EXHIBIT 10
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement"), dated as of May 14, 1999, is
made by and between XXXXXX BROTHERS INC. ("Xxxxxx") and e4L, INC., a Delaware
corporation formerly known as National Media Corporation ("NMC"). Xxxxxx and NMC
are referred to herein as the "Parties."
WHEREAS, pursuant to a July 2, 1997 letter, NMC retained Xxxxxx to provide
certain investment banking services (the "Engagement Letter").
WHEREAS, pursuant to the Engagement Letter, Xxxxxx asserts that it provided
substantial and valuable investment banking services to NMC and Xxxxxx has
demanded payment therefor.
WHEREAS, NMC terminated the Engagement Letter on or about October 23, 1998
and has denied liability for any payment to Xxxxxx thereunder.
WHEREAS, the Parties wish to settle and compromise Xxxxxx'x outstanding
payment demand to avoid the time and expense of litigation.
NOW, THEREFORE, in consideration of the foregoing and of the promises
hereinafter contained, the Parties hereby agree as follows:
Ten days following the execution and delivery of this Agreement as provided
in Paragraphs 18 and 19 herein (the "Closing Date"), NMC shall:
Pay to Xxxxxx in cash $344,019, which sum includes $105,841 in
out-of-pocket expenses incurred by Xxxxxx pursuant to the Engagement Letter;
Cause Temporary Media Co., LLC, a Delaware limited liability company
("TMC"), to transfer and assign to Xxxxxx a common stock purchase warrant held
by TMC to purchase, at $1.32 per
share, an aggregate of 32,500 shares of NMC common stock, $.01 per share par
value (the "TMC Warrant"); and
Issue to Xxxxxx a common stock purchase warrant to purchase, at $1.50 per
share, an aggregate of 130,185 shares of NMC common stock, $.01 per share par
value (the "NMC Warrant").
No later than June 30, 1999, NMC shall file a registration statement (Form
S-3) with the Securities and Exchange Commission ("SEC"), covering the shares of
NMC common stock underlying the NMC Warrant and shall keep such registration
statement and the present registration statement covering the shares of NMC
common stock underlying the TMC Warrant effective with the SEC until Xxxxxx has
sold all of the shares of NMC common stock underlying the NMC Warrant and the
TMC Warrant (the "NMC Shares").
Regarding the sale by Xxxxxx of the NMC Shares, Xxxxxx and NMC agree:
During any 90-day period ("Quarter") immediately subsequent to the Closing
Date, Xxxxxx shall not sell more than 27,115 NMC Shares in the first Quarter and
27,114 NMC Shares in the remaining Quarters;
If, at any time during the first twelve (12) month period following the
Closing Date, the volume weighted average price (as that term is defined by
Bloomberg) of NMC common stock on the New York Stock Exchange ("NYSE") is above
$8.50 per share for a period of three (3) consecutive trading days or more, NMC
may request that Xxxxxx exercise warrants and concurrently sell a designated
number of NMC Shares, which may be in excess of the limitations set forth in
subparagraph 3(a) hereof, (as long as the volume weighted average price is not
less than $8.50 per share). Xxxxxx will use its bests efforts to execute such
trade(s) as soon as is reasonably possible. If Xxxxxx refuses to sell shares at
the volume weighted average price (as long as the volume weighted average price
is not less than $8.50), there shall be no "Guarantee" (as defined in
subparagraph (e) hereof) in effect with respect to such designated number of
shares. Any such request to sell NMC shares underlying the NMC Warrant may only
be effective if and when the
registration statement to be filed pursuant to paragraph 2 hereof has been
declared effective by the SEC.
If during the twelve (12) to eighteen (18) months following the Closing
Date, the volume weighted average price of NMC common stock is above $10.80 for
a period of three (3) consecutive trading days or more, NMC may request that
Xxxxxx exercise warrants and concurrently sell a designated number of NMC
Shares, which may be in excess of the limitations set forth in subparagraph 3(a)
hereof, (as long as the volume weighted average price is not less than $10.80).
Xxxxxx will use its best efforts to execute such trade(s) as soon as is
reasonably possible. If Xxxxxx refuses to sell shares at the volume weighted
average price (as long as the volume weighted average price is not less than
$10.80), there shall be no Guarantee in effect with respect to such designated
number of shares.
