-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gv1HkWPFKeJTv9ZfcKB9F+WnGnDhmI4sxnyu5Drfis+cqBtU6aE3uNf9NuqksV/a Qvdrh+f1JLmirPb24WJHhA== 0000912057-00-001192.txt : 20000202 0000912057-00-001192.hdr.sgml : 20000202 ACCESSION NUMBER: 0000912057-00-001192 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20000113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: E4L INC CENTRAL INDEX KEY: 0000070412 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 132658741 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-94611 FILM NUMBER: 506910 BUSINESS ADDRESS: STREET 1: 15821 VENTURA BOULEVARD STREET 2: SUITE 570 CITY: ENCINO STATE: CA ZIP: 91416 BUSINESS PHONE: 8184616400 MAIL ADDRESS: STREET 1: 15821 VENTURA BOULEVARD STREET 2: SUITE 570 CITY: ENCINO STATE: CA ZIP: 91416 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL MEDIA CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL PARAGON CORP DATE OF NAME CHANGE: 19870827 S-3 1 S-3 As filed with the Securities and Exchange Commission on January 13, 2000 Registration No. 333- _ - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- e4L, INC. (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 13-2658741 (I.R.S. Employer Identification Number) 15821 VENTURA BOULEVARD 5TH FLOOR LOS ANGELES, CALIFORNIA 91436 (Address of principal executive offices) DANIEL M. YUKELSON EXECUTIVE VICE PRESIDENT/FINANCE AND CHIEF FINANCIAL OFFICER, AND SECRETARY 15821 VENTURA BOULEVARD 5TH FLOOR LOS ANGELES, CALIFORNIA 91436 (Name and address of agent for service) (818) 461-6400 (Telephone number, including area code, of agent for service) ------------------ Approximate date of commencement of proposed sale to the public: As soon as practicable after the Registration Statement becomes effective. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, check the following box: / / If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest investment plans. Check the following box. /X/ If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box./ / CALCULATION OF REGISTRATION FEE
Proposed Proposed Amount of Title of Securities Amount to be Maximum Offering Maximum Aggregate Registration to be Registered Registered Price Per Share Offering Price Fee Common Stock, par value $.01 per share 600,000 $3.0625/share (1) $1,837,500(1) $485.10(1) - -------------------------------------------------------------------------------------------------------------------
(1) Based on the average of the high and low trading price of the Registrant's Common Stock as reported by the New York Stock Exchange on January 12, 2000, as estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act of 1933. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION ("SEC"), ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. SUBJECT TO COMPLETION - JANUARY 13, 2000 PROSPECTUS e4L, INC. 15821 VENTURA BOULEVARD 5TH FLOOR LOS ANGELES, CALIFORNIA 91436 (818) 461-6400 ------------------------------------ 600,000 SHARES OF COMMON STOCK ------------------------------------ Selling Stockholders are offering and selling up to 600,000 shares of common stock. The Selling Stockholders may acquire the shares of common stock offered pursuant to this Prospectus upon exercise of warrants or upon satisfaction of e4L's obligations to the holders of Series E Convertible Preferred Stock. The Selling Stockholders may offer the shares of common stock through public or private transactions, on the New York Stock Exchange, at prevailing market prices, or at privately negotiated prices. e4L's common stock is listed on the New York Stock Exchange under the symbol "ETV." On January 12, 2000, the closing sale price for the common stock, as quoted on the New York Stock Exchange, was $2.875 per share. SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. ------------------------------------ NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SHARES OF COMMON STOCK OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is . ------------------ The information in this Prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. TABLE OF CONTENTS SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.................................................................3 RISK FACTORS......................................................................................................4 THE COMPANY.......................................................................................................7 USE OF PROCEEDS...................................................................................................8 SELLING STOCKHOLDERS..............................................................................................9 PLAN OF DISTRIBUTION.............................................................................................11 LEGAL MATTERS....................................................................................................11 EXPERTS ........................................................................................................11 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..................................................................13 WHERE YOU CAN GET MORE INFORMATION...............................................................................13
-2- SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements contained in this Prospectus discuss future expectations, contain projections of results of operations or financial condition or state other "forward-looking" information regarding e4L and its subsidiaries. Those statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and has been derived using numerous assumptions. Important factors that may cause e4L's actual results to differ from projections include, for example, - the success or failure of e4L's efforts to implement its business strategies; - competition for products and media time; - the ability to raise sufficient capital to expand e4L's business; - the ability to develop or obtain rights to successful new products and ability to exploit alternative distribution channels such as wholesale/retail and electronic commerce; - the ability to attract and retain quality employees and talented performers for e4L's direct response television programming; and - other risks which may be described in e4L's future filings with the SEC. -3- RISK FACTORS You should carefully consider each of the following factors and other information in this prospectus