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Name:
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Title:
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<PAGE>
EXHIBIT 1
TO
REGISTRATION
RIGHTS
AGREEMENT
[Date]
[Name and address
of transfer agent]
RE: E4L, INC.
Ladies and Gentlemen:
We are counsel to e4L, Inc., a corporation organized under the laws of
the State of Delaware (the "COMPANY"), and we understand that [Name of Investor]
(the "HOLDER") has purchased from the Company shares of the Company's Series F
Convertible Preferred Stock (the "PREFERRED STOCK") that are convertible into
shares of the Company's common stock, par value $.01 per share (the "COMMON
STOCK") and (ii) warrants (the "WARRANTS") to acquire shares of Common Stock.
Pursuant to a Registration Rights Agreement, dated as of August __, 1999, by and
among the Company and the signatories thereto (the "REGISTRATION RIGHTS
AGREEMENT"), the Company agreed with the Holder, among other things, to register
the Registrable Securities (as that term is defined in the Registration Rights
Agreement) under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
upon the terms provided in the Registration Rights Agreement. In connection with
the Company's obligations under the Registration Rights Agreement, on _____ __,
1999, the Company filed a Registration Statement on Form S-___ (File No. 333-
_____________) (the "REGISTRATION STATEMENT") with the Securities and Exchange
Commission (the "SEC") relating to the Registrable Securities, which names the
Holder as a selling stockholder thereunder.
[Other customary introductory and scope of examination language to be
inserted]
Based on the foregoing, we are of the opinion that the Registrable
Securities have been registered under the Securities Act.
[Other customary language to be included.]
Very truly yours,
cc: [Name of Investor]
<PAGE>
EXHIBIT 10.2
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of August
27, 1999, by and among e4L, INC., a corporation organized under the laws of the
State of Delaware (the "COMPANY"), with headquarters located at 15821 Ventura
Boulevard, 5th Floor, Los Angeles, California 91436 and each of the purchasers
(the "PURCHASERS") set forth on the execution pages hereof (the "EXECUTION
PAGES").
WHEREAS:
1. The Company and each Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("REGULATION D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "SECURITIES ACT");
2. Each Purchaser desires to purchase, upon the terms and conditions
stated in this Agreement, units (the "Units"), each Unit consisting of (i)
1,000 shares of the Company's Series F Convertible Preferred Stock, par value
$.01 per share (the "PREFERRED SHARES"), convertible into the Company's
common stock, par value $.01 per share (the "COMMON STOCK"), (ii) warrants
(the "BUYITNOW WARRANTS"), in the form attached hereto as EXHIBIT B to
acquire 20,000 common units of Buyitnow.com, LLC (the "BUYITNOW COMMON
SHARES") presently owned by the Company and (iii) warrants (the "e4L
WARRANTS") in the form attached hereto as EXHIBIT C to acquire 10,000 shares
of Common Stock. The rights, preferences and privileges of the Preferred
Shares, including the terms upon which such Preferred Shares are convertible
into shares of Common Stock, are set forth in the form of Certificate of
Designations, Preferences and Rights attached hereto as EXHIBIT A (the
"CERTIFICATE OF DESIGNATION"). The shares of Common Stock issuable upon
conversion of the Preferred Shares or otherwise pursuant to the Certificate
of Designation are referred to herein as the "CONVERSION SHARES,"the shares
of Common Stock issuable upon exercise of or otherwise pursuant to the e4L
Warrants are referred to herein as the "e4L Warrant Shares," and the Buyitnow
Common Shares transferrable upon exercise of or otherwise pursuant to the
Buyitnow Warrants are referred to herein as the "BUYITNOW WARRANT SHARES."
3. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement, in the form attached hereto as EXHIBIT D (the "REGISTRATION
RIGHTS AGREEMENT"), pursuant to which the Company has agreed to provide
certain registration rights under the Securities Act and the rules and
regulations promulgated thereunder, and applicable state securities laws;
<PAGE>
NOW, THEREFORE, the Company and the Purchasers hereby agree as
follows:
(a) PURCHASE AND SALE OF UNITS.
(i) PURCHASE OF UNITS. On the Closing Date (as defined below),
subject to the satisfaction (or waiver) of the conditions set forth in
Section 6 and Section 7 below, the Company shall issue and sell to each
Purchaser and each Purchaser severally agrees to purchase from the Company,
such number of Units as is set forth on such Purchaser's Execution Page
hereto. The purchase price (the "PURCHASE PRICE") per Unit shall be equal to
One Million Dollars ($1,000,000.00), and a minimum of one Unit must be
purchased. Each Purchaser's obligation to purchase Units hereunder is
distinct and separate from each other Purchaser's obligation to purchase
Units and no Purchaser shall be required to purchase hereunder more than the
number of Units set forth on such Purchaser's Execution Page hereto
notwithstanding any failure by any other Purchaser to purchase Units
hereunder.
