• by Masha Geller , March 11, 2002

Interactive entertainment network eUniverse, Inc., and L90 today announced they have agreed to terminate their merger agreement, subject to final terms to be negotiated by the parties, to include among other things cash reimbursement by L90 to eUniverse of certain expenses incurred relating to the proposed merger.

”We believe that based on the preliminary terms we have reached with L90 governing the termination of the merger agreement, coupled with the uncertainty of the conclusion of L90's pending SEC investigation, it is in the best interest of our shareholders at this time to terminate the existing merger agreement with L90,” said Brad Greenspan, Chairman and CEO of eUniverse.

“Going forward, eUniverse continues to evaluate other strong acquisition opportunities and will also continue to explore the possibility of purchasing selected assets of L90 in the future,” he added.

eUniverse’s decision is believed to be based largely on the fact that L90 today announced the resignation by John C. Bohan as President and CEO of the company and as a member of its board of directors. In addition, the company has "removed" Thomas A. Sebastian from his position as Chief Financial Officer and has placed him on administrative leave.

As a result, the Nasdaq Stock Market said today that trading in the company had been halted pre-open at a last sale price of $1.21 and will remain halted until L90 has fully satisfied Nasdaq's request for additional information. The stock traded above $25 in February of 2000 but has fallen steadily amid the shakeout among online firms.

The news is the latest in a string of resignations and probes. A vice president of finance resigned on Feb. 4, after the SEC has issued subpoenas to L90 and one of its directors requesting documents related primarily to the company's financial records. L90 Founder Mark Roah resigned from the board last Friday for "personal reasons."

Mitchell Cannold, who most recently served as Chief Operating Officer of Space.com, will replace Bohan as L90’s new President and CEO, and serve on the company's board of directors. “I recognize the immediate challenges facing L90,” Cannold said in the statement, “but I also see tremendous potential for the company. Cleary, my top priority is to ensure that, as L90 continues its forward momentum, it does so with the best interests of its shareholders in mind.'' Mr. Cannold is expected to begin working immediately with L90's board of directors, its management and its outside experts and advisors.

L90 has also engaged Peter Sealey, a long-standing member of the board of directors, as a consultant to advise L90's management, and Steven Kantor, a certified public accountant, as Vice President of Finance.

According to an announcement released this morning, L90 continues to cooperate with the SEC investigation and is hopeful that it can resolve this investigation in an expedient manner.