before deciding to invest in shares of e4L's Common Stock. e4L HAS HISTORICALLY SUFFERED LOSSES WHICH HAS ADVERSELY AFFECTED CASH FLOW e4L incurred significant losses in four of its last five fiscal years. e4L also reported a net loss of approximately $43.6 million for fiscal year 1999 and a loss of $10.7 million during the six months ended September 30, 1999. Because of e4L's historical financial condition as well as other unfavorable conditions, e4L developed a business plan and has begun implementing new strategies designed to increase net revenue, reduce costs and return it to profitability. If the business plan does not adequately address the circumstances and situations which resulted in e4L's historic poor performance, e4L would be required to seek alternative forms of financing, the availability of which is uncertain, or be forced to go out of business. THE DIRECT RESPONSE MARKETING AND ELECTRONIC COMMERCE INDUSTRIES ARE EXTREMELY COMPETITIVE e4L experiences extreme competition for products, customers and media access in the direct response marketing and electronic commerce industries. Accordingly, to be successful, e4L must: - Accurately predict consumer needs and market conditions, including consumers' acceptance of the Internet as a medium for commerce and competition; - Introduce successful products; - Produce compelling direct response television programs and Internet sales initiatives; - Acquire appropriate amounts of media time; - Manage its media time effectively; - Fulfill customer orders timely and efficiently; - Provide courteous and informative customer service; - Maintain adequate vendor relationships and terms; - Enhance successful products to generate additional sales; - Expand the methods used to sell products, including greater use of the Internet as a sales medium; - Expand in existing geographic markets; and - Integrate acquired companies and businesses efficiently. e4L's historical operating results were primarily caused by delays in product introductions, lack of successful products, failure to adequately leverage its global spending and economic conditions in the Asian (including the South Pacific Rim) market. More recently, reduced media availability and limited new products have negatively affected e4L's operating results. e4L actively seeks out new products, new sources of products and alternative distribution channels, including wholesale/retail and the Internet. e4L cannot be certain that inventors and product manufacturers will select it to market their products. Significant delays in product introductions or a lack of successful products could prevent e4L from selling adequate amounts of its products and otherwise have a negative effect on e4L's business. e4L DEPENDS UPON FOREIGN SALES FOR REVENUE, WHICH EXPOSES e4L TO ADDITIONAL RISKS e4L markets products to consumers in over 70 countries. In recent years, e4L has derived approximately forty percent of its net revenue from sales to customers outside the United States and Canada. e4L's largest international markets are Europe and Asia, primarily Japan, Australia and New Zealand. The economic environment in the Asian region has had and, for the foreseeable future, may continue to have, an adverse effect on e4L. e4L's international expansion has caused an increase in its working capital requirements due to the additional time required to deliver products abroad and receive payment from foreign countries. While e4L's foreign operations have the advantage of airing direct response television programs that have already proven successful in the United States, as well as successful direct response television programs produced by other direct marketing companies with limited media access and distribution capabilities, there can be no assurance that e4L's foreign operations will continue to generate similar revenue or operate profitability. Competition in the international marketplace is intense. In addition, e4L is subject to many risks associated with doing business abroad including: - adverse fluctuations in currency exchange rates; - transportation delays and interruptions; - political and economic disruptions; -4- - the imposition of tariffs and import and export controls; and - increased customs or local regulations. The occurrence of any of these risks could have an adverse effect on e4L's business. AS e4L ENTERS NEW MARKETS, IT IS CONFRONTED WITH NEW AND COMPLEX ISSUES As e4L enters new markets, it is faced with the uncertainty of never having done business in that country's particular commercial, political and social environment. Accordingly, despite e4L's best efforts, the likelihood of success is unpredictable for reasons particular to each new market. For example, e4L's success in any new market is based primarily on strong product acceptance by consumers in the new market. It is also possible that, despite e4L's apparently successful entrance into a new market, some unforeseen circumstance could arise which would limit e4L's ability to continue to do business, operate profitability or to expand in that new market. e4L DEPENDS ON THE INTRODUCTION OF SUCCESSFUL NEW PRODUCTS TO BE PROFITABLE e4L is dependent on its continuing ability to introduce successful new products to supplement or replace existing products as they mature through their product life cycles. e4L's five most successful products each year typically account for a substantial amount of e4L's annual net revenue. Generally, e4L's successful products change from year to year. Accordingly, e4L's future results of operations depend on its ability to introduce successful products consistently and to capture the full revenue potential of each product at all stages of consumer marketing and distribution channels during the product's life cycle. In addition to a supply of successful new products, e4L's revenue and results of operations depend on a positive customer response to its direct response television programming and the effective management of product inventory and media time. Consumer response to e4L's programming depends on many variables, including the appeal of the products being marketed, the effectiveness of the direct response program, the availability of competing products and the timing and frequency of program airings. We cannot assure you that e4L's programming will receive market acceptance. e4L must have an adequate supply of inventory to meet consumer demand. Most of e4L's products have a limited market life, so it is extremely important that e4L generate maximum sales during this time period. If production delays or shortages, poor inventory management or inadequate cash flow prevent e4L from maintaining sufficient inventory, e4L could lose potential product sales, which may never be recouped. In addition, unanticipated obsolescence of a product may occur or problems may arise regarding regulatory, intellectual property, product liability or other issues which adversely affect future sales of a product even though e4L may still hold a large quantity of the product in inventory. Accordingly, e4L's ability to maintain systems and procedures to effectively manage its inventory is of critical importance to e4L's cash flow and results of operations. The average product life cycle in the United States and internationally is less than two years. Generally, products generate their most significant revenue in their first year of sales. In addition, e4L must adapt to market conditions and competition as well as other factors which may cut short a product's life cycle and adversely affect e4L's results of operations. e4L offers a limited money-back guarantee on all of its products if the customer is not fully satisfied. Accordingly, e4L's results of operations may be adversely affected by product returns under e4L's guarantee, its product warranty or otherwise. Although e4L establishes reserves against product returns which it believes are adequate based on product mix and returns history, e4l cannot assure you that it will not experience unexpectedly high levels of product returns which exceed the reserves for that product. If product returns do exceed reserves, e4L's results of operations would be adversely affected. e4L DEPENDS ON THIRD PARTY MANUFACTURERS AND SERVICE PROVIDERS FOR MANY OF ITS ACTIVITIES Substantially all of e4L's products are manufactured by other domestic and foreign companies. In addition, e4L utilizes other companies to fulfill orders placed for e4L's products and to provide telemarketing services. If e4L's suppliers are unable, either temporarily or permanently, to deliver products to e4L in time to fulfill sales orders, it could have a negative effect on e4L's results of operations. Moreover, because the time from the initial approval of a product by e4L's product development department until the first sale of a product must be short, e4L must be able to cause its product manufacturers to quickly produce high-quality, reasonably priced products for e4L to sell. However, because e4L's primary product manufacturers are foreign companies which require longer lead times for products, any delay -5- in production or delivery would adversely affect sales of the product and e4L's results of operations. In addition, e4L's use of foreign manufacturers further exposes e4L to the general risks of doing business abroad. e4L MUST BE ABLE TO ACQUIRE AND EFFECTIVELY USE MEDIA TIME TO SELL PRODUCTS AND BUILD BRAND AWARENESS e4L must have access to media time to televise its direct response television programming on cable and broadcast networks, network affiliates and local stations. e4L purchases a significant amount of media time from cable television and satellite networks, which assemble programming for transmission to cable system operators. If demand for airtime increases, cable system operators and broadcasters may limit the amount of time available for these broadcasts. Larger multiple cable system operators also sell 'dark' time, (i.e., the hours during which a network does not broadcast its own programming) to third parties which may cause prices for such media to rise. Significant increases in the cost of media time or significant decreases in e4L's access to media could negatively impact e4L. In addition, periodic world events may limit e4L's access to air time and reduce the number of persons viewing e4L's direct response programming in one or more markets, which would negatively impact e4L for these periods. Recently, international media suppliers have begun to negotiate for fixed media rates and minimum revenue guarantees, each of which increase e4L's cost of media and risk. In addition to acquiring adequate amounts of media time, e4L's business depends on its ability to manage efficiently its acquisitions of media time, by analyzing the need for, and making purchases of, long term media and spot media. e4L must also properly allocate its available airtime among its current library of direct response television programs. Whenever e4L makes advance purchases and commitments to purchase media time, it must manage the media time effectively, because the failure to do so could negatively affect e4L's business. If e4L cannot use all of the media time it has acquired, it attempts to sell its excess media time to others. However, e4L cannot assure you that it will be able to use or sell its excess media time. In April 1998, e4L began leasing a twenty-four hour transponder on the Eutelstat Satellite, which broadcasts across Europe. e4L has incurred significant start-up costs in connection with the transponder lease. If e4L is unable to use effectively or sell the remaining transponder media time, e4L's future operations could be negatively affected. During the year ended March 31, 1999, e4L classified a portion of this contract as unfavorable and recorded a $5.3 million unusual charge. e4L HAS BEEN SUBJECT TO NUMEROUS LAWSUITS AND REGULATORY ACTIONS There have been many lawsuits against companies in the direct marketing industry. In recent years, e4L has been involved in significant legal proceedings and regulatory actions by the Federal Trade Commission and Consumer Products Safety Commission, which have resulted in significant costs and charges to e4L. In addition, e4L, its wholly owned subsidiary, Positive Response Television, Inc. and Positive Response's chief executive officer are subject to FTC consent orders which require them to submit periodic compliance reports to the FTC. Any additional FTC or CPSC violations or significant new litigation could have an adverse effect on e4L's business. e4L IS EXPOSED TO PRODUCT LIABILITY CLAIMS BY CONSUMERS Products sold by e4L may expose it to potential liability from damage claims by users of the products. In certain instances, e4L is able to obtain contractual indemnification rights against these liabilities from the manufacturers of the products. In addition, e4L generally requires its manufacturers to carry product liability insurance. However, e4L cannot be certain that manufacturers will maintain this insurance or that their coverage will be adequate to cover all claims. In addition, e4L cannot be certain that it will be able to maintain its insurance coverage or obtain additional coverage on acceptable terms, or that its insurance will provide adequate coverage against all claims. e4L COMPETES WITH MANY OTHER TYPES OF COMPANIES FOR CUSTOMERS e4L competes directly with companies which generate sales from direct response television programs and other direct marketing and electronic commerce companies. e4L also competes with a large number of consumer product retailers, many of which have substantially greater financial, marketing and other resources than e4L. Some of these retailers have recently begun, or indicated that they intend to begin, selling products through direct response marketing methods, including sales in various e-commerce channels, such as the Internet. e4L also competes with companies that make imitations of e4L's products at substantially lower prices, which may be sold in department stores, pharmacies, general merchandise stores and through magazines, newspapers, direct mail advertising, catalogs and the Internet. e4L PLACES GREAT RELIANCE ON ITS KEY PERSONNEL e4L's executive officers have substantial experience and expertise in direct response sales and marketing, electronic commerce and media. In addition, e4L is highly dependent on certain of its employees responsible for -6- product development and production of direct response television programs. If any of these individuals leave e4L, e4L's business could be negatively affected. e4L'S BUSINESS IS AFFECTED BY SEASONALITY ISSUES e4L's revenue varies throughout the year. e4L's revenue has historically been highest in its third and fourth fiscal quarters and lower in its first and second fiscal quarters due to fluctuations in the number of television viewers. These seasonal trends have been and may continue to be affected by the timing and success of new product offerings and the potential growth in e4L's electronic commerce businesses. e4L'S STOCK PRICE MAY BE ADVERSELY AFFECTED BY SALES OF ITS CONVERTIBLE SECURITIES Sales of a substantial number of shares of e4L's common stock in the public market could adversely affect the market price of e4L's common stock outstanding. As of November 30, 1999, there are approximately 35.7 million shares of e4L Common Stock outstanding, nearly all of which are freely tradable. In addition, approximately 45.0 million shares of e4L Common Stock are currently reserved for issuance upon the exercise of outstanding options and warrants and the conversion of convertible preferred stock. For example, approximately 16.6 million shares of Common Stock may be issued to holders of e4L's Series D Convertible Preferred Stock (based on a conversion price of $1.073125 per share) and approximately 10.9 million shares of Common Stock may be issued to holders of e4L's Series E Convertible Preferred Stock (based on a conversion price of $1.50 per share and not including any shares of common stock that are issuable to holders of Series E Convertible Preferred Stock in satisfaction of the one-year 4% premium payable upon conversion). THE COMPANY e4L is principally engaged in the use of direct response transactional television programming, also known as infomercials, wholesale/retail distribution and electronic commerce, to sell consumer products worldwide. e4L manages all phases of direct marketing for the majority of its consumer products in both the United States and international markets, including product selection and development, manufacturing by third parties, production and broadcast of direct response programs, order processing and fulfillment and customer service. e4L is engaged in direct marketing of consumer products in the United States through its wholly-owned subsidiary, Quantum North America, Inc. (formerly Media Arts International, Ltd. and d/b/a e4L North America), which e4L acquired in 1986, and internationally through its wholly-owned subsidiaries: Quantum International Limited, which e4L acquired in 1991; Quantum Prestige Limited, through which e4L operates in New Zealand and in all Asian countries other than Japan; Quantum International (Japan) Company Limited, which e4L formed in June 1995; and Suzanne Paul Holdings Pty Limited and its operating subsidiaries which e4L acquired in July 1996. e4L produces television programming through e4L Television (formerly d/b/a DirectAmerica Corporation), which e4L acquired in October 1995. e4L is a Delaware corporation, with its principal executive offices located at 15821 Ventura Boulevard, 5th Floor, Los Angeles, California 91436, and its telephone number is (818) 461-6400. -7- USE OF PROCEEDS e4L will not receive any proceeds from the sale of the shares of Common Stock offered by the Selling Stockholders pursuant to this Prospectus. The Selling Stockholders will remit to e4L the exercise price of the warrants in connection with an exercise of such securities. e4L will use the proceeds from such warrant exercises for working capital purposes. -8- SELLING STOCKHOLDERS The following table sets forth the name of the Selling Stockholders, the number of shares of Common Stock beneficially owned by each Selling Stockholder as of January 12, 2000, and the number of shares of Common Stock which may be offered for sale pursuant to this Prospectus by each Selling Stockholder. The Offered Shares may be offered from time to time by each Selling Stockholder named below. See "Plan of Distribution." However, the Selling Stockholders are under no obligation to sell all or any portion of the shares of Common Stock offered hereby, nor is any Selling Stockholder obligated to sell such shares of Common Stock immediately under this Prospectus. Because the Selling Stockholders may sell all or part of the shares of Common Stock offered hereby, no estimate can be given as to the number of shares of Common Stock that will be held by each Selling Stockholder upon termination of any offering made hereby. Pursuant to Rule 416(a) under the Securities Act, the shares of Common Stock issuable in respect of the warrants are subject to adjustment by reason of stock splits, stock dividends and other similar transactions in the Common Stock.
Common Shares Beneficially Owned After Offering (1) Number of Common -------------------------- Name of Selling Stockholder Shares Beneficially Common Shares Percent of Owned Prior to Offering Offered Hereby Number Outstanding The Media Group, Inc. 266,667 266,667 0 0 Bochetto & Lentz, P.C. 133,333 133,333 0 0 Jeffrey S. Amling 1,927 1,927 0 0 Mark Armbruster 326 326 0 0 D. Geoff Armstrong 1,634 1,634 0 0 Frank Bodenchack 2,172 2,172 0 0 Charles Carey 241 241 0 0 Mark Cuban 2,410 2,410 0 0 Douglas Frankel 483 483 0 0 William Gerlach 4,818 4,818 0 0 Gruber/McBaine International 5,786 5,786 0 0 Hirsch Living Trust vdt 10/30/90 964 964 0 0 Benjamin Homel 964 964 0 0 David Jacobs 483 483 0 0 Jacor Communications, Inc. 96,426 96,426 0 0 Casey Kasem, Inc. Retirement Trust 653 653 0 0 Kraig Kitchin 1,928 1,928 0 0 Ross & Rebecca Kudwitt 326 326 0 0 Laguintas Partners, L.P. 18,321 18,321 0 0 Robert Lee 483 483 0 0 Lehman Family Trust 964 964 0 0 Stephen C. Lehman 34,433 34,433 0 0 Howard Loewenberg 723 723 0 0 Drew Marcus 772 772 0 0 Douglas D. and Andrea T. Mitchelson 192 192 0 0 Robert Moore 1,928 1,928 0 0 Wilhelmina Nuehring Family Trust 1,722 1,722 0 0 Harry Radutzky 483 483 0 0 S/L Trilling Trust 2,411 2,411 0 0 David and Sonia Salzman 8,088 8,088 0 0
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Common Shares Beneficially Number of Common Owned After Offering (1) Name of Selling Stockholder Shares Beneficially Common Shares Percent of Owned Prior to Offering Offered Hereby Number Outstanding Andrew M. Schuon 483 483 0 0 Talisman Capital Opportunity Fund 4,248 4,248 0 0 Charles Thornstrom 2,172 2,172 0 0 Scott Wieler 483 483 0 0 Robert Wilson 326 326 0 0 Robert Wunsch 172 172 0 0 Robert Wunsch FBO Margaret and John Scott 57 57 0 0
- --------------- (1) Assumes the sale of all shares of Common Stock offered hereby. e4L is not aware of any plans of the Selling Stockholders to dispose of their Common Stock. -10- PLAN OF DISTRIBUTION The shares of Common Stock are being offered on behalf of each of the Selling Stockholders and e4L will not receive any proceeds from the Offering. The shares of Common Stock may be sold or distributed from time to time by each Selling Stockholder, or by pledgees, donees or transferees of, or other successors in interest to, each Selling Stockholder, directly to one or more purchasers (including pledgees) or through brokers, dealers, agents or underwriters who may act solely as agent or may acquire such shares as principals, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices, or at fixed prices, which may be subject to change. The sale of the shares of Common Stock may be effected in one or more of the following methods: (i) ordinary brokers' transactions, which may include long or short sales; (ii) transactions involving cross or block trades or otherwise on the New York Stock Exchange; (iii) purchases by brokers, dealers or underwriters as principal and resale by such purchasers for their own accounts pursuant to this Prospectus; (iv) "at the market" to or through market makers or into established trading markets, including direct sales to purchasers or sales effected through agents; (v) or any other exchange on which the Common Stock is listed (including any over-the-counter listing service); (vi) any combination of the foregoing, or by any other legally available means. In addition, each Selling Stockholder or its successor in interest may enter into hedging transactions with broker-dealers who may engage in short sales of shares of Common Stock in the course of hedging the position they assume with such Selling Stockholder. Each Selling Stockholder or its successor in interest may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares of Common Stock, which shares of Common Stock may be resold thereafter pursuant to this Prospectus. There can be no assurance that all or any of the shares of Common Stock will be issued to, or sold by, each Selling Stockholder. Brokers, dealers, underwriters or agents participating in the sale of the shares of Common Stock as agents may receive compensation in the form of commissions, discounts or concessions from each Selling Stockholder and/or purchasers of the Common Stock for whom such broker-dealers may act as agent, or to whom they may sell as principal, or both (which compensation to a particular broker-dealer may be less than or in excess of customary commissions). Each Selling Stockholder and any broker-dealers or other persons who act in connection with the sale of the Common Stock hereunder may be deemed to be "Underwriters" within the meaning of the Securities Act, and any commission they receive and proceeds of any sale of such shares may be deemed to be underwriting discounts and commissions under the Securities Act. Neither e4L nor any of the Selling Stockholders can presently estimate the amount of such compensation. e4L knows of no existing arrangements between any Selling Stockholders and any other stockholders, broker, dealer, underwriter or agent relating to the sale or distribution of the shares of Common Stock. A Selling Stockholder may decide not to sell any shares. e4L cannot assure you that any Selling Stockholder will use this prospectus to sell any or all of the shares of Common Stock. Any shares covered by this prospectus which qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to this prospectus. In addition, a Selling Stockholder may transfer, devise or gift the shares by other means not described in this prospectus. Each Selling Stockholder and any other persons participating in the sale or distribution of the Common Stock will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, which provisions may limit the timing of purchases and sales of any of the Common Stock by any Selling Stockholder or any other such persons. The foregoing may affect the marketability of the Common Stock. e4L will pay substantially all of the expenses incident to the registration, offering and sale of the Common Stock to the public other than commissions or discounts of underwriters, broker-dealers or agents. e4L has also agreed to indemnify each Selling Stockholder and certain related persons against certain liabilities, including liabilities under the Securities Act. LEGAL MATTERS The validity of the shares of Common Stock offered hereby has been passed upon for e4L by e4L's outside legal counsel, Klehr, Harrison, Harvey, Branzburg & Ellers LLP, Philadelphia, Pennsylvania. EXPERTS The consolidated financial statements and schedule of e4L, Inc. appearing in e4L's Annual Report (Form 10-K) for the year ended March 31, 1999 have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements and -11- schedule are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing. -12- INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The SEC allows companies to "incorporate by reference" the information filed with them, which means that e4L can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this Prospectus and information e4L files later with the SEC will automatically update and supersede this information. e4L incorporates by reference the documents listed below and any future filings it will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934: (a) e4L's Annual Report on Form 10-K for the fiscal year ended March 31, 1999; (b) e4L's Quarterly Report on Form 10-Q for the quarters ended June 30, 1999 and September 30, 1999; (c) e4L's Current Reports on Form 8-K dated June 8, 1999, August 30, 1999 and September 22, 1999; (d) e4L's Proxy Statements on Schedule 14A, dated August 23, 1999 and December 16, 1999; and (e) the description of e4L's Common Stock contained in e4L's Registration Statement on Form 8-A, dated August 28, 1990, including all amendments and reports filed for the purpose of updating such description. This Prospectus is part of a registration statement e4L filed with the SEC. You should rely only on the information or representations provided in this Prospectus. e4L has authorized no one to provide you with different information. e4L is not offering or selling these securities in any state where the offer or sale is not permitted. You should not assume that the information in this Prospectus is accurate as of any date other than the date stated on the front cover page of this Prospectus. e4L will provide without charge to each person to whom this Prospectus is delivered, upon written or oral request, a copy of any or all of such documents which are incorporated herein by reference. You should direct your requests for copies to e4L, Inc., 15821 Ventura Boulevard, 5th Floor, Los Angeles, California 91436; Attention: Investor Relations, telephone number (818) 461-6400, facsimile number (818) 461-6525. WHERE YOU CAN GET MORE INFORMATION At your request, e4L will provide you, without charge, a copy of any exhibits to e4L's Registration Statement. If you would like more information, write or call e4L at: e4L, Inc. Attention: Investor Relations 15821 Ventura Boulevard, 5th Floor Los Angeles, California 91436 Telephone: (818) 461-6400 Facsimile: (818) 461-6530 e4L's fiscal year ends on March 31. e4L intends to provide to its stockholders annual reports containing audited financial statements and other appropriate reports. In addition, e4L files annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information e4L files at the SEC's public reference room in Washington, D.C. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. e4L's SEC filings are also available to the public on the SEC's Internet site at http\\www.sec.gov. -13- No dealer, salesman or any other person has been authorized to give any information or to make any representations not contained in this Prospectus in 600,000 SHARES OF COMMON STOCK connection with the offering described herein and, if given or made, such e4L, INC. information or representation must not be relied upon as having been authorized by e4L or the Selling Stockholders. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy a security other than the shares of Common Stock offered hereby, nor does it ------- constitute an offer to sell or a solicitation of an offer to buy any of PROSPECTUS the securities offered hereby in any jurisdiction to any person to whom it is ------- unlawful to make such offer or solicitation in such jurisdiction. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information contained herein is correct as of any date subsequent to the date hereof. JANUARY 13, 2000
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following is an itemized statement of the estimated amounts of all expenses payable by e4L in connection with the registration of the shares of Common Stock offered hereby, other than underwriting discounts and commissions: Registration Fee--Securities and Exchange Commission................... $ 485.10 *Blue Sky fees and expenses............................................. $ 1,000.00 *Accountants' fees and expenses ........................................ $ 5,000.00 *Legal fees and expenses ............................................... $ 5,000.00 *Printing and EDGAR expenses ........................................... $ 1,000.00 *Miscellaneous ......................................................... $ 1,000.00 --------- Total ......................................................... $ 13,485.10 =========
- ------------------ * Estimate ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. e4L has adopted in its Certificate of Incorporation and Bylaws the provisions of Section 102(b)(7) of the Delaware General Corporation Law which eliminate or limit the personal liability of a director of e4L or its stockholders for monetary damages for breach of fiduciary duty as a director, except that this provision shall not eliminate or limit the liability of a director for any breach of the director's duty of loyalty to e4L or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or a known violation of the law, under Section 174 of the Delaware General Corporation Law, or for any transaction from which the director derived an improper personal benefit. Further, e4L's Certificate of Incorporation and Bylaws provide that e4L shall indemnify all persons whom it may indemnify pursuant to Section 145 of the Delaware Corporation Law to the full extent permitted therein. Section 145 provides, subject to various exceptions and limitations, that e4L may indemnify its directors or officers if such director or officer is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of e4L, or is or was serving at the request of e4L as a director or officer of another corporation, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of e4L, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The determination of whether indemnification is proper under the circumstances, unless made by a court, shall be made by a majority of a quorum of disinterested members of the Board of Directors, independent legal counsel or the stockholders of e4L. In addition, e4L shall indemnify its directors or officers to the extent that they have been successful on the merits or otherwise in defense of any such action, suit or proceeding, or in the defense of any claim, issue or matter therein, against expenses (including attorneys' fees) actually and reasonably incurred by them in connection therewith. II-1 ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Schedule of Exhibits.
Exhibit NUMBER EXHIBIT 4.1 (1) Form of e4L Warrant issued to The Media Group, Inc. and to Bochetto & Lentz, P.C. 5 (1) Opinion and Consent of Klehr, Harrison, Harvey, Branzburg & Ellers LLP. 23 (1) Consent of Ernst & Young LLP, independent auditors.
- ---------------- (1) Filed herewith. ITEM 17. UNDERTAKINGS. (a) The undersigned Registrant hereby undertakes: (i) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (A) to include any prospectus required by section 10(a)(3) of the Securities Act; (B) to reflect in the Prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. (C) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement. (ii) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (iii) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (iv) For purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. (b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-2 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Los Angeles, State of California, on this 12th day of January, 2000. e4L, INC. BY: /s/ Stephen C. Lehman ---------------------------------------- Stephen C. Lehman, Chairman of the Board of Directors and Chief Executive Officer POWER OF ATTORNEY Each of the undersigned officers and directors of e4L, Inc. whose signature appears below hereby appoints Stephen C. Lehman and Daniel M. Yukelson as true and lawful attorney-in-fact for the undersigned with full power of substitution, to execute in his name and on his behalf in each capacity stated below, any and all amendments (including post-effective amendments) to this Registration Statement as the attorney-in-fact shall deem appropriate, and to cause to be filed any such amendment (including exhibits thereto and other documents in connection therewith) to this Registration Statement with the Securities and Exchange Commission, as fully and to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, or any of them, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on this 12th day of January, 2000. SIGNATURE TITLE(S) /s/ Stephen C. Lehman Chairman of the Board of Directors and Chief - ------------------------------ Executive Officer Stephen C. Lehman /s/ Daniel M. Yukelson Executive Vice President/Finance and Chief - ------------------------------ Financial Officer, and Secretary Daniel M. Yukelson /s/ Stuart D. Buchalter Director - ------------------------------ Stuart D. Buchalter /d/ David E. Salzman Director - ------------------------------ David E. Salzman /s/ Andrew M. Schuon Director - ------------------------------ Andrew M. Schuon /s/ Eric R. Weiss Vice Chairman of the Board of Directors and - ------------------------------ Chief Operating Officer Eric R. Weiss EXHIBIT INDEX
EXHIBIT NO. 4.1 Form of e4L Warrant issued to The Media Group, Inc. and to Bochetto & Lentz, P.C. 5 Opinion and Consent of Klehr, Harrison, Harvey, Branzburg & Ellers, LLP. 23 Consent of Ernst & Young LLP, independent auditors.
EX-4.1 2 EX-4.1 EXHIBIT 4.1 VOID AFTER 5:00 P.M. NEW YORK CITY TIME ON NOVEMBER 18, 2001 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: November 19, 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 $1.6875. 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 which is being issued pursuant to that certain Settlement Agreement, dated as of the date hereof, by and among the Company and the other signatories thereto (the "SETTLEMENT AGREEMENT"). This Warrant is subject to the following terms, provisions, and conditions: 6. 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 (but in no event later than fifteen business days) 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. 7. PERIOD OF EXERCISE. 7.1 This Warrant is exercisable, at any time or from time to time on or after the date of initial issuance of this Warrant (the "ISSUE DATE") and before 5:00 p.m., New York City time on, November 18, 2001 (the "EXERCISE PERIOD"). 8. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and agrees as follows: 8.1 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. 8.2 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 suf ficient number of shares of Common Stock to provide for the exercise in full of this Warrant. 8.3 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 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. 8.4 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. 9. 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. 9.1 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. 9.2 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. 9.3 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 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. 9.4 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. 9.5 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. 9.6 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. 9.7 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(d) 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. 10. 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. 11. 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. 12. TRANSFER AND REPLACEMENT OF WARRANT. 12.1 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. 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 not assignable. 12.2 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. 12.3 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. 12.4 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. 13. REGISTRATION RIGHTS. The initial holder of this Warrant is entitled to the benefit of such registration rights in respect of the Warrant Shares as are set forth in the Settlement Agreement. 14. 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. 15. 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. 16. MISCELLANEOUS. 16.1 AMENDMENTS. This Warrant and any provision hereof may only be amended by an instrument in writing signed by the Company and the holder hereof. 16.2 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. 16.3 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 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. 16.4 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. IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer. e4L, INC. By: ----------------------------------- Name: ----------------------------- Title: ---------------------------- 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 e4L, Inc., 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. (a) 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. (b) 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: ---------------------------------- ---------------------------------- ---------------------------------- 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. EX-5 3 EX-5 EXHIBIT 5 [LETTERHEAD OF KLEHR, HARRISON, HARVEY, BRANZBURG & ELLERS LLP] January 13, 2000 Board of Directors e4L, Inc. 15821 Ventura Boulevard, 5th Floor Los Angeles, California 91436 RE: REGISTRATION STATEMENT ON FORM S-3 Gentlemen: We have acted as counsel to e4L, Inc., a Delaware corporation (the "Company"), in connection with the preparation of the Company's Registration Statement on Form S-3 (the "Registration Statement") being filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"). The Registration Statement relates to (i) the resale of up to 400,000 shares (the "Warrant Shares") of the Company's common stock, par value $.01 per share issuable upon exercise of warrants (the "Warrants") and (ii) the resale of up to 200,000 shares (the "Premium Shares") of Common Stock issuable in connection with the Company's obligations under the Series E Convertible Preferred Stock (the "Series E Preferred Stock"). In connection with this opinion, we have examined and relied upon the original or copies of (i) the Certificate of Incorporation and the By-laws of the Company, (ii) minutes and records of the corporate proceedings with respect to the issuance of the Warrant Shares and the Premium Shares, and (iii) such other documents as we have deemed necessary as a basis for the opinion hereinafter set forth. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents. As to any facts material to the opinions expressed herein that were not independently established or verified, we have relied upon oral or written statements and representations of officers and other representatives of the Company and others. This opinion is limited to the laws of the State of Delaware and we express no opinion as to the laws of any other jurisdiction. Based upon and subject to the foregoing, we are of the opinion that (i) the Warrant Shares issuable upon exercise of the Warrants, when issued upon exercise of the Warrants in accordance with the terms of the Warrants, will be validly issued, fully paid and non-assessable and (ii) the Premium Shares issuable in connection with the Series E Preferred Stock, when issued in accordance with the terms of the Series E Preferred Stock, will be validly issued, fully paid and non-assessable. This opinion is being furnished to you solely for your benefit in connection with the Registration Statement and is not to be used, circulated, quoted or referred to or relied upon for any other purpose without our express written permission. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Act, or the rules and regulations of the Commission promulgated thereunder. Very truly yours, /s/ Klehr, Harrison, Harvey, Branzburg & Ellers LLP EX-23 4 EX-23 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3) and related Prospectus of e4L, Inc. for the registration of 600,000 shares of its common stock and to the incorporation by reference therein of our report dated June 25, 1999, with respect to the consolidated financial statements and schedule of e4L, Inc. included in its Annual Report (Form 10-K) for the year ended March 31, 1999, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Los Angeles, California January 11, 2000 -----END PRIVACY-ENHANCED MESSAGE-----