(ii) FORM OF PAYMENT. On the Closing Date, each Purchaser shall pay
the aggregate Purchase Price for the Units being purchased by such Purchaser
on the Closing Date by wire transfer to the Company, in accordance with the
Company's written wiring instructions, against delivery of duly executed
certificates representing the Preferred Shares and Warrants being purchased
by such Purchaser and the Company shall deliver such certificates and
Warrants against delivery of such aggregate Purchase Price.
(iii) CLOSING DATE. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and
time of the issuance and sale of the Units to each of the Purchasers pursuant
to this Agreement (the "CLOSING") shall be 12:00 noon Eastern Daylight
Savings Time on August 27, 1999, subject to a two (2) business day grace
period at either party's option, but in any event not later than August 31,
1999, or such other time as may be mutually agreed upon by the Company and
the Purchasers (the "CLOSING DATE"). The closing shall occur at the offices
of Klehr, Harrison, Harvey, Branzburg & Ellers LLP, 260 S. Broad Street,
Philadelphia, Pennsylvania 19102.
(b) PURCHASERS' REPRESENTATIONS AND WARRANTIES
Each Purchaser severally represents and warrants to the Company that:
(i) INVESTMENT PURPOSE. Purchaser is purchasing the Units, including
the Preferred Shares, the Buyitnow Warrants and the e4L Warrants, for
Purchaser's own account for investment purposes only and not with a present
view towards the public sale or distribution thereof, except pursuant to
sales that are exempt from the registration requirements of the Securities
Act and/or sales registered under the Securities Act. Purchaser understands
that Purchaser must bear the economic risk of this investment indefinitely,
unless the Securities are registered pursuant to the Securities Act and any
applicable state securities or blue sky laws or an exemption from such
registration is available, and that the Company has no present intention of
registering the resale of any such Securities other than as contemplated by
the Registration Rights Agreement.
(ii) ACCREDITED INVESTOR STATUS. Purchaser is an "ACCREDITED
INVESTOR" as that term is defined in Rule 501(a) of Regulation D.
(iii) RELIANCE ON EXEMPTIONS. Purchaser understands that the Units
are being offered and sold to Purchaser in reliance upon specific exemptions
from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy
of, and Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility
of Purchaser to acquire the Units.
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<PAGE>
(iv) INFORMATION. Purchaser and its counsel, if any, have been
furnished all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the Units which
have been specifically requested by Purchaser or its counsel. Purchaser and
its counsel have been afforded the opportunity to ask questions of the
Company and have received what Purchaser believes to be satisfactory answers
to any such inquiries. Neither such inquiries nor any other investigation
conducted by Purchaser or its counsel or any of its representatives shall
modify, amend or affect Purchaser's right to rely on the Company's
representations and warranties contained in Section 3 below. Purchaser
understands that Purchaser's investment in the Securities involves a high
degree of risk.
(v) GOVERNMENTAL REVIEW. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities.
(vi) TRANSFER OR RESALE. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the sale or resale of the
securities being acquired hereunder have not been and are not being registered
under the Securities Act or any state securities laws, and such securities may
not be transferred unless (a) the resale of such securities has been registered;
(b) Purchaser shall have delivered to the Company an opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that such securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration or (c) sold under Rule 144 promulgated under the Securities Act (or
a successor rule) ("RULE 144"); and (ii) neither the Company nor any other
person is under any obligation to register such securities under the Securities
Act or any state securities laws (other than pursuant to the Registration Rights
Agreement).
(vii) LEGENDS. Purchaser understands that the Preferred Shares,
Buyitnow Warrants and e4L Warrants, and, until such time as the Conversion
Shares, the Buyitnow Warrant Shares and the e4L Warrant Shares have been
registered under the Securities Act (including registration pursuant to Rule 416
thereunder) or otherwise may be sold by Purchaser under Rule 144, the
certificates for the Conversion Shares, the Buyitnow Warrant Shares and the e4L
Warrant Shares will bear a restrictive legend in substantially the following
form:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be sold, transferred or assigned in
the absence of an effective registration statement for the securities
under said Act, or an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions, that
registration is not required under said Act or unless sold under Rule
144 under said Act.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Conversion Shares or e4L
Warrant Shares upon which it is stamped, if, unless otherwise required by state
securities laws, (a) the sale of such Conversion Shares or e4L Warrant Shares is
registered under the Securities Act (including registration pursuant to Rule 416
thereunder) as contemplated by the Registration Rights Agreement; (b) such
holder provides the Company with an opinion of counsel, in form, substance and
scope customary for opinions of counsel in comparable transactions, to the
effect that a public sale or transfer of such Conversion Shares or e4L Warrant
Shares may be made without registration under the Securities Act; or (c) such
holder provides the Company with reasonable assurances that such Conversion
Shares or e4L Warrant Shares can be sold under Rule 144. In the event the above
legend is removed from any Conversion Shares or e4L Warrant Shares and
thereafter the effectiveness of a registration statement covering such
Conversion Shares or e4L Warrant Shares is suspended or the Company determines
that a supplement or amendment thereto is required by applicable securities
laws, then upon reasonable advance notice to Purchaser the Company may require
that the above legend be placed on any such Conversion Shares or e4L Warrant
Shares that cannot then be sold pursuant
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<PAGE>
to an effective registration statement or under Rule 144 and Purchaser shall
cooperate in the replacement of such legend. Such legend shall thereafter be
removed when such Conversion Shares or e4L Warrant Shares may again be sold
pursuant to an effective registration statement or under Rule 144.
The Company shall further provide reasonable cooperation to the
Purchasers to assist with the removal of the legend on the Buyitnow Warrant
Shares in accordance with the requirements imposed by Buyitnow.com, LLC with
respect to such legend removal.
(viii) AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of Purchaser and are valid and binding agreements of Purchaser
enforceable in accordance with their terms.
(ix) RESIDENCY. Purchaser is a resident of the jurisdiction set forth
under such Purchaser's name on the Execution Page hereto executed by such
Purchaser.
(c) REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each Purchaser that:
(i) ORGANIZATION AND QUALIFICATION. Except as set forth on SCHEDULE
3(a), the Company and each of its consolidated subsidiaries (each, a
"Subsidiary," and collectively, the "Subsidiaries") is a corporation duly
organized and existing in good standing under the laws of the jurisdiction in
which it is incorporated, and has the requisite corporate power to own its
properties and to carry on its business as now being conducted. The Company and
each of its Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect. "MATERIAL ADVERSE
EFFECT" means any material adverse effect on (i) the Securities, (ii) the
ability of the Company to perform its obligations hereunder or under the
Certificate of Designation, the Warrants or the Registration Rights Agreement or
(iii) the business, operations, properties or financial condition of the Company
and its Subsidiaries, taken as a whole.
(ii) AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Buyitnow Warrants, the e4L Warrants and the Registration Rights Agreement, to
issue and sell the Units in accordance with the terms hereof, to issue the
Conversion Shares upon conversion of the Preferred Shares in accordance with the
terms of the Certificate of Designation, to sell to the Purchaser the Buyitnow
Warrant Shares upon exercise and in accordance with the terms of the Buyitnow
Warrants and to issue and sell the e4L Warrant Shares upon exercise of the e4L
Warrants in accordance with the terms thereof; (ii) except as set forth in the
last sentence of this Section 3(b), the execution, delivery and performance of
this Agreement, the Buyitnow Warrants, the e4L Warrants and the Registration
Rights Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation the issuance of
the Preferred Shares, the Buyitnow Warrants and the e4L Warrants, the issuance
and reservation for issuance of the Conversion Shares and the e4L Warrant Shares
and the sale of the Buyitnow Warrant Shares) have been duly authorized by the
Company's Board of Directors and no further consent or authorization of the
Company, its Board of Directors, or its stockholders is required; (iii) this
Agreement has been duly executed and delivered by the Company; and (iv) this
Agreement constitutes, and, upon execution and delivery by the Company of the
Buyitnow Warrants, the e4L Warrants and the Registration Rights Agreement, such
agreements will constitute, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms.
