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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 1, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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HOMECOM COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 58-2153309
(State of incorporation) (I.R.S. Employer Identification No.)
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BUILDING 14, SUITE 100
3535 PIEDMONT ROAD
ATLANTA, GEORGIA 30305
(404) 237-4646
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
HARVEY SAX
CHIEF EXECUTIVE OFFICER
HOMECOM COMMUNICATIONS, INC.
BUILDING 14, SUITE 100
ATLANTA, GEORGIA 30305
(404) 237-4646
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
RAYMOND L. MOSS
SIMS MOSS KLINE & DAVIS LLP
400 NORTHPARK TOWN CENTER, SUITE 310
1000 ABERNATHY ROAD, N.E.
ATLANTA, GEORGIA 30328
(770) 481-7200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement until March 24,
2002, or until such earlier time that all of the shares registered hereunder
have been sold.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please 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
reinvestment 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
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AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE(2) REGISTRATION FEE
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Common Stock, par value $0.0001 per share.... 1,225,000 shares $6.59375 $8,077,344 $2,245.50
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(1) Shares of common stock which may be offered by selling stockholders pursuant
to this Registration Statement consist of shares issuable upon conversion of
$2,500,000 principal amount of Series B Convertible Preferred Stock and upon
exercise of warrants to purchase 250,000 shares of common stock. In
connection with the sale of the Series B Convertible Preferred Stock and the
warrants, HomeCom agreed to file a registration statement covering at least
1,225,000 shares of common stock issuable upon conversion of the Series B
Convertible Preferred Stock and exercise of the warrants. If all the Series
B Convertible Preferred Stock had been converted as of May 21, 1999, the
conversion price would have been $5.258 per common share, and approximately
478,700 shares of common stock would have been issuable as a result of such
conversion. An additional 250,000 shares of common stock would be issuable
if all the warrants were exercised. This registration statement covers a
further 496,300 shares of common stock in the event the actual number of
shares issuable upon conversion of the Series B Convertible Preferred Stock
or upon exercise of the warrants increases as a result of adjustments in the
conversion or exercise prices. In addition to the shares set forth in the
table, the amount to be registered includes an indeterminate number of
shares issuable upon conversion of the Series B Convertible Preferred Stock
and exercise of the Warrants, as this amount may be adjusted as a result of
stock splits, stock dividends and similar transactions in accordance with
Rule 416. HomeCom is not, however, relying on Rule 416 to register any
shares issuable as a result of other changes to the conversion price of the
debentures or the exercise price of the Warrants.
(2) Estimated solely for the purpose of computing the amount of the registration
fee, based on the average of the high and low prices for the Company's
common stock as reported on the Nasdaq SmallCap Market(TM) on May 21, 1999,
in accordance with Rule 457 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 OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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PROSPECTUS
SUBJECT TO COMPLETION, DATED JUNE 1, 1999
1,225,000 Shares
HOMECOM COMMUNICATIONS, INC.
Common Stock
THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED BEGINNING ON PAGE 2 IN
DETERMINING WHETHER TO PURCHASE SHARES OF HOMECOM.
These shares of common stock are being offered by the selling shareholders
identified on page 12 of this prospectus in the section entitled "Selling
Shareholders." The selling shareholders may sell these shares from time to time:
- on the Nasdaq SmallCap Market()(TM);
- on the over-the-counter market;
- in transactions directly with market makers; or
- in privately negotiated transactions.
We will not receive any portion of the proceeds from the sale of these
shares.
HomeCom's common stock is quoted on the Nasdaq SmallCap Market under the
symbol HCOM.
The selling shareholders will determine the price of the shares independent
of HomeCom. On May 25, 1999, the last sale price of the common stock on the
Nasdaq SmallCap Market was $5.9188 per share.
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UNDERWRITING DISCOUNTS AND PROCEEDS TO SELLING
PRICE TO PUBLIC COMMISSION SHAREHOLDERS
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Per Share.................
Total..................... See text above See text above See text above
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is June 1, 1999
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TABLE OF CONTENTS
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PAGE
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SUMMARY..................................................... 1
RISK FACTORS................................................ 2
USE OF PROCEEDS............................................. 11
ISSUANCE OF SHARES TO SELLING SHAREHOLDERS.................. 11
SELLING SHAREHOLDERS........................................ 11
PLAN OF DISTRIBUTION........................................ 13
DESCRIPTION OF CAPITAL STOCK................................ 14
LEGAL MATTERS............................................... 18
EXPERTS..................................................... 18
WHERE YOU CAN FIND MORE INFORMATION......................... 18
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We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You should
not rely on any unauthorized information. This prospectus does not offer to sell
or buy any shares in any jurisdiction in which it is unlawful. The information
in this prospectus is current as of the date on the cover.
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SUMMARY
HomeCom Communications, Inc. specializes in Internet application solutions
for the financial services market, providing all of the professional services
and technology necessary to develop and integrate an online marketplace. In
addition, HomeCom offers several products designed for e-commerce in the
financial services industry, which includes Personal Internet Banker(TM) (PIB),
Harvey(TM), InsureRate(TM), and its Internet Security Services Division.
As used in this prospectus, HomeCom refers to HomeCom Communications, Inc.,
a Delaware corporation, and its wholly owned subsidiaries. HomeCom was
incorporated on December 2, 1994, under the laws of Delaware. Our principal
executive offices are located at Building 14, Suite 100, 3535 Piedmont Road,
Atlanta, Georgia 30305 and our telephone number is (404) 237-4646.
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RISK FACTORS
WE HAVE A LIMITED OPERATING HISTORY
We have a limited operating history. Our growth plans are subject to the
risks, expenses, and uncertainties frequently encountered by young companies
that operate exclusively in the new and evolving markets for internet products
and services. If we fail to achieve our growth plans, our prospects, and the
market for our shares, will be adversely affected. Successfully implementing our
growth plans depends on the following factors:
- Our ability to attract, retain, and motivate qualified people;
- Our ability to upgrade and commercialize products and services;
- Our ability to effectively integrate the technology and operations of
businesses or technologies we have acquired; and
- Our development or acquisition of services or products equal or superior
to those of our competitors.
WE EXPECT TO INCUR CONTINUED LOSSES
As of March 31, 1999, we had an accumulated deficit of approximately $8.1
million. We expect to continue to experience significant losses on a quarterly
and annual basis for at least the next 6-12 months. This will be primarily due
to increased sales and marketing, product development, customer service and
support, and operating costs incurred in support of our product and service
offerings. If we cannot generate sufficient revenues to offset our operating
expenses, our business and operating results will continue to be materially
adversely affected.
WE WILL REQUIRE ADDITIONAL CAPITAL TO FINANCE OUR OPERATING LOSSES AND CAPITAL
REQUIREMENTS
We have incurred substantial operating losses, and we expect to utilize
substantial sums of cash in our operations for at least the next 12 months. We
may also need to spend significant amounts of cash to:
- fund continued growth, and offset operating losses;
- take advantage of unanticipated opportunities, such as major strategic
alliances or other special marketing opportunities, acquisitions of
complementary businesses or assets, or the development of new products;
or
- react to unanticipated developments or competitive pressures.
If we exhaust our current sources of capital and are not able to obtain
additional capital, we will be required to undertake steps to continue our
operations. These may include immediate reduction of our operating costs and
other expenditures, including potential reductions of personnel and suspension
of salary increases and capital expenditures. If these actions are still not
sufficient, we may elect to implement other cost reduction actions. These
actions may limit our opportunities to realize continued increases in sales, and
we may not be able to reduce our costs and amounts sufficient to achieve
break-even or profitable results. If we exhaust our sources of capital and
subsequent cost
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reduction measures are not sufficient to allow us to achieve break-even or
profitable results, we may be forced to seek protection from our creditors.
OUR MARGINS MAY CONTINUE TO DECLINE DUE TO PRICE EROSION
The market for internet and intranet products and services is highly
competitive and is characterized by significant pressures to reduce prices,
incorporate new capabilities, and accelerate completion schedules. This increase
in competition has resulted in significant price competition, which in turn has
resulted in significant reductions in the average selling price of many of our
products and services, including our web site development and hosting services.
We have not been able to offset the effects of price reductions through an
increase in the number of our customers, higher revenue from enhanced services,
or cost reductions, and we expect that our margins may continue to decline. This
decline, if it continues, will negatively affect our results, and may negatively
affect the market for our shares. Our gross margins for each of the past 2 years
have been approximately 20%, which represents a significant decline from the
gross margins we achieved in 1996 of approximately 63%.
There are no substantial barriers to entry in our market, and we expect
that competition will continue to intensify. In addition, we compete with many
other companies that have longer operating histories, longer customer
relationships, and substantially greater financial, management, technical
development sales, marketing, and other resources. Many nationally known
companies and regional local companies across the country are involved in
intranet and intranet applications, including the development and support of web
sites and internet applications, and the number of these companies is
increasing.
WE DEPEND UPON CONTINUED GROWTH IN USE OF THE INTERNET
Our future success is dependent upon continued growth in the use of the
internet and the web. The internet may not prove to be a viable commercial
marketplace for many reasons, including:
- lack of acceptable security technologies,
- potentially inadequate development of the necessary infrastructure, or
- timely development and commercialization of performance improvements.
If the internet continues to experience significant growth in the number of
users and level of services, the internet infrastructure may not be able to
support the demands placed upon it, and the performance and reliability of the
web may be adversely affected.
OUR STOCK PRICE MAY BE VOLATILE
The trading price of our shares has been, and may continue to be, subject
to wide fluctuations. During 1998, the closing sale prices of our shares on the
Nasdaq SmallCap Market(TM) ranged from $1.13 to $18.25. The stock price may
fluctuate in response to a number of events and factors such as:
- quarterly variations in operating results,
- announcements of technological innovations or new products and media
products by us or our competitors,
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- changes in financial estimates and recommendations by securities
analysts,
- the operating and stock price performance of other companies that
investors view as comparable, and
- news reports related to trends in our markets.
In addition, the stock market in general and the market prices for
internet-related companies in particular have experienced extreme volatility and
often have been unrelated to the operating performance of those companies. These
broad market and industry fluctuations may adversely affect the price of the
stock regardless of our operating performance.
WE MAY NOT PROPERLY MANAGE OUR GROWTH
Our growth has placed a significant strain on our managerial, operational
and financial resources. To manage our growth, we must continue to implement and
improve our operational and financial systems and to expand, train, and manage
our employee base. Our systems, procedures or controls may not be adequate to
support our operations. Our management may not be able to achieve the rapid
execution necessary to support our market opportunity. Any failure to
effectively manage growth could have a material adverse effect on our business,
operating results, or financial condition.
WE MAY NOT PROPERLY HANDLE THE RISKS ASSOCIATED WITH ACQUISITIONS
As part of our business strategy, we have completed several acquisitions
and expect to enter into additional business combinations to further our goal to
become a leading provider of Internet software solutions for the financial
services industry. Acquisition transactions are accompanied by many risks, and
we may not be successful in addressing one or more of these risks. These risks
include:
- the difficulty of assimilating the operations and personnel of the
acquired companies;
- the difficulties of managing geographically separate business units;
- the difficulty of incorporating acquired technology or content and rights
into our product and services;
- unanticipated expenses relating to technology integration;
- the maintenance of uniform standards, controls, procedures, and policies;
and
- the impairment of relationships with employees and customers as a result
of any integration or management changes.
Since February 1999, we have completed two acquisitions which have added
approximately 35 employees to HomeCom.
WE DEPEND ON KEY PERSONNEL
We depend upon the continued services of our senior management for our
continued success. The loss of any member of senior management, such as Harvey
Sax, Daniel A. Delity, David B. Frank, or James Wm. Ellsworth, could have a
serious negative impact
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upon our business and operating results. We can provide no assurances that we
will be able to retain our senior management or other key personnel. Although we
have entered into employment agreements with each of executive officers that
contain non-competition and nondisclosure provisions, our ability to benefit
from them is uncertain because these provisions are typically limited in
geographic scope and time, and may not effectively prohibit competition due to
the global nature of the internet.
OUR AVERAGE SALES CYCLE MAY LENGTHEN
Our development and implementation of interactive web sites and intranet
software applications involves a lengthy sales cycle, which can be as long as
six to nine months. Extensive web sites, development or licensing of our
products may also involve substantial commitment of capital by potential
customers as well as the attendant delays frequently associated with approving
larger capital expenditures and reviewing new technologies that affect key
operations. If our average sales cycle continues to lengthen, we will face
increased costs, potentially lower profit margins and a potential inability to
achieve our target and sales goals.
WE MAY INCUR LOSSES FROM DEFECTS IN OUR PRODUCTS AND SERVICES
Web site services and other services based on software and computing
systems frequently encounter development and completion delays. Software may
contain undetected errors or failures when introduced, especially in the case of
web sites when the volume of traffic on the site increases. Errors found in the
software, underlying web site, or other project may result in delays in
completion, commercial release, or acceptance of the software, web site, or
other project. In addition, we may incur unanticipated additional costs in order
to cure any defect or be obligated to refund money paid to us or pay for damages
caused by any delay or defect. Applications or products developed by us may
contain undetected errors or failures when first introduced. If software errors
are discovered after introduction, we could experience delays and lost revenues
during the period required to correct these errors. Despite our best efforts to
the contrary, errors may be found in new applications, products, or releases
after the commencement of installation or shipment. These problems can result in
losses, or in delays in receiving revenues.
WE MAY INCUR LOSSES FROM SECURITY RISKS
Our software and equipment is vulnerable to computer viruses or similar
disruptive problems caused by customers or other internet users. Computer
viruses or problems caused by third parties, such as hackers, could lead to
interruptions, delays, or termination of service to our customers. Third parties
could also potentially jeopardize security of confidential information stored in
our computer systems or our customers' computer systems by their inappropriate
use of the internet, which could cause losses to us and to our customers.
Inappropriate use of the internet includes attempting to gain unauthorized
access to information or systems. Although we intend to continue to implement
security measures to prevent this, hackers have circumvented security measures
in the past, and may be able to circumvent our security measures or the security
measures of third parties in the future. Further, until more comprehensive
technologies are developed, the security and privacy concerns of existing and
potential customers may inhibit the growth of the internet service industry in
general and our customer base and revenue in particular. We do not have errors
and omissions, product liability, or other insurance to protect against risks
caused by computer viruses or other misuse of software or equipment by third
parties.
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WE MAY NOT BE SUCCESSFUL IN PROTECTING OUR PROPRIETARY RIGHTS OR AVOIDING CLAIMS
THAT WE INFRINGED THE PROPRIETARY RIGHTS OF OTHERS
Our success depends in part upon our software and related documentation. We
principally rely on copyright, trade secret, confidentiality procedures, and
contract laws to protect our proprietary technology. The steps we have taken may
not be adequate to prevent misappropriation of our technology, and our
competitors may independently develop technologies that are substantially
equivalent or superior to our technologies. We have a registered service mark
for our logo and have applied for federal registration of the names HomeCom,
Post On the Fly(TM), and Personal Internet Banker(TM). In addition, the laws of
some foreign countries do not protect our proprietary rights to as great an
extent as the laws of the United States. Although we do not believe that the
software or trademarks we use or any of the other elements of our business
infringe on the proprietary rights of any third parties, third parties may
assert claims of infringement against us in the future and may succeed in
securing injunctive relief or money damages. We could incur substantial costs
and diversion of management resources in the defense of any claims relating to
proprietary rights, which could materially adversely affect our business,
financial condition, and results of operations.
THERE ARE A SUBSTANTIAL NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE
The market for the shares may be adversely affected as a result of sales of
a large number of shares in the market, or a perception that large sales may
occur. This could also limit HomeCom's ability to raise capital through
offerings of shares, or to effect acquisitions utilizing shares as the purchase
price.
HomeCom has 6,625,412 shares outstanding. Of that amount, 3,662,934 shares,
or approximately 55%, will be freely tradable without restriction or further
registration under the Securities Act, except for any shares purchased by
affiliates of HomeCom, as that term is defined in Rule 144 under the Securities
Act. That number includes 626,087 shares issued in connection with a recently
completed acquisition, and HomeCom has filed a registration statement covering
those shares. The sellers of those shares have agreed to sell no more than
one-half, or 313,043, of the shares within until June 24, 1999, with no more
than one-third of these 313,043 shares being sold during the each of the first
three thirty day periods commencing March 24, 1999. These restrictions do not
apply in the event that the shares have traded above $4.813 per share on each of
the five trading days prior to any single sale, if the sale is made at a price
per share of at least $4.813. The sellers of those shares have also agreed not
to sell any of the remaining 313,043 shares until June 24, 1999 and to limit
sales on a cumulative basis to no more than one-sixth of these 313,043 shares
during each month for the following sixth months. These restrictions do not
apply in the event that the shares have traded above $10.00 per share on each of
the five trading days prior to any single sale, as long as the sale is made at a
price per share of at least $10.00.
The remaining 2,962,478 shares, or approximately 45%, may be sold in the
public market only if registered or sold under an exemption from registration
such as Rule 144. Also included in the 6,625,412 outstanding shares are 185,342
shares we issued in connection with another recently completed acquisition, and
we have contractually agreed to file a registration statement covering 92,671,
or one-half, of those shares by June 23, 1999. The holders of those shares have
agreed that they will not sell more than one-half of the 92,671 shares included
in that registration statement before July 22, 1999.
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In addition, there are also the following shares that may become available
for resale in the public markets:
- There are outstanding warrants to acquire an aggregate of 490,000 shares
at a weighted average exercise price of $8.32 per share. The shares
issuable upon exercise of the warrants have been registered under the
Securities Act, and will be available for resale upon issuance following
exercise of the warrants.
- There are outstanding options to purchase 763,854 shares under our stock
option plans at a weighted average exercise price of $4.77 per share, and
8,300 shares have been issued under our stock purchase plan at a weighted
average price of $2.19 per share. On July 31, 1998, we filed a
registration statement on Form S-8 under the Securities Act to register
the potential sale of 300,000 shares reserved for issuance under our
stock option plan and the 150,000 shares reserved for issuance under our
stock purchase plan. Except for shares held by our affiliates, shares
purchased under our stock option and purchase plans generally will be
available for resale in the public market.
PREFERRED STOCK, IF ISSUED, WILL HAVE RIGHTS SENIOR TO THE SHARES
We have the right to issue up to 10,000,000 shares of preferred stock and
to fix the rights, preferences, privileges and restrictions, which include
voting rights, of the preferred stock without shareholder approval. The rights
of holders of common stock may be adversely affected by the rights of holders of
any preferred stock that may be issued in the future. In addition, the issuance
of additional shares of preferred stock could make it more difficult for a third
party to acquire control of HomeCom, even if the change of control would be
beneficial to shareholders.
WE HAVE ANTI-TAKEOVER PROVISIONS IN PLACE
Our restated certificate of incorporation provides that our board is
divided into three classes of directors with each class serving a staggered
three year term. The division of the board of directors into three classes may
discourage a third party from making a tender offer or commencing a proxy
contest to obtain control of HomeCom, and may maintain the incumbency of the
present board of directors.
THERE ARE LIMITATIONS ON THE LIABILITY OF OUR DIRECTORS AND OFFICERS
Our restated certificate of incorporation provides that our directors shall
have no personal liability for some breaches of their fiduciary duties. In
addition, our restated bylaws provide for mandatory indemnification of directors
and officers to the fullest extent permitted by Delaware law. These limitations
on personal liability do not apply to liabilities under the federal securities
laws. However these provisions may reduce the likelihood of derivative
litigation against directors and officers and may discourage stockholders from
bringing a lawsuit against directors and officers for a breach of their
fiduciary duties.
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THERE ARE UNCERTAINTIES ASSOCIATED WITH GOVERNMENT REGULATION AND OTHER LEGAL
ISSUES
There are currently few laws or regulations directly applicable to access
to or commerce on the internet. Due to the increased popularity and the use of
the internet, it is possible that laws and regulations may be adopted, covering
issues such as:
- user privacy,
- defamation,
- pricing,
- taxation,
- content regulation,
- quality of products and services, and
- intellectual property ownership and infringement.
Legislation of this type could expose us to substantial liability. It could
also dampen the growth in use of the web, decrease the acceptance of the web as
a communications and commercial medium, or require us to incur significant
expense in complying with any new regulations. Other nations, including Germany,
have taken actions to restrict the free flow of material considered to be
objectionable on the web. The European Union has recently adopted privacy and
copyright directives that may impose additional burdens and costs on our
international operations. In addition, several telecommunication carriers,
including America's Carriers Telecommunications Association, are seeking to have
telecommunications over the web regulated by the Federal Communication
Commission in the same manner as other telecommunication services. Because the
growing popularity and use of the web has burdened the existing
telecommunications infrastructure, many areas with high web use have begun to
experience interruptions in phone service. Local telephone carriers, including
Pacific Bell, have petitioned the Federal Communications Commission to regulate
service providers and impose access fees. Increased regulation, or the
imposition of access fees, could substantially increase the cost of
communicating on the web and potentially decrease the demand for our products. A
number of proposals have been made at the federal, state, and local level that
would impose additional taxes on the sale of goods and services through the
internet. These proposals, if adopted, could substantially impair the growth of
electronic commerce and could adversely affect our opportunity to derive
financial benefit from the sale of goods and services through the internet.
THERE ARE POTENTIAL COMMERCE-RELATED LIABILITIES
We are offering and intend to continue to offer insurance and securities
products through the internet. These activities will expose us to a number of
additional risks and uncertainties, including:
- potential liabilities for wrongful or illegal activities that may be
conducted in connection with the sale of securities and insurance
products;
- consumer fraud and false or deceptive advertising or sales practices;
- breach of contract claims related to the sales of insurance and
securities products;
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- claims that materials included in our sites infringe on third-party
patents, copyrights, trademarks or other intellectual property rights or
are libelous, defamatory, and breach third-party confidentiality or
privacy rights;
- claims relating to any failure to appropriately collect or remit sales or
other taxes arising from commerce transactions;
- claims that may be brought by customers as a result of losses resulting
from any down time or other performance failures in our services; and
- state laws limiting the sale of insurance and securities products.
Although we maintain liability insurance, insurance may not cover these
claims or may not be adequate. Even if the claims do not result in material
liability, investigating and defending claims of this type is expensive.
FAILURE TO OBTAIN YEAR 2000 COMPLIANCE MAY HAVE ADVERSE EFFECTS ON US
Many existing computer programs were originally designed to use only two
digits to identify a year in date fields. As a result, date-sensitive software
applications may recognize a date using 00 as the year 1900 rather than the year
2000. If not corrected, these applications could fail or produce erroneous
results when working with dates in the year 2000 and beyond. If not properly
addressed, the year 2000 issue could have a material effect on our financial
position and future operating results.
We primarily rely on industry standard operating systems and applications
for our internal systems rather than proprietary software, and based on review
of significant internal programs and systems, we have determined that they are
substantially year 2000 compliant. In addition, we are seeking confirmation from
our primary telecommunications service providers that they are developing and
implementing plans to become year 2000 compliant. Information we have received
so far has indicated that they are in the process of implementing remediation
procedures to ensure that their computer systems, services, or products are year
2000 compliant by December 31, 1999. However, we have not undertaken an in-depth
evaluation of these providers in relation to the year 2000 issue. In addition,
we cannot predict whether or not all of these vendors' programs will be
successful. To the extent that these vendors fail to resolve any year 2000
issues on a timely basis or in a manner that is compatible with our systems,
that failure could have a material adverse effect on our financial position and
future operating results. We are using internal resources to identify and
correct our systems for year 2000 compliance, and we expect any incremental
costs associated with addressing this issue to be minimal. We do not believe
that the costs of addressing year 2000 issues will be material to our future
operating results or financial position.
MANAGEMENT AND SIGNIFICANT STOCKHOLDERS CAN EXERCISE INFLUENCE OVER HOMECOM
Based upon stock ownership as of May 25, 1999, our executive officers,
directors, and 5% stockholders and their affiliates own an aggregate of 39% of
our outstanding shares. As a result, these persons acting together will have the
ability to control all matters submitted to our shareholders for approval and to
control the management and affairs of HomeCom. This concentration of ownership
may have the effect of delaying or preventing a change in control of HomeCom,
impede a merger, consolidation, or takeover or other business
9
<PAGE> 13
combination, or discourage a potential acquiror from attempting to obtain
control. This concentration of control could also have a negative effect on the
market price of your shares.
NEW INVESTORS WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION
Shares purchased in this offering may incur immediate and substantial
dilution. To the extent that currently outstanding options and warrants are
exercised or converted, there will be further dilution in your shares. Please
refer to the information above under "There Are a Substantial Number of Shares
Eligible For Future Sale."
WE MAY NOT MAINTAIN NASDAQ LISTING REQUIREMENTS
If we are unable to maintain the standards for continued listing, our
shares could be subject to delisting from the Nasdaq SmallCap Market(TM). If our
shares were delisted, trading, if any, in our shares would be conducted in the
over-the-counter market on the OTC Bulletin Board established for securities
that do not meet the Nasdaq SmallCap Market(TM) listing requirements or in what
are commonly referred to as the pink sheets. As a result, investors may find it
more difficult to dispose of or to obtain accurate price quotations on the
shares. Under the currently effective criteria for continued listing of
securities on the Nasdaq SmallCap Market(TM), a company must maintain $2,000,000
in net tangible assets, a minimum bid price of $1.00, and a public float of at
least $1,000,000.
THE SHARES MAY BECOME SUBJECT TO RISKS OF LOW PRICED STOCKS
In the absence of the shares being quoted in Nasdaq, or listed on an
exchange, trading in the shares would be covered by Rule 15g-9 promulgated under
the Securities Exchange Act of 1934, if our shares are a penny stock. The
applicability of this rule, if it occurs, could materially adversely affect the
ability of broker-dealers to sell our shares and the ability of purchasers in
this offering to sell their shares in the secondary market.
Under that rule, broker-dealers who recommend penny stocks to persons other
than established customers and accredited investors, who are generally investors
with net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 together with a spouse, must make a special written suitability
determination for the purchaser and receive the purchaser's written agreement to
a transaction before the sale.
The SEC has adopted regulations that generally defined a penny stock to be
any equity security that has a market price of less than $5.00 per share.
However, exemptions to this rule include:
- an equity security listed on the Nasdaq Stock Market(TM), and
- an equity security issued by an issuer that has:
- net tangible assets of at least $2,000,000, if the issuer has been in
continuous operation for three years,
- net tangible assets of at least $5,000,000, if the issuer has been in
continuous operation for less than three years, or
- average revenue of at least $6,000,000 for the preceding three years.
10
<PAGE> 14
Unless an exception is available, the regulations require the delivery,
before any transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the associated risks.
USE OF PROCEEDS
The proceeds from the sale of the shares covered by this prospectus are
entirely for the benefit of the selling shareholders. We will not receive any
proceeds from the sale of the shares from the selling shareholders. Homecom will
receive proceeds from the exercise of the warrants in an amount equal to (i) the
number of shares exercised pursuant to the warrants, multiplied by (ii) the
applicable exercise price per share. These proceeds will be used for general
working capital purposes.
ISSUANCE OF SHARES TO SELLING SHAREHOLDERS
On March 25, 1999, we completed a private placement of $2,500,000 principal
amount of Series B Convertible Preferred Stock and warrants to purchase our
common stock. The preferred stock is convertible into common stock, until March
24, 2002, at the option of the holder, at a conversion price equal to the market
conversion price, but the conversion price will not exceed $5.23. Market
conversion price means the average of the closing bid prices of our stock during
any four consecutive trading days as determined by the holder during the
twenty-five consecutive trading day period ending one trading day prior to the
date that a notice of conversion is sent to us by the investor, subject to
adjustment under circumstances more extensively described in the section
entitled "Description of Capital Stock -- Series B Convertible Preferred Stock"
on page 15 of this prospectus. The preferred stock is redeemable at our option
beginning on the earlier to occur of July 13, 1999 or the date that this
registration statement become effective with the SEC at a price of 120% of its
principal amount.
The warrants are exercisable for an aggregate of 250,000 shares of common
stock at the option of the holder until March 24, 2004, at an exercise price of
$5.70 per share, subject to adjustment under circumstances more extensively
described in the section entitled "Description of Capital Stock -- Warrants" on
page 17 of this prospectus.
The preferred stock and warrants were sold in reliance on Rule 506 of the
Securities Act of 1933, which provides an exemption from registration for sales
to accredited investors, as defined by Rule 501 under Regulation D of the
Securities Act. Under the terms of the private placement, we agreed to file a
registration statement on Form S-3 to cover at least 1,225,000 shares of common
stock issuable upon conversion of the preferred stock and exercise of the
warrants.
SELLING SHAREHOLDERS
The following table presents information known to us with respect to
beneficial ownership of our common stock as of May 25, 1999, by each selling
stockholder. The number of shares in the table represents an estimate of the
number of shares of common stock to be offered by the selling stockholders, if
the holders were to fully convert the preferred stock as of May 14, 1999, fully
exercise the warrants, and offer all the resulting shares of common stock for
sale. In accordance with the terms of the preferred stock, if
11
<PAGE> 15
converted on May 21, 1999, the preferred stock would convert at a conversion
price of $5.258 per share into 478,700 shares of common stock. The warrants are
exercisable at an exercise price of $5.70 per share into 250,000 shares of
common stock. The actual number of shares of common stock issuable upon
conversion of the preferred stock and exercise of the warrants is indeterminate,
and could be materially less or more than the amount estimated due to the
conversion and exercise price adjustments explained in the section of this
prospectus entitled "Description of Capital Stock" on page 15, in particular the
subsections entitled "Series B Convertible Preferred Stock" on page 14 and
"Warrants" on page 17. We have agreed to register, under a registration
statement on Form S-3 of which this prospectus is a part, 1,225,000 shares; the
additional shares covered by this prospectus for sale by the selling
stockholders are to accommodate the possibility that the actual number of shares
issuable upon conversion of the preferred stock or exercise of warrants
increases as a result of adjustments in the conversion or exercise prices. This
table, however, assumes no adjustment to the conversion price of the preferred
stock or exercise price of the warrants. We cannot assure you that the selling
stockholders will sell any or all of the shares that they may acquire upon their
conversion of preferred stock or exercise of warrants.
<TABLE>
<CAPTION>
SHARES
OFFERED SHARES
PURSUANT TO OFFERED
SHARES CONVERSION OF PURSUANT TO
BENEFICIALLY PREFERRED EXERCISE OF
SELLING STOCKHOLDERS OWNED STOCK WARRANTS
-------------------- ------------ ------------- -----------
<S> <C> <C> <C>
CPR (USA), Inc............................... -- 239,350 112,500
LibertyView Funds, L.P....................... -- 191,480 90,000
LibertyView Fund, L.L.C...................... -- 47,870 22,500
J.P. Turner & Company, L.L.C................. -- -- 6,250
John Clarke.................................. -- -- 18,750
------- ------- -------
Total.............................. -- 478,700 250,000
======= ======= =======
</TABLE>
- -------------------------
* less than one percent of our common stock
ADDITIONAL INFORMATION REGARDING BENEFICIAL
OWNERSHIP OF SHARES BY THE SELLING STOCKHOLDERS
The terms of the preferred stock and the warrants provide that the
preferred stock is convertible and the warrants are exercisable by any holder
only to the extent that the number of shares of common stock issuable at that
time, together with the number of shares of common stock beneficially owned by
that holder and its affiliates as determined in accordance with Section 13(d) of
the Securities Exchange Act, would not exceed 4.99% of our then outstanding
common stock so long as that holder is subject to laws, rules or regulations
which would prohibit owning in excess of 4.99%. As of the date of this
prospectus, however, none of the selling stockholders would beneficially own
under Rule 13d-3 more than 4.99% of our outstanding common stock based on the
currently applicable exercise price of the warrants and conversion price of the
preferred stock.
12
<PAGE> 16
ADDITIONAL INFORMATION REGARDING SOME OF
THE SHARES HELD BY THE SELLING SHAREHOLDERS
As a result of limitations imposed by Nasdaq and the terms of the preferred
stock, we may not issue shares representing more than 19.99% of our outstanding
stock unless we obtain stockholder approval or a waiver of the limitations by
Nasdaq.
PLAN OF DISTRIBUTION
Shares covered by this prospectus may be offered and sold from time to time
by the selling shareholders. The selling shareholders will act independently of
HomeCom in making decisions with respect to the timing, manner and size of each
sale. The selling shareholders may sell the shares:
- on the Nasdaq SmallCap Market(TM);
- at prices and at terms then prevailing or at prices related to the then
current market price; or
- in private sales at negotiated prices directly or through brokers.
The selling shareholders and any underwriter, dealer or agent who
participates in the distribution of the shares may be deemed to be underwriters
under the Securities Act, and any discount, commission or concession received by
these persons might be deemed to be an underwriting discount or commission under
the Securities Act. We have agreed to indemnify the selling shareholders against
some liabilities arising under the Securities Act.
Any broker-dealer participating in transactions as agent may receive
commissions from the selling shareholders, and, if acting as agent for the
purchaser of the shares, from the purchaser). Usual and customary brokerage fees
will be paid by the selling shareholders. Broker-dealers may agree with the
selling shareholders to sell a specified number of shares at a stipulated price
per share, and, to the extent the broker-dealer is unable to do so acting as
agent for the selling shareholders, to purchase as principal any unsold shares
at the price required to fulfill the broker-dealer commitment to the selling
shareholders. Broker-dealers who acquire shares as principal may then resell the
shares from time to time in transactions in the over-the-counter market, in
negotiated transactions or by a combination of these methods of sale, at market
prices prevailing at the time of sale or at negotiated prices, and in connection
with resales may pay to or receive from the purchasers of the shares commissions
as described above.
We have advised the selling shareholders that the anti-manipulation rules
under the Exchange Act may apply to sales of shares in the market and to the
activities of the selling shareholders and their affiliates. The selling
shareholders have advised HomeCom that during the time as the selling
shareholders may be engaged in the attempt to sell shares registered under this
prospectus, they will:
- not engage in any stabilization activity in connection with any of the
shares;
- not bid for or purchase any of the shares or any rights to acquire the
shares, or attempt to induce any person to purchase any of the shares or
rights to acquire the shares other than as permitted under the Securities
Exchange Act;
13
<PAGE> 17
- not effect any sale or distribution of the shares until after the
prospectus shall have been appropriately amended or supplemented, if
required, to describe the terms of the sale or distribution; and
- effect all sales of shares in broker's transactions through
broker-dealers acting as agents, in transactions directly with market
makers, or in privately negotiated transactions where no broker or other
third party, other than the purchaser, is involved.
The selling shareholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against some liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any broker-dealers, and any profits
received on the resale of shares, may be deemed to be underwriting discounts and
commissions under the Securities Act if the broker-dealers purchase shares as
principal.
In order to comply with the securities laws of some states, if applicable,
the shares will be sold in some jurisdictions only through registered or
licensed brokers or dealers. In some states, the shares may not be sold unless
the shares have been registered or qualified for sale in the applicable state or
an exemption from the registration or qualification requirement is available and
is complied with.
HomeCom has agreed to use its best efforts to maintain the effectiveness of
this registration statement with respect to the shares until the earlier of the
sale of the shares or two years from the date of this prospectus. No sales may
be made under this prospectus after that date unless we amend or supplement this
prospectus to indicate that we have agreed to extend the period of
effectiveness. There can be no assurance that the selling shareholders will sell
all or any of the shares offered under this prospectus.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 15,000,000 shares of common stock,
$.0001 par value, and 1,000,000 shares of preferred stock, $.01 par value. As of
April 27, 1999, we had issued and there were outstanding 6,625,412 shares of
common stock held of record by approximately 3,000 record holders and 125 shares
of Series B Convertible Preferred Stock held of record by three record holders.
Of the authorized preferred stock, 20,000 shares have been designated Series A
Convertible Preferred Stock, none of which are presently outstanding, and 125
shares have been designated Series B Convertible Preferred Stock.
COMMON STOCK
Holders of shares of common stock are entitled to one vote per share for
the election of directors and all matters to be submitted to a vote of the
stockholders. Subject to the rights of any holders of preferred stock which may
be issued in the future, the holders of shares of common stock are entitled to
share ratably in any dividends as may be declared by the board of directors out
of legally available funds. In the event of dissolution, liquidation or winding
up of HomeCom, holders of shares of common stock are entitled to share ratably
in all assets remaining after payment of all liabilities and the aggregate
liquidation preference of outstanding shares of preferred stock. Holders of
shares of common stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of common stock are, and the shares of
common stock to be issued by
14
<PAGE> 18
Homecom in this offering will be, duly authorized, validly issued, fully paid
and nonassessable.
PREFERRED STOCK
Our restated certificate of incorporation authorizes the issuance of
preferred stock with designations, rights and preferences determined from time
to time by the board of directors. Accordingly, the board of directors is
empowered, without stockholder approval, to issue preferred stock with
dividends, liquidation, conversion, voting and other rights that could adversely
affect the voting power or other rights of the holders of common stock.
SERIES B CONVERTIBLE PREFERRED STOCK
Pursuant to our certificate of incorporation, the board has classified 125
shares of preferred stock as Series B Convertible Preferred Stock with the
rights, preferences, privileges and terms set forth in the certificate of
designations filed with the State of Delaware. Of the 125 shares authorized by
the board, all are currently outstanding. The stated value per share of the
series B preferred stock is $20,000. All shares of common stock are of junior
rank to all series B preferred shares in respect to the preferences as to
distributions and payments upon the liquidation, dissolution, and winding up.
The rights of the shares of common stock shall be subject to the preferences and
relative rights of the series B preferred shares. The series B preferred shares
will be of greater rank than any series of common or preferred stock issued by
us in the future. Without the prior express written consent of the holders of at
least a majority of the then outstanding series B preferred shares, we will not
authorize or issue capital stock that is of senior or equal rank to the series B
preferred shares regarding the preferences as to distributions and payments upon
the liquidation, dissolution and winding up of HomeCom. Without the prior
express written consent of the holders of not less than a majority of the then
outstanding series B preferred shares, we will not hereafter authorize or make
any amendment to our certificate of incorporation or bylaws, or make any
resolution of the board of directors with the Delaware Secretary of State
containing any provisions which would materially and adversely affect or impair
the rights or relative priority of the holders of the series B preferred shares
relative to the holders of the common stock or the holders of any other class of
capital stock. In the event of our merger or consolidation with or into another
corporation, the series B preferred shares shall maintain their relative powers,
designations, and preferences, and no merger may result that is inconsistent
with this provision.
Holders of the series B preferred stock are not entitled to receive
dividends. If any series B preferred shares are outstanding, we may not, without
the prior express written consent of the holders of a majority of the then
outstanding series B preferred shares, directly or indirectly declare, pay or
make any dividends or other distributions upon any of the common stock so long
as written notice thereof has been given to holders of the series B preferred
shares at least thirty days prior to the earlier of (a) the record date taken
for or (b) the payment of the dividend or other distribution. We may declare and
pay a dividend in cash with respect to the common stock so long as we: pay
simultaneously to each holder of series B preferred shares an amount in cash
equal to the amount the holder would have received had all of the holder's
series B preferred shares been converted to common stock one business day before
the record date for any the dividend, and after giving effect to the payment of
any dividend and any other required
15
<PAGE> 19
payments in including required payments to the holders of the series B preferred
shares, we have in cash or cash equivalents an amount equal to the aggregate of:
- all of its liabilities reflected on its most recently available balance
sheet;
- the amount of any indebtedness incurred by us or any of our subsidiaries
since its most recent balance sheet; and
- 120% of the amount payable to all holders of any shares of any class of
preferred stock assuming a liquidation as the date of our most recently
available balance sheet.
In the event of any voluntary or involuntary liquidation, dissolution, or
winding up, the holders of the series B preferred shares will be entitled to
receive in cash out of our assets, whether from capital or from earnings
available for distribution to our stockholders, before any amount shall be paid
to the holders of any of our capital stock of any class junior in rank to the
series B preferred shares in respect of the preferences as to the distributions
and payments on the liquidation, dissolution and winding up, an amount per
series B preferred share equal to the sum of (i) $20,000 and (ii) a premium of
5% per year of the stated value from the date of issuance of the series B
preferred stock; provided that, if the funds are insufficient to pay the full
amount due to the holders of series B preferred shares and holders of shares of
other classes or series of preferred stock that are of equal rank with the
series B preferred shares as to payments of this type, then each holder of
series B preferred shares and other preferred shares will share equally in the
available funds in accordance with their respective liquidation preferences. The
purchase or redemption by us of stock of any class in any manner permitted by
law will not be regarded as a liquidation, dissolution or winding up. Neither
our consolidation or merger with or into any other person, nor the sale or
transfer by us of less than substantially all of its assets will be deemed to be
a liquidation, dissolution or winding up.
The holders of series B preferred shares shall have no voting rights,
except as required by law, including the General Corporation Law of the State of
Delaware.
Each share of series B preferred stock is convertible on or after the
earlier of June 23, 1999, or the date of this prospectus into the number of
shares of our common stock, equal to the stated value ($20,000) plus a premium
of 5% per year of the stated value from the date of issuance of the series B
preferred stock, divided by the conversion price. The conversion price is equal
to the lesser of:
(1) the average closing bid prices of the common stock for any four
consecutive trading days during the twenty-five consecutive trading day
period ending on the day prior to the conversion; or
(2) $5.23.
The holders of the series B preferred shares are limited with respect to
the number of shares that they can convert at any one time. In particular, as
long as they are subject to laws, rules or regulations which would prohibit
their owning in excess of 4.99% of the outstanding common stock following
conversion, they may not own in excess of that amount.
The series B preferred stock is subject to redemption at our option upon
the earlier to occur of July 13, 1999, or the date of this prospectus at 120% of
the principal amount of
16
<PAGE> 20
the stock being redeemed. If any series B preferred stock remain outstanding on
March 24, 2002, all the shares will automatically be converted into common
stock.
The issuance of the series B preferred stock is also subject to the NASDAQ
National Market's Market Place Rule 4460(i). Pursuant to the terms of this rule,
we have agreed with the holders of the series B preferred stock that so long as
we are subject to this rule or any rule substantially similar to this rule, we
will not issue more than 19.99% of the common stock outstanding on the date the
series B preferred stock was issued upon conversion of the series B preferred
stock in the absence of:
- the approval of the issuance by our stockholders; or
- a waiver by NASDAQ of the provisions of that rule.
WARRANTS
In connection with the completion with the our initial public offering, we
granted to our underwriter, Ladenburg Thalmann & Co. Inc., the underwriter,
warrants to acquire 100,000 shares of the common stock at an exercise price of
$7.20 per share. The exercise price is subject to adjustment under specified
circumstances. The underwriter warrants expire on May 12, 2002, if not earlier
exercised.
In connection with the completion of a sale of debentures in December of
1998, we issued to First Granite Securities, Inc., an entity designated by the
holder of the debentures, warrants to acquire an aggregate 400,000 shares of
common stock. Of these warrants, warrants to acquire an aggregate of 200,000
shares are exercisable at a price of $4.00 per share and warrants to acquire an
aggregate 200,000 shares are exercisable at a price of $6.00 per share. The
exercise price of these debenture warrants is subject to adjustment under
specified circumstances. If not earlier exercised, the debenture warrants expire
on October 27, 2000. Pursuant to an agreement dated April 8, 1998, in the event
that we agree to adjust the exercise price of the series B preferred stock
warrants to an exercise price below $5.00, we have also agreed to amend the
exercise price of any unexercised debenture warrants to the reduced exercise
price.
In connection with the completion of the sale of our series A preferred
stock, we issued the series A preferred stock warrants. These warrants represent
the right to acquire an aggregate of 125,000 shares of common stock, with
warrants to purchase 62,500 shares of common stock having an exercise price per
share equal to $14.50 per share and warrants to purchase the remaining 62,500
shares having an exercise price equal to $15.825. The exercise price of these
warrants is subject to adjustment under specified circumstances. The series A
preferred stock warrants will expire on December 31, 2000, and are eligible to
be exercised at any time on or after June 23, 1998.
In connection with the completion of the sale of series B convertible
preferred stock, we issued series B convertible preferred stock warrants. These
warrants represent the right to acquire an aggregate of 250,000 shares of common
stock, each with an exercise price per share equal to $5.70 per share. The
exercise price of these warrants is subject to adjustment under specified
circumstances. The series B convertible preferred stock warrants will expire on
March 24, 2004, if not earlier exercised.
17
<PAGE> 21
LEGAL MATTERS
The validity of the shares offered under this prospectus will be passed
upon by Sims Moss Kline & Davis LLP, Atlanta, Georgia, counsel to HomeCom.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the annual report on Form 10-K of HomeCom for the year ended December 31, 1998
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of the firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission. Some information in the
registration statement has been omitted from this prospectus as permitted by the
rules of the SEC. We file the annual, quarterly and special reports, proxy
statements and other information with the SEC. You can inspect and copy the
registration statement as well as reports, proxy statements and other
information we have filed with the SEC at the public reference room maintained
by the SEC at 450 Fifth Street, NW, Washington, D.C. 20549, and at the following
Regional Offices of the SEC: Seven World Trade Center, New York, New York 10048,
and Northwest Atrium Center, 500 West Madison Street, Chicago, Illinois 60661.
You can obtain copies from the public reference room of the SEC at 450 Fifth
Street, NW, Washington, D.C. 20549 upon payment of copying fees. You can call
the SEC at 1-800-732-0330 for further information about the public reference
room. We are also required to file electronic versions of these documents with
the SEC, which may be accessed through the SEC's World Wide Web site at
http://www.sec.gov. Our latest annual report and quarterly reports can also be
accessed through our Internet World Wide Web site at http://www.homecom.com. Our
common stock is quoted on The Nasdaq SmallCap Market(TM). Reports, proxy and
information statements and other information concerning HomeCom. may be
inspected at The Nasdaq Stock Market at 1735 K Street, NW, Washington, D.C.
20006.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference some of our publicly-filed
documents into this prospectus, which means that information included in these
documents is considered part of this prospectus. Information that we file with
the SEC subsequent to the date of this prospectus will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until the selling shareholders
have sold all the shares.
18
<PAGE> 22
The following documents filed with the SEC are incorporated by reference in
this prospectus:
1. Our annual report on Form 10-K for the year ended December 31, 1998
(File No. 0-26822).
2. Our quarterly report on Form 10-Q for the three months ended March
31, 1999 (File No. 0-29204).
3. Our definitive proxy statement dated February 11, 1999, filed in
connection with our February 26, 1999, special meeting of shareholders.
4. Our current reports on Form 8-K, filed with the SEC on May 10,
1999, April 13, 1999, and April 1, 1999 (File No. 0-26822).
We will furnish without charge to you, on written or oral request, a copy
of any or all of the documents incorporated by reference, other than exhibits to
the documents. You should direct any requests for documents to Corporate
Communications and Investor Relations, HomeCom Communications, Inc., Building
14, Suite 100, 3535 Piedmont Road, Atlanta, Georgia 30305, telephone (404)
237-4646.
19
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant will bear no expenses in connection with any sale or other
distribution by the selling shareholders of the shares being registered other
than the expenses of preparation and distribution of this Registration Statement
and the prospectus included in this Registration Statement. Such expenses are
set forth in the following table. All of the amounts shown are estimates except
the Securities and Exchange Commission ("SEC") registration fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 2,245.50
Legal fees and expenses..................................... 15,000.00
Accounting fees and expenses................................ 10,000.00
NASD listing fee............................................ 7,500.00
Miscellaneous expenses...................................... 1,000.00
----------
Total............................................. $35,745.50
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law (the "DGCL") permits a corporation to
eliminate or limit the personal liability of a director to the corporation or
its stockholders for monetary damages for breach of duty of care or other duty
as a director, provided that no provision shall eliminate or limit the liability
of a director: (A) for an appropriation, in violation of his duties, of any
business opportunity of the corporation; (B) for acts or omissions which involve
intentional misconduct or a knowing violation of law; (C) for unlawful corporate
distributions; or (D) for any transaction from which the director received an
improper personal benefit. This provision pertains only to breaches of duty by
directors in their capacity as directors (and not in any other corporate
capacity, such as officers) and limits liability only for breaches of fiduciary
duties under Delaware corporate law (and not for violation of other laws, such
as the federal securities laws). The Company's Restated Certificate of
Incorporation (the "Restated Certificate") exonerates the Company's directors
from monetary liability to the extent permitted by this statutory provision.
The Company's Restated Certificate of Incorporation and Restated Bylaws
(the "Restated Bylaws") also provide that the Company shall indemnify any person
who was or 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 (including any action by or in the right of the
Company), by reason of the fact that such person is or was a director or officer
of the Company, or is or was serving at the request of the Company as a director
or officer of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including reasonable attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding, if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Company (and with respect to any criminal
action or proceeding, if such person had no reasonable cause to believe such
person's conduct was unlawful), to the maximum extent permitted by, and in the
manner provided by, the DGCL.
II-1
<PAGE> 24
Notwithstanding any provisions of the Company's Restated Certificate of
Incorporation and Restated Bylaws to the contrary, the DGCL provides that the
Company shall not indemnify a director or officer for any liability incurred in
a proceeding in which the director is adjudged liable to the Company or is
subjected to injunctive relief in favor of the Company: (1) for any
appropriation, in violation of his duties, of any business opportunity of the
Company; (2) for acts or omissions which involve intentional misconduct or a
knowing violation of law; (3) for unlawful corporate distributions; or (4) for
any transaction from which the director or officer received an improper personal
benefit.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <C> <S>
5.1 -- Opinion of Sims Moss Kline & Davis LLP
10.49+++ -- Certificate of Designations, Preferences and Rights of
Series B Convertible Preferred Stock HomeCom Communications,
Inc. dated as of March 24, 1999
10.50+++ -- Securities Purchase Agreement dated as of March 25, 1999, by
and among HomeCom Communications, Inc. and CPR (USA), Inc.,
LibertyView Funds, L.P., and LibertyView Fund, L.L.C.
10.51+++ -- Registration Rights Agreement dated as of March 25, 1999, by
and among HomeCom Communications, Inc. and CPR (USA), Inc.,
LibertyView Funds, L.P., and LibertyView Fund, L.L.C.
10.52+++ -- Transfer Agent Instructions dated as of March 25, 1999
10.53+++ -- Transfer Agent Legal Opinion dated as of March 25, 1999
10.54+++ -- Placement Agency Agreement dated as of March 25, 1999, by
and between HomeCom Communications, Inc. and J.P. Turner &
Company, L.L.C.
10.55 -- Warrant Agreement, dated as of March 25, 1999, by and among
CPR (USA), Inc. and HomeCom Communications, Inc.
10.56 -- Warrant Agreement, dated as of March 25, 1999, by and among
LibertyView Fund, L.L.C. and HomeCom Communications, Inc.
10.57 -- Warrant Agreement, dated as of March 25, 1999, by and among
LibertyView, Funds, L.P. and HomeCom Communications, Inc.
10.59 -- Warrant Agreement, dated as of March 25, 1999, by and among
J.P. Turner & Company, L.L.C. and HomeCom Communications,
Inc.
23.1 -- Consent of PricewaterhouseCoopers LLP, Independent
Accountants
23.2 -- Consent of Sims Moss Kline & Davis LLP (included in Exhibit
5.1)
24.1 -- Power of Attorney (see page II-3)
</TABLE>
- -------------------------
+++ Incorporated herein by reference to exhibit of the same number in Form 10-K
of the Registrant filed with the Commission on March 31, 1999.
II-2
<PAGE> 25
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement 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.
(2) That, for the purpose of determining any liability under the
Securities Act, each 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of this offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 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 therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
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 SEC 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-3
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
HomeCom Communications, Inc. 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 Atlanta, State of Georgia, on May 27,
1999.
HOMECOM COMMUNICATIONS, INC.
By: /s/ HARVEY W. SAX
-----------------------------------
Harvey W. Sax
Chairman and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Harvey W. Sax and Norman H. Smith,
jointly and severally, his or her true and lawful attorneys-in-fact, each with
full power of substitution, for him or her in any and all capacities, to sign
any and all amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact or any
of them, or his or their substitute or substitutes, may lawfully do or cause to
be done or 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 and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ HARVEY W. SAX President, Chief Executive May 27, 1999
- --------------------------------------------------- Officer and Director
Harvey W. Sax (Principal Executive
Officer)
/s/ NAT STRICKLEN Executive Vice President May 27, 1999
- --------------------------------------------------- and Director
Nat Stricklen
/s/ KRISHAN PURI Executive Vice President May 27, 1999
- --------------------------------------------------- and Director
Krishan Puri
/s/ GIA BOKUCHAVA, PH.D. Chief Technical Officer May 27, 1999
- --------------------------------------------------- and Director
Gia Bokuchava, Ph.D
/s/ ROGER NEBEL Vice President and May 27, 1999
- --------------------------------------------------- Director
Roger Nebel
</TABLE>
II-4
<PAGE> 27
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ NORMAN H. SMITH Chief Financial Officer May 27, 1999
- ---------------------------------------------------
Norman H. Smith
Director , 1999
- ---------------------------------------------------
William Walker
/s/ CLAUDE THOMAS Director May 27, 1999
- ---------------------------------------------------
Claude Thomas
Director , 1999
- ---------------------------------------------------
James Wm. Ellsworth
Director , 1999
- ---------------------------------------------------
Daniel A. Delity
</TABLE>
II-5
<PAGE> 28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<C> <C> <S>
5.1 -- Opinion of Sims Moss Kline & Davis LLP
10.49+++ -- Certificate of Designations, Preferences and Rights of
Series B Convertible Preferred Stock HomeCom Communications,
Inc. dated as of March 24, 1999
10.50+++ -- Securities Purchase Agreement dated as of March 25, 1999 by
and among HomeCom Communications, Inc. and CPR (USA), Inc.,
LibertyView Funds, L.P., and Liberty View Fund, L.L.C.
10.51+++ -- Registration Rights Agreement dated as of March 25, 1999 by
and among HomeCom Communications, Inc. and CPR (USA), Inc.,
LibertyView Funds, L.P., and Liberty View Fund, L.L.C.
10.52+++ -- Transfer Agent Instructions dated as of March 25, 1999.
10.53+++ -- Transfer Agent Legal Opinion dated as of March 25, 1999.
10.54+++ -- Placement Agency Agreement dated as of March 25, 1999 by and
between HomeCom Communications, Inc. and J.P. Turner &
Company, L.L.C.
10.55 -- Warrant Agreement, dated as of March 25, 1999 by and among
CPR (USA), Inc. and HomeCom Communications, Inc.
10.56 -- Warrant Agreement, dated as of March 25, 1999 by and among
LibertyView Fund, L.L.C. and HomeCom Communications, Inc.
10.57 -- Warrant Agreement, dated as of March 25, 1999 by and among
LibertyView Funds, L.P. and HomeCom Communications, Inc.
10.59 -- Warrant Agreement, dated as of March 25, 1999 by and among
J.P. Turner & Company, L.L.C. and HomeCom Communications,
Inc.
23.1 -- Consent of PricewaterhouseCoopers LLP, Independent
Accountants
23.2 -- Consent of Sims Moss Kline & Davis LLP (included in Exhibit
5.1)
24.1 -- Power of Attorney (see page II-3)
</TABLE>
- -------------------------
+++ Incorporated herein by reference to exhibit of the same number in Form 10-K
of the Registrant filed with the Commission on March 31, 1999.
II-6
<PAGE> 1
EXHIBIT 5.1
OPINION OF COUNSEL
June 1, 1999
HomeCom Communications, Inc.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by you
with the Securities and Exchange Commission on or about June 1, 1999 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933 of shares of your common stock (the "Shares"), to be sold
by certain shareholders listed in the Registration Statement (the "Selling
Shareholders"). As your legal counsel in connection with this transaction, we
have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the sale of the Shares.
As counsel to you, we have examined such corporate records, documents,
instruments, certificates of public officials and of the Company and such
questions of law as we have deemed necessary for the purpose of rendering the
opinions set forth herein.
It is our opinion that the Shares, when sold by the selling shareholders in
the manner described in the Registration Statement, will be legally and validly
issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever it appears in the
Registration Statement and in any amendment to it.
Sincerely,
SIMS MOSS KLINE & DAVIS LLP
/s/ SIMS MOSS KLINE & DAVIS LLP
<PAGE> 1
EXHIBIT 10.55
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of March 25, 1999, between HomeCom
Communications, Inc., a Delaware corporation (the "COMPANY"), and CPR (USA),
Inc., a Delaware corporation (hereinafter referred to as "INVESTOR").
WITNESSETH:
WHEREAS, Investor has participated as an Investor in connection with
the Company's offering (the "OFFERING") of up to $2,500,000 in principal amount
of Series B Preferred Stock (the "PREFERRED STOCK") for an aggregate purchase
price $2,500,000; and
WHEREAS, the Warrants issued pursuant to this Agreement are being
issued by the Company to Investor and/or its designees, in consideration for,
and as part of the investment by Investor in connection with the Offering;
NOW, THEREFORE, in consideration of the premises, the agreements herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
Investor and/or its designees are hereby granted the right to purchase,
at any time from the date of issuance of the aforementioned Preferred Stock
until 5:00 P.M., Eastern Standard Time, on March 24, 2004 (the "WARRANT EXERCISE
TERM"), one hundred twelve thousand five hundred Shares at an exercise price
(subject to adjustment as provided in Article 7 hereof) of $5.70 per share (the
"INITIAL EXERCISE PRICE").
2. Warrant Certificates.
The warrant certificates (the "WARRANT CERTIFICATES") delivered and to
be delivered pursuant to this Agreement shall be in the form set forth as
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Exercise Price may be paid in cash or
by check to the order of the Company, or any combination of cash or check,
subject to adjustment as provided in Article 7 hereof. Upon surrender of the
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
Shares purchased, at the Company's executive offices currently located at
Fourteen Piedmont Center, Suite 100, 3535 Piedmont Road, Atlanta, Georgia 30305,
the registered holder of a Warrant Certificate ("HOLDER" or "HOLDERS") shall be
entitled to receive a certificate or certificates for the Shares so purchased.
The purchase rights represented by each Warrant Certificate are exercisable at
the option of the Holder hereof, in whole or in part (but not as to fractional
shares of the Common Stock). In the case of the purchase of less than all the
Shares purchasable under any Warrant Certificate, the Company shall cancel said
Warrant Certificate upon the surrender thereof and shall execute and deliver a
new Warrant Certificate of like tenor for the balance of the Shares purchasable
thereunder.
3.2 Cashless Exercise. At any time during the Warrant Exercise
Term, the Holder may, at its option, exchange this Warrant, in whole or in part
(a "WARRANT EXCHANGE"), into the number of Shares determined in accordance with
this Section 3.2, by surrendering this Warrant at the principal office of the
company or at the office of its transfer agent, accompanied by a notice stating
such Holder's intent to effect such exchange, the number of Shares to be
exchanged and the date on which the Holder requests that such Warrant Exchange
occur (the "NOTICE OF EXCHANGE"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "EXCHANGE DATE"). Certificates for the
Shares issuable upon such Warrant Exchange and, if applicable, a new warrant of
like tenor evidencing the balance of the Shares remaining subject to this
Warrant, shall be issued as of the Exchange Date and delivered to the Holder
within seven (7) business days following the Exchange Date. In connection with
any Warrant Exchange, this Warrant shall represent the right to subscribe for
and acquire the number of Shares (rounded to the next highest integer) equal to
(i) the number of Shares specified by the Holder in its Notice of Exchange (the
"TOTAL NUMBER") less (ii) the number of Shares
<PAGE> 2
equal to the quotient obtained by dividing (A) the product of the Total Number
and the then existing Exercise Price by (B) the current market value of a share
of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within five business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall be issued in the name of, or in such names as may be directed
by, the Holder thereof; provided, however, 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 such certificates in a name other than that
of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman or Vice Chairman of the Board of
directors, Chief Executive officer or President or Vice President of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer.
The Warrant Certificates and, upon exercise of the Warrants, in part or
in whole, certificates representing the Shares shall bear a legend substantially
similar to the following:
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "ACT"), and may not be offered or
sold except (i) pursuant to an effective registration statement under the Act,
(ii) to the extent applicable, pursuant to Rule 144 under the Act (or any
similar rule under such Act relating to the disposition of securities), or (iii)
upon the delivery by the holder to the Company of an opinion of counsel,
reasonably satisfactory to counsel to the issuer, stating that an exemption from
registration under such Act is available.
5. Price.
5.1 Adjusted Exercise Price. The adjusted Exercise Price shall
be the price which shall result from time to time from any and all adjustments
of the Initial Exercise Price in accordance with the provisions of Article 7
hereof.
5.2 Exercise Price. The term "EXERCISE PRICE" herein shall
mean the Initial Exercise Price or the adjusted Exercise Price, depending upon
the context.
6. Registration Rights.
6.1 Registration Under the Securities Act of 1993.
The Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended ("THE ACT").
6.2 Registrable Securities. As used herein the term
"REGISTRABLE SECURITY" means each of the Warrants, the Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of the
date of determination, (i) it has been effectively registered under the
Securities Act and disposed of pursuant thereto, (ii) registration under the
Securities Act is no longer required for the immediate public distribution of
such security or (iii) it has ceased to be outstanding. The term "REGISTRABLE
SECURITIES" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Article 6.
<PAGE> 3
6.3 Piggyback Registration. If, at any time during the five
years following the date of this Agreement, the Company proposes to prepare and
file any registration statement or post-effective amendments thereto covering
equity or debt securities of the Company, or any such securities of the Company
held by its shareholders (in any such case, other than in connection with a
merger, acquisition or pursuant to Form S-8 or successor form), (for purposes of
this Article 6, collectively, a "REGISTRATION STATEMENT"), it will give written
notice of its intention to do so by registered mail ("NOTICE"), at ten (10)
business days prior to the filing of each such Registration Statement, to all
holders of the Registrable Securities. Upon the written request of such a holder
(a "REQUESTING HOLDER"), made within ten (10) business days after receipt of the
Notice, that the Company include any of the Requesting Holder's Registrable
Securities in the proposed Registration Statement, the Company shall, as to each
such Requesting Holder, use its best efforts to effect the registration under
the Securities Act of the Registrable Securities which it has been so requested
to register ("PIGGYBACK REGISTRATION"), at the Company's sole cost and expense
and at no cost or expense to the Requesting Holders. Notwithstanding the
provisions of this Section 6.3, the Company shall have the right at any time
after it shall have given written notice pursuant to this Section 6.3
(irrespective of whether any written request for inclusion of such securities
shall have already been made) to elect not to file any such proposed
Registration Statement, or to withdraw the same after the filing but prior to
the effective date thereof.
7. Adjustments of Exercise Price and Number of Shares.
7.1 Subdivision and Combination. In case the Company shall at
any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
7.2 Adjustment in Number of Shares. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Article 7, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
7.3 Reclassification, Consolidation, Merger, etc. In case of
any reclassification or change of the outstanding shares of Common Stock (other
than a change in par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of the shares of
Common Stock underlying the Warrants immediately prior to any such events at a
price equal to the product of (x) the number of shares issuable upon exercise of
the Warrants and (y) the Exercise Price in effect immediately prior to the
record date for such reclassification, change, consolidation, merger, sale or
conveyance as if such Holders had exercised the Warrants.
7.4 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of shares of Common Stock upon
the exercise of the Warrants; or
(b) Upon (i) the issuance of options pursuant to the Company's
employee stock option plan in effect on the date hereof or the issuance or sale
by the Company of any shares of Common Stock pursuant to the exercise of any
such options, or (ii) the issuance or sale by the Company of any shares of
Common Stock pursuant to the exercise of any options or warrants previously
issued and outstanding on the date hereof; or
(c) Upon the issuance of shares of Common Stock pursuant to
contractual obligations existing on the date hereof; or
(d) If the amount of said adjustment shall be less than 2
cents (2(cent)) per Share, provided, however, that in such case any adjustment
that would otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall amount to at least
2 cents (2(cent)) per Share.
<PAGE> 4
7.5 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior to
the exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Common Stock or a cash dividend or distribution
payable out of current or retained earnings) or otherwise distribute to its
shareholders any monies, assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another person or entity, or any other thing of value, the Holder or Holders
of the unexercised Warrants shall thereafter be entitled, in addition to the
shares of Common Stock or other securities receivable upon the exercise thereof,
to receive, upon the exercise of such Warrants, the same monies, property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Subsection 7.5.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, nonassessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants to be listed on or quoted on the electronic bulletin board, by
NASDAQ or listed on such national securities exchanges.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) a dissolution, liquidation or winding up of the Company (other than
in connection with a consolidation or merger) or a sale of all or substantially
all of its property, assets and business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such
<PAGE> 5
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend or distribution, or any proposed dissolution, liquidation, winding up
or sale.
12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address
of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 of
this Agreement or to such other address as the Company may designate by notice
to the Holders.
13. Supplements and Amendments.
The Company and the Placement Agent may from time to time supplement or
amend this Agreement without the approval of any Holders of Warrant Certificates
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Placement Agent may deem necessary or desirable and
which the Company and the Placement Agent deem not to adversely affect the
interests of the Holders of Warrant Certificates.
14. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.
15. Termination.
This Agreement shall terminate at the close of business on March 24,
2004. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been exercised and all the Shares issuable
upon exercise of the Warrants have been resold to the public; provided, however,
that the provisions of Article 6 shall survive such termination until the close
of business on March 24, 2004.
16. Governing Law.
This Agreement and each Warrant Certificate hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware without
regard to the principles of conflict of laws. Any dispute or controversy between
the parties arising in connection with this Agreement or the subject matter
contemplated by this Agreement shall be resolved by arbitration before a
three-member panel of the American Arbitration Association in accordance with
the commercial arbitration rules of said forum and the Federal Arbitration Act,
9 U.S.C. 1 et seq., with the resulting award being final and conclusive. Said
arbitrators shall be empowered to award all forms of relief and damages claimed,
including, but not limited to, attorney's fees, expenses of litigation and
arbitration, exemplary damages, and prejudgment interest. The parties further
agree that any arbitration action between them shall be heard in Atlanta,
Georgia, and expressly consent to the jurisdiction and venue of the Superior
Court of Fulton County, Georgia, and the United States District Court for the
Northern District of Georgia, Atlanta Division for the adjudication of any civil
action asserted pursuant to this Paragraph.
17. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Investor and any other registered
holder or holders of the Warrant Certificates, Warrants or the Shares any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and the Investor and
any other holder or holders of the Warrant Certificates, Warrants or the Shares.
<PAGE> 6
18. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
HOMECOM COMMUNICATIONS, INC.
By: /s/ Harvey W. Sax
---------------------------------------
Name: Harvey W. Sax
Title: Chairman of the Board and Chief
Executive Officer
Attest: /s/ Norm H. Smith
Name: Norm H. Smith
Title: CFO, Secretary & Treasurer
INVESTOR
CPR (USA), INC.
By: /s/ Steven S. Rogers
---------------------------------------
Name: Steven S. Rogers
Title: Managing Director
CPR (USA) Inc.
Attest:
------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE> 7
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN STANDARD TIME, MARCH 24, 2004
No. 99-1 112,500 Shares
WARRANT CERTIFICATE
This Warrant Certificate certifies that CPR (USA), Inc. ("INVESTOR") or
registered assigns, is the registered holder of one Warrant to purchase, at any
time from March 25, 1999, until 5:00 P.M. Eastern Standard Time on March 24,
2004 ("EXPIRATION DATE"), up to 112,500 shares ("SHARES") of fully-paid and
non-assessable common stock, no par value ("COMMON STOCK"), of HomeCom
Communications, Inc., a Delaware corporation (the "COMPANY"), at the Initial
Exercise Price, subject to adjustment in certain events (the "EXERCISE PRICE"),
of $5.70 per Share upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the warrant agreement dated as of March 25,
1999, between the Company and Investor (the "WARRANT AGREEMENT"). Payment of the
Exercise Price may be made in cash, or by certified or official bank check in
New York Clearing House funds payable to the order of the Company, or any
combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the, request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferees) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and
<PAGE> 8
of any distribution to the holder(s) hereof, and for all other purposes, and
the Company shall not be affected by any notice to the contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: March 25, 1999 HOMECOM COMMUNICATIONS, INC.
By: /s/ Harvey Sax
---------------------------
Name: Harvey Sax
Title: President
Attest: /s/ Norm H. Smith
-----------------------------
Name: Norm H. Smith
-------------------------------
Title: CFO, Secretary & Treasurer
-----------------------------
<PAGE> 9
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ Shares and
herewith tenders in payment for such Shares cash or a certified or official bank
check payable in New York Clearing House Funds to the order of
_____________________ in the amount of $_______________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such Shares be
registered in the name of ________________________ whose address is
______________________________________________, and that such Certificate be
delivered to ___________________________________________, whose address is
_______________________________________________________________.
Dated: Signature:_________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
____________________________________
____________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE> 10
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such
holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED _________________________________ hereby sells,
assigns and transfers unto___________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________________,
Attorney, to transfer the within Warrant Certificate on the books of the within-
named Company, with full power of substitution.
Dated: Signature:_____________________________________
(Signature must conform in all respects to name
of holder as specified on the face of the
Warrant Certificate)
_____________________________________
_____________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
<PAGE> 1
EXHIBIT 10.56
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of March 25, 1999, between HomeCom
Communications, Inc., a Delaware corporation (the "COMPANY"), and LibertyView
Fund, L.L.C., a Delaware limited liability company (hereinafter referred to as
"INVESTOR").
WITNESSETH:
WHEREAS, Investor has participated as an Investor in connection with
the Company's offering (the "OFFERING") of up to $2,500,000 in principal amount
of Series B Preferred Stock (the "PREFERRED STOCK") for an aggregate purchase
price $2,500,000; and
WHEREAS, the Warrants issued pursuant to this Agreement are being
issued by the Company to Investor and/or its designees, in consideration for,
and as part of the investment by Investor in connection with the Offering;
NOW, THEREFORE, in consideration of the premises, the agreements herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
Investor and/or its designees are hereby granted the right to purchase,
at any time from the date of issuance of the aforementioned Preferred Stock
until 5:00 P.M., Eastern Standard Time, on March 24, 2004 (the "WARRANT EXERCISE
TERM"), twenty-two thousand five hundred Shares at an exercise price (subject to
adjustment as provided in Article 7 hereof) of $5.70 per share (the "INITIAL
EXERCISE PRICE").
2. Warrant Certificates.
The warrant certificates (the "WARRANT CERTIFICATES") delivered and to
be delivered pursuant to this Agreement shall be in the form set forth as
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Exercise Price may be paid in cash or
by check to the order of the Company, or any combination of cash or check,
subject to adjustment as provided in Article 7 hereof. Upon surrender of the
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
Shares purchased, at the Company's executive offices currently located at
Fourteen Piedmont Center, Suite 100, 3535 Piedmont Road, Atlanta, Georgia 30305,
the registered holder of a Warrant Certificate ("HOLDER" or "HOLDERS") shall be
entitled to receive a certificate or certificates for the Shares so purchased.
The purchase rights represented by each Warrant Certificate are exercisable at
the option of the Holder hereof, in whole or in part (but not as to fractional
shares of the Common Stock). In the case of the purchase of less than all the
Shares purchasable under any Warrant Certificate, the Company shall cancel said
Warrant Certificate upon the surrender thereof and shall execute and deliver a
new Warrant Certificate of like tenor for the balance of the Shares purchasable
thereunder.
3.2 Cashless Exercise. At any time during the Warrant Exercise
Term, the Holder may, at its option, exchange this Warrant, in whole or in part
(a "WARRANT EXCHANGE"), into the number of Shares determined in accordance with
this Section 3.2, by surrendering this Warrant at the principal office of the
company or at the office of its transfer agent, accompanied by a notice stating
such Holder's intent to effect such exchange, the number of Shares to be
exchanged and the date on which the Holder requests that such Warrant Exchange
occur (the "NOTICE OF EXCHANGE"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "EXCHANGE DATE"). Certificates for the
Shares issuable upon such Warrant Exchange and, if applicable, a new warrant of
like tenor evidencing the balance of the Shares remaining subject to this
Warrant, shall be issued as of the Exchange Date and delivered to the Holder
within seven (7) business days following the Exchange Date. In connection with
any Warrant Exchange, this Warrant shall represent the right to subscribe for
and acquire the number of Shares (rounded to the next highest integer) equal
<PAGE> 2
to (i) the number of Shares specified by the Holder in its Notice of Exchange
(the "TOTAL NUMBER") less (ii) the number of Shares equal to the quotient
obtained by dividing (A) the product of the Total Number and the then existing
Exercise Price by (B) the current market value of a share of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within five business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall be issued in the name of, or in such names as may be directed
by, the Holder thereof; provided, however, 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 such certificates in a name other than that
of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman or Vice Chairman of the Board of
Directors, Chief Executive officer or President or Vice President of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer.
The Warrant Certificates and, upon exercise of the Warrants, in part or
in whole, certificates representing the Shares shall bear a legend substantially
similar to the following:
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "ACT"), and may not be offered or
sold except (i) pursuant to an effective registration statement under the Act,
(ii) to the extent applicable, pursuant to Rule 144 under the Act (or any
similar rule under such Act relating to the disposition of securities), or (iii)
upon the delivery by the holder to the Company of an opinion of counsel,
reasonably satisfactory to counsel to the issuer, stating that an exemption from
registration under such Act is available.
5. Price.
5.1 Adjusted Exercise Price. The adjusted Exercise Price shall
be the price which shall result from time to time from any and all adjustments
of the Initial Exercise Price in accordance with the provisions of Article 7
hereof.
5.2 Exercise Price. The term "EXERCISE PRICE" herein shall
mean the Initial Exercise Price or the adjusted Exercise Price, depending upon
the context.
6. Registration Rights.
6.1 Registration Under the Securities Act of 1993.
The Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended ("THE ACT").
6.2 Registrable Securities. As used herein the term
"REGISTRABLE SECURITY" means each of the Warrants, the Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of the
date of determination, (i) it has been effectively registered under the
Securities Act and disposed of pursuant thereto, (ii) registration under the
Securities Act is no longer required for the immediate public distribution of
such security or (iii) it has ceased to be outstanding. The term "REGISTRABLE
SECURITIES" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Article 6.
<PAGE> 3
6.3 Piggyback Registration. If, at any time during the five
years following the date of this Agreement, the Company proposes to prepare and
file any registration statement or post-effective amendments thereto covering
equity or debt securities of the Company, or any such securities of the Company
held by its shareholders (in any such case, other than in connection with a
merger, acquisition or pursuant to Form S-8 or successor form), (for purposes of
this Article 6, collectively, a "REGISTRATION STATEMENT"), it will give written
notice of its intention to do so by registered mail ("NOTICE"), at ten (10)
business days prior to the filing of each such Registration Statement, to all
holders of the Registrable Securities. Upon the written request of such a holder
(a "REQUESTING HOLDER"), made within ten (10) business days after receipt of the
Notice, that the Company include any of the Requesting Holder's Registrable
Securities in the proposed Registration Statement, the Company shall, as to each
such Requesting Holder, use its best efforts to effect the registration under
the Securities Act of the Registrable Securities which it has been so requested
to register ("PIGGYBACK REGISTRATION"), at the Company's sole cost and expense
and at no cost or expense to the Requesting Holders. Notwithstanding the
provisions of this Section 6.3, the Company shall have the right at any time
after it shall have given written notice pursuant to this Section 6.3
(irrespective of whether any written request for inclusion of such securities
shall have already been made) to elect not to file any such proposed
Registration Statement, or to withdraw the same after the filing but prior to
the effective date thereof.
7. Adjustments of Exercise Price and Number of Shares.
7.1 Subdivision and Combination. In case the Company shall at
any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
7.2 Adjustment in Number of Shares. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Article 7, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
7.3 Reclassification, Consolidation, Merger, etc. In case of
any reclassification or change of the outstanding shares of Common Stock (other
than a change in par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of the shares of
Common Stock underlying the Warrants immediately prior to any such events at a
price equal to the product of (x) the number of shares issuable upon exercise of
the Warrants and (y) the Exercise Price in effect immediately prior to the
record date for such reclassification, change, consolidation, merger, sale or
conveyance as if such Holders had exercised the Warrants.
7.4 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of shares of Common Stock upon
the exercise of the Warrants; or
(b) Upon (i) the issuance of options pursuant to the Company's
employee stock option plan in effect on the date hereof or the issuance or sale
by the Company of any shares of Common Stock pursuant to the exercise of any
such options, or (ii) the issuance or sale by the Company of any shares of
Common Stock pursuant to the exercise of any options or warrants previously
issued and outstanding on the date hereof; or
(c) Upon the issuance of shares of Common Stock pursuant to
contractual obligations existing on the date hereof; or
(d) If the amount of said adjustment shall be less than 2
cents (2(cent)) per Share, provided, however, that in such case any adjustment
that would otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall amount to at least
2 cents (2(cent)) per Share.
<PAGE> 4
7.5 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior to
the exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Common Stock or a cash dividend or distribution
payable out of current or retained earnings) or otherwise distribute to its
shareholders any monies, assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another person or entity, or any other thing of value, the Holder or Holders
of the unexercised Warrants shall thereafter be entitled, in addition to the
shares of Common Stock or other securities receivable upon the exercise thereof,
to receive, upon the exercise of such Warrants, the same monies, property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Subsection 7.5.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, nonassessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants to be listed on or quoted on the electronic bulletin board, by
NASDAQ or listed on such national securities exchanges.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) a dissolution, liquidation or winding up of the Company (other than
in connection with a consolidation or merger) or a sale of all or substantially
all of its property, assets and business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such
<PAGE> 5
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend or distribution, or any proposed dissolution, liquidation, winding up
or sale.
12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 of this
Agreement or to such other address as the Company may designate by notice to the
Holders.
13. Supplements and Amendments.
The Company and the Placement Agent may from time to time supplement or
amend this Agreement without the approval of any Holders of Warrant Certificates
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Placement Agent may deem necessary or desirable and
which the Company and the Placement Agent deem not to adversely affect the
interests of the Holders of Warrant Certificates.
14. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.
15. Termination.
This Agreement shall terminate at the close of business on March 24,
2004. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been exercised and all the Shares issuable
upon exercise of the Warrants have been resold to the public; provided, however,
that the provisions of Article 6 shall survive such termination until the close
of business on March 24, 2004.
16. Governing Law.
This Agreement and each Warrant Certificate hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware without
regard to the principles of conflict of laws. Any dispute or controversy between
the parties arising in connection with this Agreement or the subject matter
contemplated by this Agreement shall be resolved by arbitration before a
three-member panel of the American Arbitration Association in accordance with
the commercial arbitration rules of said forum and the Federal Arbitration Act,
9 U.S.C. 1 et seq., with the resulting award being final and conclusive. Said
arbitrators shall be empowered to award all forms of relief and damages claimed,
including, but not limited to, attorney's fees, expenses of litigation and
arbitration, exemplary damages, and prejudgment interest. The parties further
agree that any arbitration action between them shall be heard in Atlanta,
Georgia, and expressly consent to the jurisdiction and venue of the Superior
Court of Fulton County, Georgia, and the United States District Court for the
Northern District of Georgia, Atlanta Division for the adjudication of any civil
action asserted pursuant to this Paragraph.
17. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Investor and any other registered
holder or holders of the Warrant Certificates, Warrants or the Shares any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and the Investor and
any other holder or holders of the Warrant Certificates, Warrants or the Shares.
<PAGE> 6
18. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
HOMECOM COMMUNICATIONS, INC.
By: /s/ Harvey W. Sax
-------------------------------------
Name: Harvey W. Sax
Title: Chairman of the Board and Chief
Executive Officer
Attest: /s/ Norm H. Smith
----------------------
Name: Norm H. Smith
-----------------------
INVESTOR
LIBERTYVIEW FUND, L.L.C.
By: /s/ Steven S. Rogers
-------------------------------------
Name: Steven S. Rogers
Title: Steven S. Rogers
Authorized Signatory
Attest:
------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE> 7
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN STANDARD TIME, MARCH 24, 2004
No. 99-3 22,500 Shares
WARRANT CERTIFICATE
This Warrant Certificate certifies that LibertyView Fund, L.L.C.
("INVESTOR") or registered assigns, is the registered holder of one Warrant to
purchase, at any time from March 25, 1999, until 5:00 P.M. Eastern Standard Time
on March 24, 2004 ("EXPIRATION DATE"), up to 22,500 shares ("SHARES") of
fully-paid and non-assessable common stock, no par value ("COMMON STOCK"), of
HomeCom Communications, Inc., a Delaware corporation (the "COMPANY"), at the
Initial Exercise Price, subject to adjustment in certain events (the "EXERCISE
PRICE"), of $5.70 per Share upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the warrant agreement dated as of
March 25, 1999, between the Company and Investor (the "WARRANT AGREEMENT").
Payment of the Exercise Price may be made in cash, or by certified or official
bank check in New York Clearing House funds payable to the order of the Company,
or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the, request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferees) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
<PAGE> 8
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: March 25, 1999 HOMECOM COMMUNICATIONS, INC.
By: /s/ Harvey W. Sax
----------------------------
Name: Harvey Sax
---------------------------
Title: President
-------------------------
Attest: /s/ Norm H. Smith
---------------------------
Name: Norm H. Smith
----------------------------
Title: CFO, Secretary & Treasurer
----------------------------
<PAGE> 9
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ Shares and
herewith tenders in payment for such Shares cash or a certified or official bank
check payable in New York Clearing House Funds to the order of
_____________________ in the amount of $_______________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such Shares be
registered in the name of ________________________whose address is
____________________________________________, and that such Certificate be
delivered to ___________________________________________, whose address is
_______________________________________________________________.
Dated: Signature:_________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
____________________________________
____________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE> 10
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________________ hereby
sells, assigns and transfers unto ____________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
___________________________________, Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: Signature:_________________________________
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant
Certificate)
_____________________________________
_____________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
<PAGE> 1
EXHIBIT 10.57
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of March 25 , 1999, between HomeCom
Communications, Inc., a Delaware corporation (the "COMPANY"), and LibertyView
Funds, L.P., a Cayman Islands limited partnership (hereinafter referred to as
"INVESTOR").
WITNESSETH:
WHEREAS, Investor has participated as an Investor in connection with
the Company's offering (the "OFFERING") of up to $2,500,000 in principal amount
of Series B Preferred Stock (the "PREFERRED STOCK") for an aggregate purchase
price $2,500,000; and
WHEREAS, the Warrants issued pursuant to this Agreement are being
issued by the Company to Investor and/or its designees, in consideration for,
and as part of the investment by Investor in connection with the Offering;
NOW, THEREFORE, in consideration of the premises, the agreements herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
Investor and/or its designees are hereby granted the right to purchase,
at any time from the date of issuance of the aforementioned Preferred Stock
until 5:00 P.M., Eastern Standard Time, on March 24, 2004 (the "WARRANT EXERCISE
TERM"), ninety thousand Shares at an exercise price (subject to adjustment as
provided in Article 7 hereof) of $5.70 per share (the "INITIAL EXERCISE PRICE").
2. Warrant Certificates.
The warrant certificates (the "WARRANT CERTIFICATES") delivered and to
be delivered pursuant to this Agreement shall be in the form set forth as
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Exercise Price may be paid in cash or
by check to the order of the Company, or any combination of cash or check,
subject to adjustment as provided in Article 7 hereof. Upon surrender of the
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
Shares purchased, at the Company's executive offices currently located at
Fourteen Piedmont Center, Suite 100, 3535 Piedmont Road, Atlanta, Georgia 30305,
the registered holder of a Warrant Certificate ("HOLDER" or "HOLDERS") shall be
entitled to receive a certificate or certificates for the Shares so purchased.
The purchase rights represented by each Warrant Certificate are exercisable at
the option of the Holder hereof, in whole or in part (but not as to fractional
shares of the Common Stock). In the case of the purchase of less than all the
Shares purchasable under any Warrant Certificate, the Company shall cancel said
Warrant Certificate upon the surrender thereof and shall execute and deliver a
new Warrant Certificate of like tenor for the balance of the Shares purchasable
thereunder.
3.2 Cashless Exercise. At any time during the Warrant Exercise
Term, the Holder may, at its option, exchange this Warrant, in whole or in part
(a "WARRANT EXCHANGE"), into the number of Shares determined in accordance with
this Section 3.2, by surrendering this Warrant at the principal office of the
company or at the office of its transfer agent, accompanied by a notice stating
such Holder's intent to effect such exchange, the number of Shares to be
exchanged and the date on which the Holder requests that such Warrant Exchange
occur (the "NOTICE OF EXCHANGE"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "EXCHANGE DATE"). Certificates for the
Shares issuable upon such Warrant Exchange and, if applicable, a new warrant of
like tenor evidencing the balance of the Shares remaining subject to this
Warrant, shall be issued as of the Exchange Date and delivered to the Holder
within seven (7) business days following the Exchange Date. In connection with
any Warrant Exchange, this Warrant shall represent the right to subscribe for
and acquire the number of Shares (rounded to the next highest integer) equal
<PAGE> 2
to (i) the number of Shares specified by the Holder in its Notice of Exchange
(the "TOTAL NUMBER") less (ii) the number of Shares equal to the quotient
obtained by dividing (A) the product of the Total Number and the then existing
Exercise Price by (B) the current market value of a share of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within five business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall be issued in the name of, or in such names as may be directed
by, the Holder thereof; provided, however, 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 such certificates in a name other than that
of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman or Vice Chairman of the Board of
Directors, Chief Executive officer or President or Vice President of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer.
The Warrant Certificates and, upon exercise of the Warrants, in part or
in whole, certificates representing the Shares shall bear a legend substantially
similar to the following:
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "ACT"), and may not be offered or
sold except (i) pursuant to an effective registration statement under the Act,
(ii) to the extent applicable, pursuant to Rule 144 under the Act (or any
similar rule under such Act relating to the disposition of securities), or (iii)
upon the delivery by the holder to the Company of an opinion of counsel,
reasonably satisfactory to counsel to the issuer, stating that an exemption from
registration under such Act is available.
5. Price.
5.1 Adjusted Exercise Price. The adjusted Exercise Price shall
be the price which shall result from time to time from any and all adjustments
of the Initial Exercise Price in accordance with the provisions of Article 7
hereof.
5.2 Exercise Price. The term "EXERCISE PRICE" herein shall
mean the Initial Exercise Price or the adjusted Exercise Price, depending upon
the context.
6. Registration Rights.
6.1 Registration Under the Securities Act of 1993.
The Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended ("THE ACT").
6.2 Registrable Securities. As used herein the term
"REGISTRABLE SECURITY" means each of the Warrants, the Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of the
date of determination, (i) it has been effectively registered under the
Securities Act and disposed of pursuant thereto, (ii) registration under the
Securities Act is no longer required for the immediate public distribution of
such security or (iii) it has ceased to be outstanding. The term "REGISTRABLE
SECURITIES" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Article 6.
<PAGE> 3
6.3 Piggyback Registration. If, at any time during the five
years following the date of this Agreement, the Company proposes to prepare and
file any registration statement or post-effective amendments thereto covering
equity or debt securities of the Company, or any such securities of the Company
held by its shareholders (in any such case, other than in connection with a
merger, acquisition or pursuant to Form S-8 or successor form), (for purposes of
this Article 6, collectively, a "REGISTRATION STATEMENT"), it will give written
notice of its intention to do so by registered mail ("NOTICE"), at ten (10)
business days prior to the filing of each such Registration Statement, to all
holders of the Registrable Securities. Upon the written request of such a holder
(a "REQUESTING HOLDER"), made within ten (10) business days after receipt of the
Notice, that the Company include any of the Requesting Holder's Registrable
Securities in the proposed Registration Statement, the Company shall, as to each
such Requesting Holder, use its best efforts to effect the registration under
the Securities Act of the Registrable Securities which it has been so requested
to register ("PIGGYBACK REGISTRATION"), at the Company's sole cost and expense
and at no cost or expense to the Requesting Holders. Notwithstanding the
provisions of this Section 6.3, the Company shall have the right at any time
after it shall have given written notice pursuant to this Section 6.3
(irrespective of whether any written request for inclusion of such securities
shall have already been made) to elect not to file any such proposed
Registration Statement, or to withdraw the same after the filing but prior to
the effective date thereof.
7. Adjustments of Exercise Price and Number of Shares.
7.1 Subdivision and Combination. In case the Company shall at
any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
7.2 Adjustment in Number of Shares. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Article 7, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
7.3 Reclassification, Consolidation, Merger, etc. In case of
any reclassification or change of the outstanding shares of Common Stock (other
than a change in par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of the shares of
Common Stock underlying the Warrants immediately prior to any such events at a
price equal to the product of (x) the number of shares issuable upon exercise of
the Warrants and (y) the Exercise Price in effect immediately prior to the
record date for such reclassification, change, consolidation, merger, sale or
conveyance as if such Holders had exercised the Warrants.
7.4 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of shares of Common Stock upon
the exercise of the Warrants; or
(b) Upon (i) the issuance of options pursuant to the Company's
employee stock option plan in effect on the date hereof or the issuance or sale
by the Company of any shares of Common Stock pursuant to the exercise of any
such options, or (ii) the issuance or sale by the Company of any shares of
Common Stock pursuant to the exercise of any options or warrants previously
issued and outstanding on the date hereof; or
(c) Upon the issuance of shares of Common Stock pursuant to
contractual obligations existing on the date hereof; or
(d) If the amount of said adjustment shall be less than 2
cents (2(cent)) per Share, provided, however, that in such case any adjustment
that would otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall amount to at least
2 cents (2(cent)) per Share.
<PAGE> 4
7.5 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior to
the exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Common Stock or a cash dividend or distribution
payable out of current or retained earnings) or otherwise distribute to its
shareholders any monies, assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another person or entity, or any other thing of value, the Holder or Holders
of the unexercised Warrants shall thereafter be entitled, in addition to the
shares of Common Stock or other securities receivable upon the exercise thereof,
to receive, upon the exercise of such Warrants, the same monies, property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Subsection 7.5.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, nonassessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants to be listed on or quoted on the electronic bulletin board, by
NASDAQ or listed on such national securities exchanges.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) a dissolution, liquidation or winding up of the Company (other than
in connection with a consolidation or merger) or a sale of all or substantially
all of its property, assets and business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such
<PAGE> 5
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend or distribution, or any proposed dissolution, liquidation, winding up
or sale.
12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 of this
Agreement or to such other address as the Company may designate by notice to the
Holders.
13. Supplements and Amendments.
The Company and the Placement Agent may from time to time supplement or
amend this Agreement without the approval of any Holders of Warrant Certificates
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Placement Agent may deem necessary or desirable and
which the Company and the Placement Agent deem not to adversely affect the
interests of the Holders of Warrant Certificates.
14. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.
15. Termination.
This Agreement shall terminate at the close of business on March 24,
2004. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been exercised and all the Shares issuable
upon exercise of the Warrants have been resold to the public; provided, however,
that the provisions of Article 6 shall survive such termination until the close
of business on March 24, 2004.
16. Governing Law.
This Agreement and each Warrant Certificate hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware without
regard to the principles of conflict of laws. Any dispute or controversy between
the parties arising in connection with this Agreement or the subject matter
contemplated by this Agreement shall be resolved by arbitration before a
three-member panel of the American Arbitration Association in accordance with
the commercial arbitration rules of said forum and the Federal Arbitration Act,
9 U.S.C. 1 et seq., with the resulting award being final and conclusive. Said
arbitrators shall be empowered to award all forms of relief and damages claimed,
including, but not limited to, attorney's fees, expenses of litigation and
arbitration, exemplary damages, and prejudgment interest. The parties further
agree that any arbitration action between them shall be heard in Atlanta,
Georgia, and expressly consent to the jurisdiction and venue of the Superior
Court of Fulton County, Georgia, and the United States District Court for the
Northern District of Georgia, Atlanta Division for the adjudication of any civil
action asserted pursuant to this Paragraph.
17. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Investor and any other registered
holder or holders of the Warrant Certificates, Warrants or the Shares any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and the Investor and
any other holder or holders of the Warrant Certificates, Warrants or the Shares.
<PAGE> 6
18. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
HOMECOM COMMUNICATIONS, INC.
By: /s/ Harvey W. Saw
--------------------------------------
Name: Harvey W. Sax
Title: Chairman of the Board and Chief
Executive Officer
Attest: /s/ Norm H. Smith
----------------------------
Name: Norm H. Smith
----------------------------
Title: CFO, Secretary & Treasurer
INVESTOR
LIBERTYVIEW FUNDS, L.P.
By: /s/ Steven S. Rogers
-----------------------------
Name: Steven S. Rogers
----------------------------
Title: Steven S. Rogers
Authorized Signatory
Attest:
-----------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 7
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN STANDARD TIME, MARCH 24, 2004
No. 99-2 90,000 Shares
WARRANT CERTIFICATE
This Warrant Certificate certifies that LibertyView Funds, L.P.
("INVESTOR") or registered assigns, is the registered holder of one Warrant to
purchase, at any time from March 25, 1999, until 5:00 P.M. Eastern Standard Time
on March 24, 2004 ("EXPIRATION DATE"), up to 90,000 shares ("SHARES") of
fully-paid and non-assessable common stock, no par value ("COMMON STOCK"), of
HomeCom Communications, Inc., a Delaware corporation (the "COMPANY"), at the
Initial Exercise Price, subject to adjustment in certain events (the "EXERCISE
PRICE"), of $5.70 per Share upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the warrant agreement dated as of
March 25, 1999, between the Company and Investor (the "WARRANT AGREEMENT").
Payment of the Exercise Price may be made in cash, or by certified or official
bank check in New York Clearing House funds payable to the order of the Company,
or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the, request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferees) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
<PAGE> 8
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: March 25, 1999 HOMECOM COMMUNICATIONS, INC.
By: /s/ Harvey W. Sax
-------------------------------------
Name: Harvey W. Sax
-----------------------------------
Title: Chairman of the Board and Chief
Executive Officer
Attest: /s/ Norm H. Smith
----------------------------
Name: Norm H. Smith
----------------------------
Title: CFO, Secretary & Treasurer
----------------------------
<PAGE> 9
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ Shares and
herewith tenders in payment for such Shares cash or a certified or official bank
check payable in New York Clearing House Funds to the order of
_____________________ in the amount of $_______________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such Shares be
registered in the name of ________________________whose address is
_____________________________________________, and that such Certificate be
delivered to ___________________________________________, whose address is
_______________________________________________________________.
Dated: Signature:_________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
____________________________________
____________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE> 10
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________________ hereby
sells, assigns and transfers unto
____________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
___________________________________, Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: Signature:_________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate)
________________________________
________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
<PAGE> 1
EXHIBIT 10.59
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of March 25, 1999, between HomeCom
Communications, Inc., a Delaware corporation (the "COMPANY"), and J.P. Turner &
Company, L.L.C., a Georgia limited liability corporation (hereinafter referred
to as "J.P. TURNER").
WITNESSETH:
WHEREAS, J.P. Turner has assisted the Company in connection with the
Company's offering (the "OFFERING") of up to $2,500,000 in principal amount of
Series B Preferred Stock (the "PREFERRED STOCK") for an aggregate purchase price
$2,500,000; and
WHEREAS, the Warrants issued pursuant to this Agreement are being
issued by the Company to J.P. Turner and/or its designees, in consideration for,
and as part of the compensation to be paid in connection with, the services of
J.P. Turner in connection with the Offering;
NOW, THEREFORE, in consideration of the premises, the agreements herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
J.P. Turner and/or its designees are hereby granted the right to
purchase, at any time from the date of issuance of the aforementioned Preferred
Stock until 5:00 P.M., Eastern Standard Time, on March 24, 2004 (the "WARRANT
EXERCISE TERM"), 25,000 Shares at an exercise price (subject to adjustment as
provided in Article 7 hereof) of $5.70 per share (the "INITIAL EXERCISE PRICE").
2. Warrant Certificates.
The warrant certificates (the "WARRANT CERTIFICATES") delivered and to
be delivered pursuant to this Agreement shall be in the form set forth as
Exhibit A, attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Exercise Price may be paid in cash or
by check to the order of the Company, or any combination of cash or check,
subject to adjustment as provided in Article 7 hereof. Upon surrender of the
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
Shares purchased, at the Company's executive offices currently located at
Fourteen Piedmont Center, Suite 100, 3535 Piedmont Road, Atlanta, Georgia 30305,
the registered holder of a Warrant Certificate ("HOLDER" or "HOLDERS") shall be
entitled to receive a certificate or certificates for the Shares so purchased.
The purchase rights represented by each Warrant Certificate are exercisable at
the option of the Holder hereof, in whole or in part (but not as to fractional
shares of the Common Stock). In the case of the purchase of less than all the
Shares purchasable under any Warrant Certificate, the Company shall cancel said
Warrant Certificate upon the surrender thereof and shall execute and deliver a
new Warrant Certificate of like tenor for the balance of the Shares purchasable
thereunder.
3.2 Cashless Exercise. At any time during the Warrant Exercise
Term, the Holder may, at its option, exchange this Warrant, in whole or in part
(a "WARRANT EXCHANGE"), into the number of Shares determined in accordance with
this Section 3.2, by surrendering this Warrant at the principal office of the
company or at the office of its transfer agent, accompanied by a notice stating
such Holder's intent to effect such exchange, the number of Shares to be
exchanged and the date on which the Holder requests that such Warrant Exchange
occur (the "NOTICE OF EXCHANGE"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "EXCHANGE DATE"). Certificates for the
Shares issuable upon such Warrant Exchange and, if applicable, a new warrant of
like tenor evidencing the balance of the Shares remaining subject to this
Warrant, shall be issued as of the Exchange Date and delivered to the Holder
within seven (7) business days following the Exchange Date. In connection with
any Warrant Exchange,
<PAGE> 2
this Warrant shall represent the right to subscribe for and acquire the number
of Shares (rounded to the next highest integer) equal to (i) the number of
Shares specified by the Holder in its Notice of Exchange (the "TOTAL NUMBER")
less (ii) the number of Shares equal to the quotient obtained by dividing (A)
the product of the Total Number and the then existing Exercise Price by (B) the
current market value of a share of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within five business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall be issued in the name of, or in such names as may be directed
by, the Holder thereof; provided, however, 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 such certificates in a name other than that
of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the present or any future Chairman or Vice Chairman of the Board of
Directors, Chief Executive officer or President or Vice President of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer.
The Warrant Certificates and, upon exercise of the Warrants, in part or
in whole, certificates representing the Shares shall bear a legend substantially
similar to the following:
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "ACT"), and may not be offered or
sold except (i) pursuant to an effective registration statement under the Act,
(ii) to the extent applicable, pursuant to Rule 144 under the Act (or any
similar rule under such Act relating to the disposition of securities), or (iii)
upon the delivery by the holder to the Company of an opinion of counsel,
reasonably satisfactory to counsel to the issuer, stating that an exemption from
registration under such Act is available.
5. Price.
5.1 Adjusted Exercise Price. The adjusted Exercise Price shall
be the price which shall result from time to time from any and all adjustments
of the Initial Exercise Price in accordance with the provisions of Article 7
hereof.
5.2 Exercise Price. The term "EXERCISE PRICE" herein shall
mean the Initial Exercise Price or the adjusted Exercise Price, depending upon
the context.
6. Registration Rights.
6.1 Registration Under the Securities Act of 1993.
The Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended ("THE ACT").
6.2 Registrable Securities. As used herein the term
"REGISTRABLE SECURITY" means each of the Warrants, the Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of the
date of determination, (i) it has been effectively registered under the
Securities Act and disposed of pursuant thereto, (ii) registration under the
Securities Act is no longer required for the immediate public distribution of
such security or (iii) it has ceased to be outstanding. The term "REGISTRABLE
SECURITIES" means any and/or all of the securities falling within the foregoing
definition of a "Registrable Security." In the event of any merger,
reorganization, consolidation, recapitalization or other change in corporate
structure affecting the Common Stock, such adjustment shall be made in the
definition of "Registrable Security" as is appropriate in order to prevent any
dilution or enlargement of the rights granted pursuant to this Article 6.
<PAGE> 3
6.3 Piggyback Registration. If, at any time during the five
years following the date of this Agreement, the Company proposes to prepare and
file any registration statement or post-effective amendments thereto covering
equity or debt securities of the Company, or any such securities of the Company
held by its shareholders (in any such case, other than in connection with a
merger, acquisition or pursuant to Form S-8 or successor form), (for purposes of
this Article 6, collectively, a "REGISTRATION STATEMENT"), it will give written
notice of its intention to do so by registered mail ("NOTICE"), at ten (10)
business days prior to the filing of each such Registration Statement, to all
holders of the Registrable Securities. Upon the written request of such a holder
(a "REQUESTING HOLDER"), made within ten (10) business days after receipt of the
Notice, that the Company include any of the Requesting Holder's Registrable
Securities in the proposed Registration Statement, the Company shall, as to each
such Requesting Holder, use its best efforts to effect the registration under
the Securities Act of the Registrable Securities which it has been so requested
to register ("PIGGYBACK REGISTRATION"), at the Company's sole cost and expense
and at no cost or expense to the Requesting Holders. Notwithstanding the
provisions of this Section 6.3, the Company shall have the right at any time
after it shall have given written notice pursuant to this Section 6.3
(irrespective of whether any written request for inclusion of such securities
shall have already been made) to elect not to file any such proposed
Registration Statement, or to withdraw the same after the filing but prior to
the effective date thereof.
7. Adjustments of Exercise Price and Number of Shares.
7.1 Subdivision and Combination. In case the Company shall at
any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
7.2 Adjustment in Number of Shares. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Article 7, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full Share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
7.3 Reclassification, Consolidation, Merger, etc. In case of
any reclassification or change of the outstanding shares of Common Stock (other
than a change in par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of the shares of
Common Stock underlying the Warrants immediately prior to any such events at a
price equal to the product of (x) the number of shares issuable upon exercise of
the Warrants and (y) the Exercise Price in effect immediately prior to the
record date for such reclassification, change, consolidation, merger, sale or
conveyance as if such Holders had exercised the Warrants.
7.4 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of shares of Common Stock upon
the exercise of the Warrants; or
(b) Upon (i) the issuance of options pursuant to the Company's
employee stock option plan in effect on the date hereof or the issuance or sale
by the Company of any shares of Common Stock pursuant to the exercise of any
such options, or (ii) the issuance or sale by the Company of any shares of
Common Stock pursuant to the exercise of any options or warrants previously
issued and outstanding on the date hereof; or
(c) Upon the issuance of shares of Common Stock pursuant to
contractual obligations existing on the date hereof; or
(d) If the amount of said adjustment shall be less than 2
cents (2(cent)) per Share, provided, however, that in such case any adjustment
that would otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall amount to at least
2 cents (2(cent)) per Share.
<PAGE> 4
7.5 Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior to
the exercise of all Warrants declare a dividend (other than a dividend
consisting solely of shares of Common Stock or a cash dividend or distribution
payable out of current or retained earnings) or otherwise distribute to its
shareholders any monies, assets, property, rights, evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another person or entity, or any other thing of value, the Holder or Holders
of the unexercised Warrants shall thereafter be entitled, in addition to the
shares of Common Stock or other securities receivable upon the exercise thereof,
to receive, upon the exercise of such Warrants, the same monies, property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this Subsection 7.5.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, nonassessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants to be listed on or quoted on the electronic bulletin board, by
NASDAQ or listed on such national securities exchanges.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring
upon the Holder or Holders the right to vote or to consent or to receive notice
as a shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) a dissolution, liquidation or winding up of the Company (other than
in connection with a consolidation or merger) or a sale of all or substantially
all of its property, assets and business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such
<PAGE> 5
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend or distribution, or any proposed dissolution, liquidation, winding up
or sale.
12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 of this
Agreement or to such other address as the Company may designate by notice to the
Holders.
13. Supplements and Amendments.
The Company and the Placement Agent may from time to time supplement or
amend this Agreement without the approval of any Holders of Warrant Certificates
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Placement Agent may deem necessary or desirable and
which the Company and the Placement Agent deem not to adversely affect the
interests of the Holders of Warrant Certificates.
14. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Company and the Holders inure to the benefit of their respective
successors and assigns hereunder.
15. Termination.
This Agreement shall terminate at the close of business on March 24,
2004. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been exercised and all the Shares issuable
upon exercise of the Warrants have been resold to the public; provided, however,
that the provisions of Article 6 shall survive such termination until the close
of business on March 24, 2004.
16. Governing Law.
This Agreement and each Warrant Certificate hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware without
regard to the principles of conflict of laws. Any dispute or controversy between
the parties arising in connection with this Agreement or the subject matter
contemplated by this Agreement shall be resolved by arbitration before a
three-member panel of the American Arbitration Association in accordance with
the commercial arbitration rules of said forum and the Federal Arbitration Act,
9 U.S.C. 1 et seq., with the resulting award being final and conclusive. Said
arbitrators shall be empowered to award all forms of relief and damages claimed,
including, but not limited to, attorney's fees, expenses of litigation and
arbitration, exemplary damages, and prejudgment interest. The parties further
agree that any arbitration action between them shall be heard in Atlanta,
Georgia, and expressly consent to the jurisdiction and venue of the Superior
Court of Fulton County, Georgia, and the United States District Court for the
Northern District of Georgia, Atlanta Division for the adjudication of any civil
action asserted pursuant to this Paragraph.
17. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Placement Agent and any other
registered holder or holders of the Warrant Certificates, Warrants or the Shares
any legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and the
Placement Agent and any other holder or holders of the Warrant Certificates,
Warrants or the Shares.
<PAGE> 6
18. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
HOMECOM COMMUNICATIONS, INC.
By: /s/ Harvey W. Sax
--------------------------------------
Name: Harvey W. Sax
Title: Chairman of the Board and Chief
Executive Officer
Attest: /s/ Norm H. Smith
------------------------
Name: Norm H. Smith
------------------------
J.P. TURNER & COMPANY, L.L.C.
By: /s/ Tim McAfee
--------------------------------------
Name: Tim McAfee
------------------------------------
Title: Chairman
-----------------------------------
Attest: /s/ William L. Mello
-------------------------
Name: William L. Mello
-------------------------
Title: President
-------------------------
<PAGE> 7
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN STANDARD TIME, MARCH 24, 2004
No. 99-4 25,000 Shares
WARRANT CERTIFICATE
This Warrant Certificate certifies that J.P. Turner & Company, L.L.C.
("J.P. TURNER") or registered assigns, is the registered holder of one Warrant
to purchase, at any time from March 25, 1999, until 5:00 P.M. Eastern Standard
Time on March 24, 2004 ("EXPIRATION DATE"), up to 25,000 shares ("SHARES") of
fully-paid and non-assessable common stock, no par value ("COMMON STOCK"), of
HomeCom Communications, Inc., a Delaware corporation (the "COMPANY"), at the
Initial Exercise Price, subject to adjustment in certain events (the "EXERCISE
PRICE"), of $5.70 per Share upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the warrant agreement dated as of
March 25, 1999, between the Company and J.P. Turner (the "WARRANT AGREEMENT").
Payment of the Exercise Price may be made in cash, or by certified or official
bank check in New York Clearing House funds payable to the order of the Company,
or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "HOLDERS" or "HOLDER" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events, the Exercise Price and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the, request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferees) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
<PAGE> 8
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated: HOMECOM COMMUNICATIONS, INC.
---------------------------
By: /s/ Harvey Sax
----------------------------------
Name: Harvey W. Sax
-------------------------------
Title: President
------------------------------
Attest: /s/ Norm H. Smith
-----------------------------
Name: Norm H. Smith
-----------------------------
Title: CFO, Secretary & Treasurer
-----------------------------
<PAGE> 9
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ Shares and
herewith tenders in payment for such Shares cash or a certified or official bank
check payable in New York Clearing House Funds to the order of
_____________________ in the amount of $_______________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such Shares be
registered in the name of ________________________whose address is
______________________________________________, and that such Certificate be
delivered to ___________________________________________, whose address is
_______________________________________________________________.
Dated: Signature:_________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
____________________________________
____________________________________
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE> 10
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________________ hereby
sells, assigns and transfers unto
_______________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
___________________________________, Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: Signature:_________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate)
_________________________________
_________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of our report dated March 29, 1999 relating
to the financial statements, which appears in HomeCom Communications, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1998. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
Atlanta, Georgia
June 1, 1999