Within three business days of the last day of each Quarter on which the
NYSE is open for trading, Xxxxxx shall advise NMC of the (i) number of NMC
Shares sold by it during such Quarter, (ii) the sales price for such NMC Shares,
and (iii) the aggregate sales proceeds received and shall provide NMC with
copies of all applicable trading confirmations substantially in the form of
Exhibit "A" attached hereto.
NMC guarantees to Xxxxxx (the "Guarantee") that it shall receive Aggregate
Proceeds (as herein defined) from the sale of NMC Shares of not less than:
6 months from Closing Date ("First Period"):
TMC Warrants- 32,500 @ $8.50 = $233,350
NMC Warrants- 11,921 @ $8.50 = $83,447
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"First Period Guaranteed Proceeds": $316,797
Between 6 and 12 months from Closing Date
("Second Period"):
NMC Warrants - 45,259 @ $8.50 = $316,813
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"Second Period Guaranteed Proceeds": $316,813
Between 12 and 18 months from Closing Date
("Third Period"):
NMC Warrants - 72,926 @ $10.80 = $678,212
-------
"Third Period Guaranteed Proceeds": $678,212
Total "Guaranteed Proceeds" to
be received: $1,311,822
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"Aggregate Proceeds" for each two-Quarter period (i.e., the First Period,
Second Period, and/or the Third Period) means the following:
(x) the sum of the cash realized by Xxxxxx on the sale of
NMC Shares for each of those three periods (without
deduction for any commissions or brokerage fees paid to
Xxxxxx but net of the warrant exercise price for the
NMC Shares sold); plus
(y) the aggregate volume weighted average price "in the
money" value of any unsold NMC Shares or unexercised
NMC Warrants or TMC Warrants Xxxxxx was entitled to
sell pursuant to paragraph 3(a) during each of those
three periods, determined by the volume weighted
average price for NMC common stock on the last trading
day on which the NYSE is open in each of the applicable
three periods; plus,
(z) the number of NMC Shares, if any, but not including any
NMC Shares that are included in the calculation
pursuant to subparagraph (e)(iv)(y) above, as to which
no Guarantee is in effect pursuant to sub-paragraph
3(b) hereof times $8.50 in Period One and Period Two
and $10.80 in Period Three, less the applicable warrant
exercise price.
Notwithstanding the definition of Aggregate Proceeds set forth above,
to the extent NMC Shares have been sold in the First Period or the Second
Period in excess of the number of NMC Shares covered by the Guarantee for
such periods ("Excess Shares"), those Excess Shares shall be applied to the
Guarantee for the Second Period and/or the Third Period. If the NMC shares
underlying the NMC Warrant have not been registered with the SEC by July
30, 1999 so that they may be sold, any such shares shall be excluded from
the above calculation and, within ten (10) business days of a demand from
Xxxxxx, NMC shall repurchase such shares in an amount no greater than
permitted to be sold by paragraph 3(a) herein at the closing price on the
NYSE for NMC Shares on any trading date designated by Xxxxxx in such
notice, but in no event shall the amount paid by NMC be less than $8.50 for
the shares within the Guarantee for the First Period and Second Period and
$10.80 for the shares within the Guarantee for the Third Period.
To the extent that Xxxxxx has not received Aggregate Proceeds of $316,800
by the close of the First Period, within ten (10) days following notification of
the sale of NMC Shares for the First Period pursuant to paragraph 3(d), NMC
shall pay in cash to Xxxxxx the shortfall between $316,800 and the Aggregate
Proceeds received by Xxxxxx.
To the extent that Xxxxxx has not received Aggregate Proceeds of an
additional $316,800 by the close of the Second Period, within ten (10) days
following notification of the sale of NMC
Shares for the Second Period pursuant to paragraph 3(d), NMC shall pay in cash
to Xxxxxx the shortfall between $316,800 and the Aggregate Proceeds received by
Xxxxxx.
To the extent that Xxxxxx has not received Aggregate Proceeds of an
additional $678,220 by the close of the Third Period, within ten (10) days
following notification of the sale of NMC Shares for the Third Period pursuant
to paragraph 3(d), NMC shall pay in cash to Xxxxxx the shortfall between
$678,220 and the Aggregate Proceeds received by Xxxxxx.
The payment provided for in Paragraph 1 and any payments required by
Xxxxxxxxxx 0, 0 xxx 0 xxxxx xx made by wire transfer to Xxxxxx as per its
instructions attached hereto as Exhibit "B". Xxxxxx reserves the right to change
its instructions concerning the method of payment or the address to which the
payments shall be directed.