(iii) CAPITALIZATION. The capitalization of the Company as of the date
hereof, including the authorized capital stock, the number of shares issued and
outstanding, the number of shares issuable and
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<PAGE>
reserved for issuance pursuant to the Company's stock option plans, the number
of shares issuable and reserved for issuance pursuant to securities (other than
the Preferred Shares) exercisable or exchangeable for, or convertible into, any
shares of Common Stock and the number of shares to be reserved for issuance upon
conversion of the Preferred Shares and upon exercise of the e4L Warrants is set
forth on SCHEDULE 3(c). All of such outstanding shares of capital stock have
been, or upon issuance in accordance with the terms of any such warrants,
options or preferred stock, will be, validly issued, fully paid and
nonassessable. No shares of capital stock of the Company (including the
Preferred Shares, the Conversion Shares and the e4L Warrant Shares) are subject
to preemptive rights or any other similar rights of the stockholders of the
Company or any liens or encumbrances. Except for the Securities and as set forth
on SCHEDULE 3(c), as of the date of this Agreement, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exercisable or exchangeable for, any shares of capital stock of the Company or
any of its Subsidiaries, or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries, and (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the Securities Act
(except the Registration Rights Agreement). Except as set forth on SCHEDULE
3(c), there are no securities or instruments containing antidilution or similar
provisions that will be triggered by the issuance of the securities in
accordance with the terms of this Agreement, the Certificate of Designation or
the e4L Warrants. The Company has furnished or made available to the Purchasers
true and correct copies of the Company's Certificate of Incorporation as in
effect on the date hereof ("CERTIFICATE OF INCORPORATION"), the Company's
By-laws as in effect on the date hereof (the "BY-LAWS"), and all other
instruments and agreements governing securities convertible into or exercisable
or exchangeable for Common Stock of the Company. The Certificate of Designation,
in the form attached hereto, will be duly filed prior to Closing with the
Secretary of State of the State of Delaware and, upon the issuance of the
Preferred Shares in accordance with the terms hereof, each Purchaser shall be
entitled to the rights set forth therein.
(iv) ISSUANCE OF SHARES. The Preferred Shares are duly authorized and,
upon issuance in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances and will not be subject to preemptive rights or other similar
rights of stockholders of the Company and will not impose personal liability on
the holders thereof. The Conversion Shares and e4L Warrant Shares are duly
authorized and reserved for issuance, and, upon conversion of the Preferred
Shares or exercise of the e4L Warrants, as the case may be, will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances and will not be subject to preemptive rights or other similar
rights of stockholders of the Company and will not impose personal liability
upon the holder thereof. To the Company's knowledge, the Buyitnow Warrant
Shares, when sold to the Purchasers in accordance with the terms of the Buyitnow
Warrants, will be free from all taxes, liens, claims and encumbrances.
(v) NO CONFLICTS. The execution, delivery and performance of this
Agreement, the Buyitnow Warrants, the e4L Warrants and the Registration Rights
Agreement by the Company, the performance by the Company of its obligations
under the Certificate of Designation, and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance or sale, as the case may be, and reservation for issuance or sale and
sale, as applicable, of the Preferred Shares, Buyitnow Warrants, e4L Warrants,
Conversion Shares, Buyitnow Warrant Shares and e4L Warrant Shares) will not (i)
result in a violation of the Certificate of Incorporation or By-laws or (ii)
except as set forth on Schedule 3(e) hereof, conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment
(including, without limitation, the triggering of any anti-dilution provisions),
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its Subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including U.S. federal and
state securities laws and regulations and rules or regulations of any
self-regulatory organizations to which either
-5-
<PAGE>
the Company or its securities are subject) applicable to the Company or any of
its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected (except, with respect to clause (ii), for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation, By-laws or other organizational documents
and neither the Company nor any of its Subsidiaries is in default (and no event
has occurred which, with notice or lapse of time or both, would put the Company
or any of its Subsidiaries in default) under, nor has there occurred any event
giving others (with notice or lapse of time or both) any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, except as
would not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its Subsidiaries are not being conducted, and
shall not be conducted so long as a Purchaser owns any of the Preferred Shares,
e4L Warrants, Conversion Shares or e4L Warrant Shares, in violation of any law,
ordinance or regulation of any governmental entity, except for possible
violations the sanctions for which either singly or in the aggregate would not
have a Material Adverse Effect. Except as specifically contemplated by this
Agreement and the Registration Rights Agreement, the Company is not, except as
set forth on Schedule 3(e), required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
agency or any regulatory or self regulatory agency in order for it to execute,
deliver or perform any of its obligations under this Agreement, the Buyitnow
Warrants, the e4L Warrants or the Registration Rights Agreement or to perform
its obligations under the Certificate of Designation, in each case in accordance
with the terms hereof or thereof.
(vi) SEC DOCUMENTS, FINANCIAL STATEMENTS. Since March 31, 1996, the
Company has timely filed (within applicable extension periods) all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") (all of the foregoing, filed prior to the
date hereof and after March 31, 1999, and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein, being hereinafter referred to herein as the "SEC DOCUMENTS").
The Company has delivered or made available to the Purchasers true and complete
copies of such SEC Documents as the Purchasers have requested. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act or the Securities Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with U.S. generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set forth
in the financial statements of the Company included in the SEC Documents filed
prior to the date hereof, the Company has no liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to the date of such financial statements, (ii) liabilities
not required by generally accepted accounting principles ("GAAP") to be
disclosed on a balance sheet prepared in accordance with GAAP, and (iii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in such financial statements, which
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<PAGE>
liabilities and obligations referred to in clauses (i), (ii) and (iii)
individually or in the aggregate, are not material to the financial condition or
operating results of the Company.
(vii) ABSENCE OF CERTAIN CHANGES. Since MARCH 31, 1999, there has been
no material adverse change and no material adverse development in the business,
properties, operations, prospects, financial condition or results of operations
of the Company and its Subsidiaries, taken as a whole, except as disclosed in
SCHEDULE 3(g) or in the SEC Documents filed prior to the date hereof.
(viii) ABSENCE OF LITIGATION. Except as disclosed in the SEC Documents
filed prior to the date hereof, or as otherwise disclosed on SCHEDULE 3(h),
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company, any of its Subsidiaries, or any of
their respective directors or officers in their capacities as such, which could
reasonably be expected to have a Material Adverse Effect.
(ix) INTELLECTUAL PROPERTY. Except as set forth on SCHEDULE 3(i), each
of the Company and its Subsidiaries owns or is licensed to use all material
patents, patent applications, trademarks, trademark applications, trade names,
service marks, copyrights, copyright applications, licenses, permits, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) and other similar rights and
proprietary knowledge (collectively, "INTANGIBLES") necessary for the conduct of
its business as now being conducted and as described in the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1999. To the best
knowledge of the Company, neither the Company nor any Subsidiary of the Company
infringes or is in conflict with any right of any other person with respect to
any Intangibles which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect.
Except as disclosed in the SEC Documents, neither the Company nor any of its
Subsidiaries has received written notice of any pending conflict with or
infringement upon such third party Intangibles, which alleged pending conflict
or alleged infringement, if adversely determined, would result in a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has entered into
any consent agreement, indemnification agreement outside the ordinary course of
business of the Company, forbearance to sue or settlement agreement with respect
to the validity of the Company's or its Subsidiaries' ownership or right to use
its Intangibles and, to the best knowledge of the Company, there is no
reasonable basis for any such claim to be successful. The Intangibles are valid
and enforceable and no registration relating thereto has lapsed, expired or been
abandoned or canceled or is the subject of cancellation or other adversarial
proceedings, and all applications therefor are pending and are in good standing.
The Company and its Subsidiaries have complied, in all material respects, with
their respective contractual obligations relating to the protection of the
Intangibles used pursuant to licenses. To the best knowledge of the Company, no
person is infringing on or violating the Intangibles owned or used by the
Company or its Subsidiaries.
(x) FOREIGN CORRUPT PRACTICES. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977;
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.
(xi) DISCLOSURE. All information relating to or concerning the Company
set forth in this Agreement or provided to the Purchasers pursuant to Section
2(d) hereof and otherwise in connection with the transactions contemplated
hereby is true and correct in all material respects and the Company has not
omitted to state any material fact necessary in order to make the statements
made herein or therein, in light
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of the circumstances under which they were made, not misleading. No event or
circumstance has occurred or exists with respect to the Company or its
Subsidiaries or their respective businesses, properties, operations or financial
conditions, which has not been publicly disclosed but, under applicable law,
rule or regulation, would be required to be disclosed by the Company in a
registration statement filed on the date hereof by the Company under the
Securities Act with respect to the primary issuance of the Company's securities.
(xii) FORM S-3 ELIGIBILITY. The Company is currently eligible to
register the resale of its Common Stock on a registration statement on Form S-3
under the Securities Act.
(xiii) NO GENERAL SOLICITATION. The Company has not conducted any
"GENERAL SOLICITATION," as such term is defined in Regulation D, with respect to
any of the Securities being offered hereby.
(xiv) NO INTEGRATED OFFERING. Neither the Company, nor to the Company's
knowledge, any of its affiliates, nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would require
registration of the Securities being offered hereby under the Securities Act or
cause this offering of Securities to be integrated with any prior offering of
securities of the Company for purposes of the Securities Act or any applicable
stockholder approval provisions.
(xv) NO BROKERS. Except as disclosed on SCHEDULE 3(o), the Company has
taken no action which would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments by any Purchaser relating to this
Agreement or the transactions contemplated hereby.
(xvi) TITLE. The Company and its Subsidiaries have good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the SEC Documents or
SCHEDULE 3(p) or such as do not materially affect the value of such property and
do not materially interfere with the use made and proposed to be made of such
property by the Company and its Subsidiaries. The Company does not own any real
property. Any real property and facilities held under lease by the Company and
its Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not materially interfere with
the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
(d) COVENANTS.
(i) BEST EFFORTS. The parties shall use their best efforts timely to
satisfy each of the conditions described in Section 6 and 7 of this Agreement.
(ii) FORM D: BLUE SKY LAWS. The Company agrees to file a Form D with
respect to the securities purchased by the Purchasers hereunder as required
under Regulation D and to provide a copy thereof to each Purchaser promptly
after such filing. The Company shall, on or before the Closing Date, take such
action as the Company shall reasonably determine is necessary to qualify the
Securities for sale to the Purchasers pursuant to this Agreement under
applicable securities or "blue sky" laws of the states of the United States or
obtain exemption therefrom, and shall provide evidence of any such action so
taken to the Purchasers on or prior to the Closing Date.
(iii) REPORTING STATUS. So long as any Purchaser beneficially owns any
of the Preferred Shares, e4L Warrants, Conversion Shares or e4L Warrant Shares,
the Company shall timely file all reports required
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to be filed with the SEC pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination other than a termination occurring in connection with an
acquisition of the Company by a third party or pursuant to some other form of
business combination.
(iv) USE OF PROCEEDS. The Company shall use the proceeds from the sale
of the Preferred Shares as set forth in SCHEDULE 4(d).
(v) EXPENSES. Except as otherwise provided in the Registration Rights
Agreement, each party hereto shall be responsible for its own expenses incurred
in connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the other agreements to be executed in
connection herewith.
(vi) FINANCIAL INFORMATION. The Company agrees to send to each
Purchaser those reports which it generally sends to holders of its Common Stock
until such Purchaser transfers, assigns or sells all of its Preferred Shares and
e4L Warrants.
(vii) RESERVATION OF SHARES. The Company shall at all times have
authorized and reserved for the purpose of issuance a sufficient number of
shares of Common Stock to provide for (i) the full conversion of the outstanding
Preferred Shares and issuance of the Conversion Shares in connection therewith
and (ii) the full exercise of the outstanding e4L Warrants and issuance of the
e4L Warrant Shares in connection therewith.
(viii) LISTING. The Company shall promptly secure the listing of the
Conversion Shares and e4L Warrant Shares upon the NYSE and each other national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all Conversion Shares and e4L Warrant Shares from time to time
issuable upon conversion of the Preferred Shares or exercise of the e4L
Warrants, as applicable. Until such time as the Company has been acquired by a
third person or is otherwise involved in a business transaction resulting in the
Company no longer being publicly held (in conformity with Section 4(i) hereof),
the Company will use its best efforts to continue the listing and trading of its
Common Stock on the NYSE, the American Stock Exchange ("AMEX") or the Nasdaq
National Market ("NASDAQ") and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the NYSE,
such other exchanges or the National Association of Securities Dealers ("NASD"),
as applicable.
(ix) NO INTEGRATED OFFERINGS. The Company shall not make any offers or
sales of any security (other than the Preferred Shares, the e4L Warrants, the
Conversion Shares and the e4L Warrant Shares) under circumstances that would
require registration of the Preferred Shares, Conversion Shares, e4L Warrants or
e4L Warrant Shares being offered or sold hereunder under the Securities Act.
(x) SHORT SALES. So long as a Purchaser beneficially owns any Preferred
Shares, except as otherwise provided herein, such Purchaser shall not create a
"short position" in the Common Stock. For purposes hereof, a "short position"
shall be deemed to have been created by a Purchaser if such Purchaser (i) enters
into a "short sale" (as such term is defined in Rule 3b-3 under the Exchange
Act), (ii) purchases a put option to sell shares of Common Stock or (iii) enters
into any other agreement or arrangement designed to achieve the same purposes or
effects as those to be derived from the transactions enumerated in clauses (i)
or (ii) of this sentence.
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<PAGE>
(xi) LEGAL COMPLIANCE. The Company shall conduct its business and the
business of its Subsidiaries in compliance with all laws, ordinances or
regulations of governmental entities applicable to such businesses, except where
the failure to do so would not have a Material Adverse Effect.
(e) TRANSFER AGENT INSTRUCTIONS.
(i) The Company shall instruct its transfer agent to issue
certificates, registered in the name of each Purchaser or its nominee, for the
Conversion Shares or the e4L Warrant Shares in such amounts as specified from
time to time by such Purchaser to the Company upon conversion of the Preferred
Shares or exercise of the e4L Warrants. To the extent and during the periods
provided in Section 2(f) and 2(g) of this Agreement, all such certificates shall
bear the restrictive legend specified in Section 2(g) of this Agreement.
(ii) The Company warrants that no instruction other than such
instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof in the case of the transfer of the Conversion
Shares or e4L Warrant Shares prior to registration of the Conversion Shares and
e4L Warrant Shares under the Securities Act or without an exemption therefrom,
will be given by the Company to its transfer agent and that the Conversion
Shares and e4L Warrant Shares shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this Agreement
and the Registration Rights Agreement. Nothing in this Section shall affect in
any way each Purchaser's obligations and agreement set forth in Section 2(g)
hereof to resell the Preferred Shares, e4L Warrants, the Conversion Shares or
the e4L Warrant Shares pursuant to an effective registration statement or in
compliance with an exemption from the registration requirements of applicable
securities law.
(iii) If a Purchaser provides the Company and the transfer agent with
an opinion of counsel, which opinion of counsel shall be in form, substance and
scope customary for opinions of counsel in comparable transactions, to the
effect that the Preferred Shares, e4L Warrants, the Conversion Shares or e4L
Warrant Shares to be sold or transferred may be sold or transferred pursuant to
an exemption from registration, or a Purchaser provides the Company with
reasonable assurances (including an opinion of counsel if requested by the
Company) that such Preferred Shares, e4L Warrants, Conversion Shares and e4L
Warrant Shares may be sold under Rule 144, the Company shall permit the
transfer, and, in the case of the Conversion Shares and e4L Warrant Shares,
promptly instruct its transfer agent to issue one or more certificates in such
name and in such denominations as specified by a Purchaser.
(f) CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to issue and sell the Units to
a Purchaser hereunder is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions thereto, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion.
(i) Each Purchaser shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to the Company.
(ii) Each Purchaser shall have delivered the Purchase Price for the
Units in accordance with Section 1(b) above.
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<PAGE>
(iii) The representations and warranties of each Purchaser shall be
true and correct as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date, which representations and warranties shall be true and correct as
of such date), and such Purchaser shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by such Purchaser
at or prior to the Closing Date.
(iv) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(v) The aggregate number of Units being purchased hereunder by all
Purchasers hereunder shall be 20.
(g) CONDITIONS TO EACH PURCHASER'S OBLIGATION TO PURCHASE.
The obligation of each Purchaser hereunder to purchase the Units to be
purchased by it at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for such Purchaser's sole benefit and may be waived by such
Purchaser at any time in the Purchaser's sole discretion:
(i) The Company shall have executed this Agreement, the Buyitnow
Warrants, the e4L Warrants and the Registration Rights Agreement, and delivered
the same to such Purchaser.
(ii) The Certificate of Designation shall have been accepted for filing
with the Secretary of State of the State of Delaware and a copy thereof
certified by the Secretary of State of Delaware shall have been delivered to
such Purchaser.
(iii) The Company shall have delivered to such Purchaser duly executed
Buyitnow Warrants, e4L Warrants and certificates (in such denominations as such
Purchaser shall reasonably request) representing the Preferred Shares being so
purchased by such Purchaser in accordance with Section 1(b) above.
(iv) The Common Stock shall be listed on the NYSE and trading in the
Common Stock (or the NYSE generally) shall not have been suspended by the SEC or
the NYSE.
(v) The representations and warranties of the Company shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time (except for representations and warranties that speak as of a specific
date, which representations and warranties shall be true and correct as of such
date) and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing Date. Such Purchaser shall have received a certificate, executed
by the Chief Executive Officer of the Company, dated as of the Closing Date to
the foregoing effect and as to such other matters as may be reasonably requested
by such Purchaser.
(vi) No statute, rule, regulation, executive order, decree, ruling,
injunction, action or proceeding shall have been enacted, entered, promulgated
or endorsed by any court or governmental authority of competent jurisdiction or
any self-regulatory organization having authority over the matters contemplated
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<PAGE>
hereby which questions the validity of, challenges or prohibits the consummation
of any of the transactions contemplated by this Agreement.
(vii) The Company shall have delivered evidence reasonably satisfactory
to the Purchasers that the Company's transfer agent has agreed to act in
accordance with irrevocable instructions in the form attached hereto as EXHIBIT
D.
(viii) There shall have been no material adverse changes and no
material adverse developments in the business, properties, operations,
prospects, financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole, since the date hereof, and no information, of
which the Purchasers are not currently aware, shall come to the attention of the
Purchasers that is materially adverse to the Company.
(h) GOVERNING LAW; MISCELLANEOUS.
(i) GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. The Company and the
Purchasers irrevocably consent to the jurisdiction of the United States federal
courts and the state courts located in the State of Delaware in any suit or
proceeding based on or arising under this Agreement and irrevocably agrees that
all claims in respect of such suit or proceeding may be determined in such
courts. The Company irrevocably waives the defense of an inconvenient forum to
the maintenance of such suit or proceeding. Service of process on the Company
mailed by first class mail shall be deemed in every respect effective service of
process upon the Company in any such suit or proceeding. Nothing herein shall
affect the right of any Purchaser to serve process in any other manner permitted
by law. The Company agrees that a final non-appealable judgment in any such suit
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
(ii) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed Execution Page(s)
to be physically delivered to the other party within five (5) business days of
the execution hereof.
(iii) HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(iv) SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
(v) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein. No provision of this Agreement may be
waived other than by an instrument in writing signed by the party to be charged
with enforcement and no provision of this Agreement may be amended other than by
an instrument in writing signed by the Company and each Purchaser.
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<PAGE>
(vi) NOTICES. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier or by confirmed
telecopy, and shall be effective five days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The addresses
for such communications shall be:
If to the Company:
e4L, Inc.
15821 Ventura Boulevard, 5th Floor
Los Angeles, CA 91436
Telecopy: (818) 461-6530
Attn: Chief Financial Officer
If to any Purchaser, to such address set forth under such Purchaser's
name on the Execution Page hereto executed by such Purchaser.
Each party shall provide notice to the other parties of any change in
address.
(vii) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Except as
provided herein or therein, neither the Company nor any Purchaser shall assign
this Agreement, the Registration Rights Agreement or any rights or obligations
hereunder or thereunder.
(viii) THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
(ix) SURVIVAL. The representations and warranties of the Company and
the agreements and covenants set forth in Sections 3, 4, 5 and 8 and the
representations and warranties of the Purchasers set forth in Section 2 shall
survive the closing hereunder notwithstanding any investigation conducted by or
on behalf of any Purchasers. Moreover, none of the representations and
warranties made by the Company herein shall act as a waiver of any rights or
remedies a Purchaser may have under applicable federal or state securities laws.
(x) FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(xi) TERMINATION. In the event that the Closing Date shall not have
occurred on or before August 31, 1999, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date. Notwithstanding
any termination of this Agreement, any party not in breach of this Agreement
shall preserve all rights and remedies it may have against another party hereto
for a breach of this Agreement prior to or relating to the termination hereof.
(xii) JOINT PARTICIPATION IN DRAFTING. Each party to this Agreement has
participated in the negotiation and drafting of this Agreement. As such, the
language used herein shall be deemed to be the
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language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction will be applied against any party to this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
e4L, INC.
By: /s/
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
PURCHASER:
RS PACIFIC PARTNERS
By: /s/
--------------------------------------------------
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
RESIDENCE:
-------------------------------------------
ADDRESS:
----------------------------------------------------
AGGREGATE SUBSCRIPTION AMOUNT: $2,312,215
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<PAGE>
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
e4L, INC.
By: /s/
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
PURCHASER:
RS EMERGING GROWTH PARTNERS LP
By: /s/
--------------------------------------------------
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
RESIDENCE:
-------------------------------------------
ADDRESS:
----------------------------------------------------
AGGREGATE SUBSCRIPTION AMOUNT: $1,188,726
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<PAGE>
IN WITNESS WHEREOF, the undersigned Purchaser and the Company have
caused this Agreement to be duly executed as of the date first above written.
e4L, INC.
By: /s/
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
PURCHASER:
RS PREMIUM PARTNERS LP
By: /s/
--------------------------------------------------
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
RESIDENCE:
-------------------------------------------
ADDRESS:
----------------------------------------------------
AGGREGATE SUBSCRIPTION AMOUNT: $1,499,059
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