Except for (i) the performance of the obligations created by or arising
out of this Agreement and (ii) paragraphs 8 and 9 of the Engagement Letter, NMC
and Xxxxxx, and each of them, release and discharge each other and their
respective shareholders, directors, officers, agents, employees, predecessors,
successors, subsidiaries, affiliates and assigns from any and all claims or
liabilities, whether or not such claims or liabilities are known or suspected to
exist, relating to or arising out of the Engagement Letter, or any services
provided by or expenses incurred by Xxxxxx pursuant thereto.
The parties acknowledge that each may hereafter discover facts
different from or in addition to those now known or believed to be true
regarding the subject matter of this mutual release and agree that this
Agreement shall remain in full force and effect, notwithstanding the existence
of any such different or additional facts.
Each party hereto represents and warrants that it is the sole
and lawful owner of all right, title and interest in and to all matters to which
the foregoing mutual release refers and that it has not previously assigned or
transferred, or purported to assign or transfer, to any person any released
matter or any portion thereof. The parties, and each of them, shall indemnify
and hold
harmless the other from and against any claim, demand, liability, expense, or
cause of action based on or arising out of any such assignment or transfer or
purported assignment or transfer.
This Agreement is for the sole purpose of settling the claims of the
parties and it is expressly understood and agreed that this Agreement does not
constitute, or is not evidence of, any admission by NMC of any liability to
Xxxxxx or the validity of any of Xxxxxx'x claims pursuant to the Engagement
Letter.
In the event either party breaches its obligations hereunder, or
otherwise breaches the Agreement, the prevailing party shall be entitled to
receive as damages any and all costs, expenses and attorneys' fees incurred by
such prevailing party in enforcing any provision of this Agreement or in
obtaining and enforcing a judgment for any payments not made.
NMC may not assign or otherwise transfer its obligation to make any of
the payments specified in this Agreement, unless Xxxxxx, in its sole discretion
provides express written consent.
The parties agree that the Engagement Letter has been terminated as of
October 23, 1998; that paragraphs 1, 2, 3, 4, 5, 6, 7, 13 and 14 of the
Engagement Letter are of no further force or effect; and that paragraphs 8, 9,
10, 11 and 12 of the Engagement Letter shall remain in effect as per their
respective terms and provisions.
The provisions of this Agreement shall be binding on and inure to the
benefit of Xxxxxx'x and NMC's predecessors, parents, subsidiaries, affiliates
and related companies, and any and all past, present and future officers,
owners, directors, trustees, shareholders, employees, agents, successors and
assigns of Xxxxxx and NMC.
This Agreement comprises the entire agreement of settlement between the
Parties and supersedes all prior understandings or agreements among the parties
hereto. Any antecedent or contemporaneous extrinsic representations and
warranties made in the negotiation or preparation of this Agreement are intended
to be merged into this Agreement and are of no further effect. However,
nothing in the releases included herein alters, modifies or negates the rights
and duties of the Parties under this Agreement.
Each of the Parties represents to the other that it has full power and
authority to enter into this Agreement and the release, that this Agreement and
the release have been authorized by all necessary corporate action, and that the
undersigned officers are duly authorized to execute this Agreement and the
release.
This Agreement shall be governed by the substantive law of the State of
New York without regard to principles of conflicts of laws.
All notices, requests, demands and other communications which are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally, or sent by telecopy or
certified mail, postage prepaid:
If to Xxxxxx, to both of:
Xxxxxx Brothers Inc.
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
-and-
Xxxxxx Brothers, Inc.
3 World Financial Center
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
If to NMC, to:
e4L, Inc.
00000 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx,
Executive Vice President and
Chief Financial Officer
Telecopy No.: (000) 000-0000
with copy to:
Buchalter, Nemer, Fields & Younger
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
This Agreement may be executed in counterparts and counterparts may be
delivered by facsimile; provided, however, that the Parties will also deliver
originals and execute counterparts to each other by overnight delivery service.
This Agreement shall not be binding or effective until it is signed and
delivered by the Parties. No modification, waiver, supplement or amendment of
this Agreement shall be binding or enforceable unless executed in writing by the
party to be bound thereby.
IN WITNESS WHEREOF the Parties have executed this Agreement by and
through the undersigned officers.
XXXXXX BROTHERS INC.
By: /s/
----------------------------
Name:
Title:
e4L, INC.
By: /s/
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Name:
Title:
