UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
Commission File Number 1-15161
3Dshopping.com
(Exact name of registrant as specified in its charter)
California 95-4594029
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
308 Washington Boulevard
Marina del Rey, California 90292
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 301-6733
-------------
Securities registered pursuant to Section 12(b) of the Act:
Common Stock
Warrants to Purchase Common Stock
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of each class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of September 1, 1999 the aggregate market value of the registrant's
Common Stock held by non affiliates of the registrant was $30,194,506.87. Solely
for purposes of this calculation, the registrant has treated its Board of
Directors and executive officers as affiliates.
As of September 1, 1999, the number of shares of the registrant's Common
Stock outstanding was 4,755,747.
Documents incorporated by reference:
Parts of registrant's Proxy Statement for the 1999 annual meeting of
shareholders are incorporated by reference into Part III of this report.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 3. Exhibits
The exhibits listed below are filed as part of this report
Exhibit
Number Description
- ------- -----------
2.1 Agreement and Plan of Reorganization dated as of April 1, 1999
between the Registrant, Design Base Los Angeles Inc., Brian Smith
and Todd Hosaka. Incorporated by reference to Exhibit 10.7 to our
Registration Statement on Form S-1 (File No. 333-74795).
3.1 Amended and Restated Articles of Incorporation of the Registrant.
Incorporated by reference to Exhibit 3.1 to our Registration
Statement on Form S-1 (File No. 333-74795).
3.2 Amended and Restated Bylaws of the Registrant. Incorporated by
reference to Exhibit 3.2 to our Registration Statement on Form S-1
(File No. 333-74795).
4.1 Specimen Common Stock Certificate. Incorporated by reference to
Exhibit 4.1 to our Registration Statement on Form S-1 (File No.
333-74795).
4.2 Warrant Agreement dated July 20, 1999 among the Registrant and
ChaseMellon Shareholder Services, LLC, as Warrant Agent, including
the form of Warrant.
4.3 Form of Representative's Warrants. Incorporated by reference to
Exhibit 4.3 to our Registration Statement on Form S-1 (File No.
333-74795).
4.4 Purchase Warrant dated March 18, 1999 between the Registrant and
Generation Capital. Incorporated by reference to Exhibit 4.4 to our
Registration Statement on Form S-1 (File No. 333-74795).
4.5 Promissory Note dated March 18, 1999 from the Registrant in favor of
Generation Capital Associates. Incorporated by reference to Exhibit
4.5 to our Registration Statement on Form S-1 (File No. 333-74795).
4.6 Substitute Purchase Warrant dated March 18, 1999 between the
Registrant and Generation Capital Associates. Incorporated by
reference to Exhibit 4.6 to our Registration Statement on Form S-1
(File No. 333-74795).
10.1(1) Website Linking and Promotion Agreement dated April 22, 1998 between
the Registrant and MediaOne, Inc. Incorporated by reference to
Exhibit 10.1 to our Registration Statement on Form S-1 (File No.
333-74795).
10.2 Website Design, Build and Maintain Agreement dated September 24,
1998 between the Registrant and Leavens Awards Co., Inc.
Incorporated by reference to Exhibit 10.2 to our Registration
Statement on Form S-1 (File No. 333-74795).
2
<PAGE>
10.3 Contract for Internet Consulting Services dated February 10, 1999
between the Registrant and Fish Interactive. Incorporated by
reference to Exhibit 10.3 to our Registration Statement on Form S-1
(File No. 333-74795).
10.4 Letter Agreement dated February 5, 1999 between the Registrant and
Shandrick International, Inc. Incorporated by reference to Exhibit
10.4 to our Registration Statement on Form S-1 (File No. 333-74795).
10.5 Lease Agreement dated April 16, 1996 between the Registrant and
Perloff/Webster. Incorporated by reference to Exhibit 10.5 to our
Registration Statement on Form S-1 (File No. 333-74795).
10.6 Commercial Sub-Lease Agreement dated December 3, 1998 between the
Registrant and Westland Network. Incorporated by reference to
Exhibit 10.6 to our Registration Statement on Form S-1 (File No.
333-74795).
10.7 Lease Extension and Modification dated as of April 26, 1999 between
the Registrant and Perloff/Webster. Incorporated by reference to
Exhibit 10.8 to our Registration Statement on Form S-1 (File No.
333-74795).
10.8 Employment Letter Agreement dated May 21, 1999 between the
Registrant and Robert J. Vitamante. Incorporated by reference to
Exhibit 10.9 to our Registration Statement on Form S-1 (File No.
333-74795).
10.9 3Dshopping.com 1999 Stock Option Plan. Incorporated by reference to
Exhibit 10.10 to our Registration Statement on Form S-1 (File No.
333-74795).
10.10 Letter Agreement dated June 28, 1999 between the Registrant and
Generation Capital Associates. Incorporated by reference to Exhibit
10.11 to our Registration Statement on Form S-1 (File No.
333-74795).
10.11 Employment Agreement with C. Michael Mellin dated July 2, 1999.
Incorporated by reference to Exhibit 10.11 to the Registrant's
Annual Report on Form 10-K for fiscal year ended June 30, 1999.
10.12 Lease Agreement, dated July 22, 1999 by and between Pacifica Square
LLC and Registrant. Incorporated by reference to Exhibit 10.12 to
the Registrant's Annual Report on Form 10-K for fiscal year ended
June 30, 1999.
10.13 Employment Agreement with Brian Smith dated May 21, 1999.
11.1(2) Statement re computation of per share earnings.
23.1(2) Consents of Friedman, Minsk, Cole & Fastovsky, independent auditors.
24.1(2) Power of Attorney (see signature page of report).
27.1(2) Financial Data Schedule.
- --------------
(1) Certain portions of this Exhibit have been omitted pursuant to an order of
the SEC granting our request for confidential treatment; such portions have
been filed separately with the SEC.
(2) Previously filed.
3
<PAGE>
(b) Reports on Form 8-K
The Company did not file any Reports on Form 8-K during the period
covered by this report.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed
on its behalf by the undersigned, thereunto duly authorized, in Venice,
California on October 5, 1999.
3DSHOPPING.COM
By: *LAWRENCE WEISDORN
-------------------------------------
Lawrence Weisdorn
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment has been signed below by the following persons on October 5, 1999 on
behalf of the Registrant and in the capacities indicated:
Signature Title
- --------- -----
*LAWRENCE WEISDORN Chairman, Chief Executive Officer
- ----------------------------- and Director
Lawrence Weisdorn (Principal Executive Officer)
*ROBERT J. VITAMANTE President, Chief Operating Officer
- ----------------------------- and Acting Chief Financial Officer
Robert J. Vitamante (Principal Financial and Accounting Officer)
*ROBERT J. GRANT Treasurer, Secretary and Director
- -----------------------------
Robert J. Grant
*DONALD L. HEJMANOWSKI Director
- -----------------------------
Donald L. Hejmanowski
*JOEL J. MCINTYRE Director
- -----------------------------
Joel J. McIntyre
*By: ROBERT J. VITAMANTE
-----------------------------
Robert J. Vitamante
As Attorney-in-Fact
5
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Description
- ------- -----------
2.1 Agreement and Plan of Reorganization dated as of April 1, 1999
between the Registrant, Design Base Los Angeles Inc., Brian Smith
and Todd Hosaka. Incorporated by reference to Exhibit 10.7 to our
Registration Statement on Form S-1 (File No. 333-74795).
3.1 Amended and Restated Articles of Incorporation of the Registrant.
Incorporated by reference to Exhibit 3.1 to our Registration
Statement on Form S-1 (File No. 333-74795).
3.2 Amended and Restated Bylaws of the Registrant. Incorporated by
reference to Exhibit 3.2 to our Registration Statement on Form S-1
(File No. 333-74795).
4.1 Specimen Common Stock Certificate. Incorporated by reference to
Exhibit 4.1 to our Registration Statement on Form S-1 (File No.
333-74795).
4.2 Warrant Agreement dated July 20, 1999 among the Registrant and
ChaseMellon Shareholder Services, LLC, as Warrant Agent, including
the form of Warrant.
4.3 Form of Representative's Warrants. Incorporated by reference to
Exhibit 4.3 to our Registration Statement on Form S-1 (File No.
333-74795).
4.4 Purchase Warrant dated March 18, 1999 between the Registrant and
Generation Capital. Incorporated by reference to Exhibit 4.4 to our
Registration Statement on Form S-1 (File No. 333-74795).
4.5 Promissory Note dated March 18, 1999 from the Registrant in favor of
Generation Capital Associates. Incorporated by reference to Exhibit
4.5 to our Registration Statement on Form S-1 (File No. 333-74795).
4.6 Substitute Purchase Warrant dated March 18, 1999 between the
Registrant and Generation Capital Associates. Incorporated by
reference to Exhibit 4.6 to our Registration Statement on Form S-1
(File No. 333-74795).
10.1(1) Website Linking and Promotion Agreement dated April 22, 1998 between
the Registrant and MediaOne, Inc. Incorporated by reference to
Exhibit 10.1 to our Registration Statement on Form S-1 (File No.
333-74795).
10.2 Website Design, Build and Maintain Agreement dated September 24,
1998 between the Registrant and Leavens Awards Co., Inc.
Incorporated by reference to Exhibit 10.2 to our Registration
Statement on Form S-1 (File No. 333-74795).
10.3 Contract for Internet Consulting Services dated February 10, 1999
between the Registrant and Fish Interactive. Incorporated by
reference to Exhibit 10.3 to our Registration Statement on Form S-1
(File No. 333-74795).
10.4 Letter Agreement dated February 5, 1999 between the Registrant and
Shandrick International, Inc. Incorporated by reference to Exhibit
10.4 to our Registration Statement on Form S-1 (File No. 333-74795).
<PAGE>
10.5 Lease Agreement dated April 16, 1996 between the Registrant and
Perloff/Webster. Incorporated by reference to Exhibit 10.5 to our
Registration Statement on Form S-1 (File No. 333-74795).
10.6 Commercial Sub-Lease Agreement dated December 3, 1998 between the
Registrant and Westland Network. Incorporated by reference to
Exhibit 10.6 to our Registration Statement on Form S-1 (File No.
333-74795).
10.7 Lease Extension and Modification dated as of April 26, 1999 between
the Registrant and Perloff/Webster. Incorporated by reference to
Exhibit 10.8 to our Registration Statement on Form S-1 (File No.
333-74795).
10.8 Employment Letter Agreement dated May 21, 1999 between the
Registrant and Robert J. Vitamante. Incorporated by reference to
Exhibit 10.9 to our Registration Statement on Form S-1 (File No.
333-74795).
10.9 3Dshopping.com 1999 Stock Option Plan. Incorporated by reference to
Exhibit 10.10 to our Registration Statement on Form S-1 (File No.
333-74795).
10.10 Letter Agreement dated June 28, 1999 between the Registrant and
Generation Capital Associates. Incorporated by reference to Exhibit
10.11 to our Registration Statement on Form S-1 (File No.
333-74795).
10.11 Employment Agreement with C. Michael Mellin dated July 2, 1999.
Incorporated by reference to Exhibit 10.11 to the Registrant's
Annual Report on Form 10-K for fiscal year ended June 30, 1999.
10.12 Lease Agreement, dated July 22, 1999 by and between Pacifica Square
LLC and Registrant. Incorporated by reference to Exhibit 10.12 to
the Registrant's Annual Report on Form 10-K for fiscal year ended
June 30, 1999.
10.13 Employment Agreement with Brian Smith dated May 21, 1999.
11.1(2) Statement re computation of per share earnings.
23.1(2) Consents of Friedman, Minsk, Cole & Fastovsky, independent auditors.
24.1(2) Power of Attorney (see signature page of report).
27.1(2) Financial Data Schedule.
- --------------
(1) Certain portions of this Exhibit have been omitted pursuant to an order of
the SEC granting our request for confidential treatment; such portions have
been filed separately with the SEC.
(2) Previously filed.
WARRANT AGREEMENT
between
3Dshopping.com
and
ChaseMellon Shareholder Services, L.L.C.
Dated as of July 23, 1999
<PAGE>
This Agreement, dated as of July 23, 1999, is between 3Dshopping.com, a
California corporation (the "Company"), and ChaseMellon Shareholder Services,
L.L.C., a New Jersey limited liability company (the "Warrant Agent").
The Company, at or about the time that it is entering into this Agreement,
proposes to issue and sell to public investors up to 1,265,000 Units ("Units").
Each Unit consists of one share of Common Stock of the Company ("Common Stock")
and one Warrant (collectively, the "Warrants"), each Warrant exercisable to
purchase one share of Common Stock for $18, upon the terms and conditions and
subject to adjustment in certain circumstances, all as set forth in this
Agreement.
The Company proposes to issue to the Representative of the Underwriters in
the public offering of Units referred to above warrants to purchase up to
110,000 additional Units.
The Company wishes to retain the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and replacement of the certificates evidencing the
Warrants to be issued under this Agreement (the "Warrant Certificates") and the
exercise of the Warrants.
The Company and the Warrant Agent wish to enter into this Agreement to set
forth the terms and conditions of the Warrants and the rights of the holders
thereof ("Warrantholders") and to set forth the respective rights and
obligations of the Company and the Warrant Agent. Each Warrantholder is an
intended beneficiary of this Agreement with respect to the rights of
Warrantholders herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent
The Company appoints the Warrant Agent to act as agent for the Company in
accordance with the instructions in this Agreement and the Warrant Agent accepts
such appointment.
Section 2. Date, Denomination and Execution of Warrant Certificates
The Warrant Certificates (and the Form of Election to Purchase and the Form
of Assignment to be printed on the reverse thereof) shall be in registered form
only and shall be substantially of the tenor and purport recited in Exhibit A
hereto, and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate (but which do not affect
the rights or duties of the Warrant Agent) and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any law, or
with any rule or regulation made pursuant thereto, or with any rule or
regulation of any stock exchange on which the Common Stock or the Warrants may
be listed or any automated quotation system, or to conform to usage. Each
Warrant Certificate shall entitle the registered holder thereof, subject to the
provisions of this Agreement and of the Warrant Certificate, to purchase, on or
before the close of business on July 23, 2004 (the "Expiration Date"), one fully
paid and non-assessable share of Common Stock for each Warrant evidenced by such
Warrant Certificate, subject to adjustments as provided in Section 6 hereof, for
$18 (the "Exercise Price"). Each Warrant Certificate issued as a part of a Unit
offered to the public as described in the recitals, above, shall be dated July
23, 1999; each other Warrant Certificate shall be dated the date on which the
Warrant Agent receives valid issuance instructions from the Company or a
transferring holder of a Warrant Certificate or, if such instructions specify
another date, such other date.
2
<PAGE>
For purposes of this Agreement, the term "close of business" on any given
date shall mean 5:00 p.m., Eastern time, on such date; provided, however, that
if such date is not a business day, it shall mean 5:00 p.m., Eastern time, on
the next succeeding business day. For purposes of this Agreement, the term
"business day" shall mean any day other than a Saturday, Sunday, or a day on
which banking institutions in New York, New York are authorized or obligated by
law to be closed.
Each Warrant Certificate shall be executed on behalf of the Company by the
Chairman of the Board or the Chief Executive Officer or the President or a Vice
President, either manually or by facsimile signature printed thereon either
manually or by facsimile signature. Each Warrant Certificate shall be manually
countersigned by the Warrant Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any
Warrant Certificate shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issue and delivery thereof by the
Company, such Warrant Certificate, nevertheless, may be countersigned by the
Warrant Agent, issued and delivered with the same force and effect as though the
person who signed such Warrant Certificate had not ceased to be such officer of
the Company.
Section 3. Subsequent Issue of Warrant Certificates
Subsequent to their original issuance, no Warrant Certificates shall be
reissued except (i) Warrant Certificates issued upon transfer thereof in
accordance with Section 4 hereof, (ii) Warrant Certificates issued upon any
combination, split-up or exchange of Warrant Certificates pursuant to Section 4
hereof, (iii) Warrant Certificates issued in replacement of mutilated,
destroyed, lost or stolen Warrant Certificates pursuant to Section 5 hereof,
(iv) Warrant Certificates issued upon the partial exercise of Warrant
Certificates pursuant to Section 7 hereof, and (v) Warrant Certificates issued
to reflect any adjustment or change in the Exercise Price or the number or kind
of shares purchasable thereunder pursuant to Section 22 hereof. The Warrant
Agent is hereby irrevocably authorized to countersign and deliver, in accordance
with the provisions of said Sections 4, 5, 7 and 22, the new Warrant
Certificates required for purposes thereof, and the Company, whenever required
by the Warrant Agent, will supply the Warrant Agent with Warrant Certificates
duly executed on behalf of the Company for such purposes.
Section 4. Transfers and Exchanges of Warrant Certificates
Upon receipt by the Warrant Agent of all necessary information, the Warrant
Agent will keep or cause to be kept books for registration of ownership and
transfer of the Warrant Certificates issued hereunder. Such registers shall show
the names and addresses of the respective holders of the Warrant Certificates
and the number of Warrants evidenced by each such Warrant Certificate.
The Warrant Agent shall, from time to time, register the transfer of any
outstanding Warrants upon the books to be maintained by the Warrant Agent for
that purpose, upon surrender of the Warrant Certificate evidencing such
Warrants, with the Form of Assignment duly and properly filled in and executed
with such signature guaranteed by a banking institution or NASD member and such
supporting documentation as the Warrant Agent or the Company may reasonably
require, to the Warrant Agent at its stock transfer office in Ridgefield Park,
New Jersey at any time on or before the Expiration Date, and upon payment to the
Warrant Agent for the account of the Company of an amount equal to any
applicable transfer tax or governmental charge. Payment of the amount of such
tax or charge may be made in cash, or by certified or official bank check,
payable in lawful money of the United States of America to the order of the
Company. The Warrant Agent shall have no duty or obligation to take any action
under any Section of this Agreement which requires the payment by a
Warrantholder of applicable taxes and governmental charges unless and until the
Warrant Agent is satisfied that all such taxes and/or charges have been paid.
Upon receipt of a Warrant Certificate, with the Form of Assignment duly
filled in and executed, accompanied by payment of an amount equal to any
applicable transfer tax, the Warrant Agent shall promptly
3
<PAGE>
cancel the surrendered Warrant Certificate and countersign and deliver to the
transferee a new Warrant Certificate for the number of full Warrants transferred
to such transferee, provided, however, that in case the registered holder of any
Warrant Certificate shall elect to transfer fewer than all of the Warrants
evidenced by such Warrant Certificate, the Warrant Agent in addition shall
promptly countersign and deliver to such registered holder a new Warrant
Certificate or Certificates for the number of full Warrants not so transferred.
Any Warrant Certificate or Certificates may be exchanged at the option of
the holder thereof for another Warrant Certificate or Certificates of different
denominations, of like tenor and representing in the aggregate the same number
of Warrants, upon surrender of such Warrant Certificate or Certificates, with
the Form of Assignment duly filled in and executed, to the Warrant Agent, at any
time or from time to time after the close of business on the date hereof and
prior to the close of business on the Expiration Date. The Warrant Agent shall
promptly cancel the surrendered Warrant Certificate and deliver the new Warrant
Certificate pursuant to the provisions of this Section.
Section 5. Mutilated, Destroyed, Lost or Stolen Warrant Certificates
Upon receipt by the Company and the Warrant Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of any
Warrant Certificate, and in the case of loss, theft or destruction, of indemnity
or security satisfactory to them, and reimbursement to them of all reasonable
expenses incidental thereto, and, in the case of mutilation, upon surrender and
cancellation of the Warrant Certificate, the Warrant Agent shall countersign and
deliver a new Warrant Certificate of like tenor for the same number of Warrants.
Section 6. Adjustments of Number and Kind of Shares Purchasable and Exercise
Price
The number and kind of securities or other property purchasable upon
exercise of a Warrant shall be subject to adjustment from time to time upon the
occurrence, after the date hereof, of any of the following events:
A. In case the Company shall (1) pay a dividend in, or make a distribution
of, shares of capital stock on its outstanding Common Stock, (2) subdivide its
outstanding shares of Common Stock into a greater number of such shares or (3)
combine its outstanding shares of Common Stock into a smaller number of such
shares, the total number of shares of Common Stock purchasable upon the exercise
of each Warrant outstanding immediately prior thereto shall be adjusted so that
the holder of any Warrant Certificate thereafter surrendered for exercise shall
be entitled to receive at the same aggregate Exercise Price the number of shares
of capital stock (of one or more classes) which such holder would have owned or
have been entitled to receive immediately following the happening of any of the
events described above had such Warrant been exercised in full immediately prior
to the record date with respect to such event. Any adjustment made pursuant to
this Subsection shall, in the case of a stock dividend or distribution, become
effective as of the record date therefor and, in the case of a subdivision or
combination, be made as of the effective date thereof. If, as a result of an
adjustment made pursuant to this Subsection, the holder of any Warrant
Certificate thereafter surrendered for exercise shall become entitled to receive
shares of two or more classes of capital stock of the Company, the Board of
Directors of the Company (whose determination shall be conclusive and shall be
evidenced by a Board resolution filed with the Warrant Agent) shall determine
the allocation of the adjusted Exercise Price between or among shares of such
classes of capital stock.
B. In the event of a capital reorganization or a reclassification of the
Common Stock (except as provided in Subsection A. above or Subsection E. below),
any Warrantholder, upon exercise of Warrants, shall be entitled to receive, in
substitution for the Common Stock to which he would have become entitled upon
exercise immediately prior to such reorganization or reclassification, the
shares (of any class or classes) or other securities or property of the Company
(or cash) that he would have been entitled to receive at the same aggregate
Exercise Price upon such reorganization or reclassification if such Warrants had
been exercised immediately prior to the record date with respect to such event;
and in any such case, appropriate provision (as determined by the Board of
Directors of the Company, whose determination shall be conclusive and shall be
evidenced by a certified Board resolution filed with the Warrant Agent) shall be
made for the application of this Section 6 with respect to the rights and
4
<PAGE>
interests thereafter of the Warrantholders (including but not limited to the
allocation of the Exercise Price between or among shares of classes of capital
stock), to the end that this Section 6 (including the adjustments of the number
of shares of Common Stock or other securities purchasable and the Exercise Price
thereof) shall thereafter be reflected, as nearly as reasonably practicable, in
all subsequent exercises of the Warrants for any shares or securities or other
property (or cash) thereafter deliverable upon the exercise of the Warrants.
C. Whenever the number of shares of Common Stock or other securities
purchasable upon exercise of a Warrant is adjusted as provided in this Section
6, the Company will promptly file with the Warrant Agent a certificate signed by
a Chairman or co-Chairman of the Board or the Chief Executive Officer or the
President or a Vice President of the Company and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the Company
setting forth the number and kind of securities or other property purchasable
upon exercise of a Warrant, as so adjusted, stating that such adjustments in the
number or kind of shares or other securities or property conform to the
requirements of this Section 6, and setting forth a brief statement of the facts
and computations accounting for such adjustments. Promptly after receipt of such
certificate, the Company, or the Warrant Agent at the Company's request, will
deliver, by first-class, postage prepaid mail, a brief summary thereof (to be
supplied by the Company) to the registered holders of the outstanding Warrant
Certificates; provided, however, that failure to file or to give any notice
required under this Subsection, or any defect therein, shall not affect the
legality or validity of any such adjustments under this Section 6; and provided,
further, that, where appropriate, such notice may be given in advance and
included as part of the notice required to be given pursuant to Section 12
hereof.
D. In case of any consolidation of the Company with, or merger of the
Company into, another entity (other than a consolidation or merger which does
not result in any reclassification or change of the outstanding Common Stock),
or in case of any sale or conveyance to another entity of the property of the
Company as an entirety or substantially as an entirety, the entity formed by
such consolidation or merger or the entity which shall have acquired such
assets, as the case may be, shall execute and deliver to the Warrant Agent a
supplemental warrant agreement providing that the holder of each Warrant then
outstanding shall have the right thereafter (until the expiration of such
Warrant) to receive, upon exercise of such Warrant, solely the kind and amount
of shares of stock and other securities and property (or cash) receivable upon
such consolidation, merger, sale or transfer by a holder of the number of shares
of Common Stock of the Company for which such Warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided in this
Section. The above provision of this Subsection shall similarly apply to
successive consolidations, mergers, sales or transfers.
The Warrant Agent shall not be under any responsibility to determine the
correctness of any provision contained in any such supplemental warrant
agreement, including but not limited to, the kind or amount of shares of stock
or securities or property (or cash) purchasable by holders of Warrant
Certificates upon the exercise of their Warrants after any such consolidation,
merger, sale or transfer or of any adjustment to be made with respect thereto,
but subject to the provisions of Section 20 hereof, may accept as conclusive
evidence of the correctness of any such provisions, and shall be protected in
relying upon, a certificate of a firm of independent certified public
accountants (who may be the accountants regularly employed by the Company) with
respect thereto.
E. Irrespective of any adjustments in the number or kind of shares issuable
upon exercise of Warrants, Warrant Certificates theretofore or thereafter issued
may continue to express the same price and number and kind of shares as are
stated in the similar Warrant Certificates initially issuable pursuant to this
Warrant Agreement.
F. The Company may retain a firm of independent public accountants of
recognized standing, which may be the firm regularly retained by the Company,
selected by the Board of Directors of the Company or any Executive Committee of
said Board, and not disapproved by the Warrant Agent, to make any computation
required under this Section, and a certificate signed by such firm shall, in the
absence of fraud or gross negligence, be conclusive evidence of the correctness
of any computation made under this Section. Notwithstanding the foregoing, the
Warrant Agent shall be fully protected and shall incur no liability in relying
on such certificate of independent
5
<PAGE>
public accountants unless and until it has been advised in writing of the gross
negligence or fraud of such accountants.
G. For the purpose of this Section, the term "Common Stock" shall mean (i)
the Common Stock or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value. In the event that at any time as a result of an adjustment made pursuant
to this Section, the holder of any Warrant thereafter surrendered for exercise
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section, and all
other provisions of this Agreement, with respect to the Common Stock, shall
apply on like terms to any such other shares.
H. The Company may, from time to time and to the extent permitted by law,
reduce the exercise price of the Warrants by any amount for a period of not less
than 20 days. If the Company so reduces the exercise price of the Warrants, it
will give not less than 15 days' notice of such decrease, which notice may be in
the form of a press release, and shall take such other steps as may be required
under applicable law in connection with any offers or sales of securities at the
reduced price. The Company shall promptly give written notice of such decrease
to the Warrant Agent.
Section 7. Exercise and Redemption of Warrants
Unless the Warrants have been redeemed as provided in this Section 7, the
registered holder of any Warrant Certificate may exercise the Warrants evidenced
thereby, in whole at any time or in part from time to time at or prior to the
close of business, on the Expiration Date, subject to the provisions of Section
9, at which time the Warrant Certificates shall be and become wholly void and of
no value. Warrants may be exercised by their holders or redeemed by the Company
as follows:
A. Exercise of Warrants shall be accomplished upon surrender of the Warrant
Certificate evidencing such Warrants, with the Form of Election to Purchase on
the reverse side thereof duly and properly filled in and executed, to the
Warrant Agent at its stock transfer office in Ridgefield Park, New Jersey,
together with payment to the Warrant Agent of the Exercise Price (as of the date
of such surrender) of the Warrants then being exercised and an amount equal to
any applicable transfer tax and charge and, if requested by the Company, any
other taxes or governmental charges which the Company may be required by law to
collect in respect of such exercise. Payment of the Exercise Price and other
amounts may be made by wire transfer of funds, or by certified or bank cashier's
check, payable in lawful money of the United States of America to the order of
the Warrant Agent. No adjustment shall be made for any cash dividends, whether
paid or declared, on any securities issuable upon exercise of a Warrant. Upon
exercise of any Warrant, the Warrant Agent shall promptly deposit all funds
received by it in payment of the Exercise Price into a segregated account (the
"Collection Account") established for this purpose. All funds deposited in this
Collection Account shall remain uninvested and will be disbursed on a weekly
basis to the Company after they have been determined by the Warrant Agent to be
collected funds.
B. Upon receipt of a Warrant Certificate, with the Form of Election to
Purchase duly filled in and executed, accompanied by payment of the Exercise
Price of the Warrants being exercised (and of an amount equal to any applicable
taxes or government charges as aforesaid), the Warrant Agent shall promptly
request from the Transfer Agent with respect to the securities to be issued and
deliver to or upon the order of the registered holder of such Warrant
Certificate, in such name or names as such registered holder may designate, a
certificate or certificates for the number of full shares of the securities to
be purchased, together with cash made available by the Company pursuant to
Section 8 hereof in respect of any fraction of a share of such securities
otherwise issuable upon such exercise. If the Warrant is then exercisable to
purchase property other than securities, the Warrant Agent shall take any
reasonably appropriate steps to cause such property to be delivered to or upon
the order of the registered holder of such Warrant Certificate. In addition, if
it is required by law and upon instruction by the Company, the Warrant Agent
will deliver to each Warrantholder a prospectus which complies with the
provisions of Section 10
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of the Securities Act of 1933 and the Company agrees to supply Warrant Agent
with a sufficient number of prospectuses to effectuate that purpose.
C. In case the registered holder of any Warrant Certificate shall exercise
fewer than all of the Warrants evidenced by such Warrant Certificate, the
Warrant Agent shall promptly countersign and deliver to the registered holder of
such Warrant Certificate, or to his duly authorized assigns, a new Warrant
Certificate or Certificates evidencing the number of Warrants that were not so
exercised.
D. Each person in whose name any certificate for securities is issued upon
the exercise of Warrants shall for all purposes be deemed to have become the
holder of record of the securities represented thereby as of, and such
certificate shall be dated, the date upon which the Warrant Certificate was duly
surrendered in proper form and payment of the Exercise Price (and of any
applicable taxes or other governmental charges) was made; provided, however,
that if the date of such surrender and payment is a date on which the stock
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares as of, and the certificate for such
shares shall be dated, the next succeeding business day on which the stock
transfer books of the Company are open (whether before, on or after the
Expiration Date) and the Warrant Agent shall be under no duty to deliver the
certificate for such shares until such date. The Company covenants and agrees
that it shall not cause its stock transfer books to be closed for a period of
more than 20 consecutive business days except upon consolidation, merger, sale
of all or substantially all of its assets, dissolution or liquidation or as
otherwise provided by law.
E. The Warrants outstanding at the time of a redemption may be redeemed at
the option of the Company, in whole or in part on a pro-rata basis, at any time
after January 19, 2000 (which is 180 days after the effective date of the
Company's Registration Statement on Form S-1 (SEC File No. 333-74795)) if, at
the time notice of such redemption is given by the Company as provided in
Paragraph F, below, the Daily Price has equaled or exceeded $24 for the ten
consecutive trading days immediately preceding the date of such notice, at a
price equal to $0.25 per Warrant (the "Redemption Price"). For the purpose of
the foregoing sentence, the term "Daily Price" shall mean, for any relevant day,
the closing bid price on that day as reported by the principal exchange or
quotation system on which prices for the Common Stock are reported. On the
redemption date the holders of record of redeemed Warrants shall be entitled to
payment of the Redemption Price upon surrender of such redeemed Warrants to the
Company at the principal office of the Warrant Agent in Ridgefield Park, New
Jersey.
F. Notice of redemption of Warrants shall be given at least 30 days prior
to the redemption date by mailing, by registered or certified mail, return
receipt requested, a copy of such notice to the Warrant Agent and to all of the
holders of record of Warrants at their respective addresses appearing on the
books or transfer records of the Company or such other address designated in
writing by the holder of record to the Warrant Agent not less than 40 days prior
to the redemption date.
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G. From and after the redemption date, all rights of the Warrantholders
(except the right to receive the Redemption Price) shall terminate, but only if
(a) no later than one day prior to the redemption date the Company shall have
irrevocably deposited with the Warrant Agent as paying agent a sufficient amount
to pay on the redemption date the Redemption Price for all Warrants called for
redemption and (b) the notice of redemption shall have stated the name and
address of the Warrant Agent and the intention of the Company to deposit such
amount with the Warrant Agent no later than one day prior to the redemption
date.
H. The Warrant Agent shall pay to the holders of record of redeemed
Warrants all monies received by the Warrant Agent for the redemption of Warrants
to which the holders of record of such redeemed Warrants who shall have
surrendered their Warrants are entitled.
I. Any amounts deposited with the Warrant Agent that are not required for
redemption of Warrants may be withdrawn by the Company. Any amounts deposited
with the Warrant Agent that shall be unclaimed after six months after the
redemption date may be withdrawn by the Company, and thereafter the holders of
the Warrants called for redemption for which such funds were deposited shall
look solely to the Company for payment. The Company shall be entitled to the
interest, if any, on funds deposited with the Warrant Agent and the holders of
redeemed Warrants shall have no right to any such interest. The Warrant Agent
shall have no duty or obligation to invest any money received by it pursuant
hereto.
J. If the Company fails to make a sufficient deposit with the Warrant Agent
as provided above, the holder of any Warrants called for redemption may at the
option of the holder (a) by notice to the Company declare the notice of
redemption a nullity as to such holder, or (b) maintain an action against the
Company for the Redemption Price. If the holder brings such an action, the
Company will pay reasonable attorneys' fees of the holder. If the holder fails
to bring an action against the Company for the Redemption Price within 60 days
after the redemption date, the holder shall be deemed to have elected to declare
the notice of redemption to be a nullity as to such holder and such notice shall
be without any force or effect as to such holder. Except as otherwise
specifically provided in this Paragraph J, a notice of redemption, once mailed
by the Company as provided in Paragraph F shall be irrevocable.
Section 8. Fractional Interests
The Company shall not be required to issue any Warrant Certificate
evidencing a fraction of a Warrant or to issue fractions of shares or securities
on the exercise of the Warrants. If any fraction (calculated to the nearest
one-hundredth) of a Warrant or a share of securities would, except for the
provisions of this Section, be issuable on the exercise of any Warrant, the
Company shall, at its option, either purchase such fraction for an amount in
cash equal to the current value of such fraction computed on the basis of the
closing market price (as quoted on the American Stock Exchange (the "Amex") on
the trading day immediately preceding the day upon which such Warrant
Certificate was surrendered for exercise in accordance with Section 7 hereof or
issue the required fractional Warrant or share. By accepting a Warrant
Certificate, the holder thereof expressly waives any right to receive a Warrant
Certificate evidencing any fraction of a Warrant or to receive any fractional
share of securities upon exercise of a Warrant, except as expressly provided in
this Section 8. The Warrant Agent shall have no duty or obligation under this
Section unless and until it has received appropriate instructions from the
Company and the Company has provided or caused to be provided to the Warrant
Agent sufficient cash necessary to satisfy the Company's obligations with
respect to fractional shares.
Section 9. Reservation of Equity Securities
The Company covenants that it will at all times reserve and keep available,
free from any preemptive rights, out of its authorized and unissued equity
securities, solely for the purpose of issue upon exercise of the Warrants, such
number of shares of equity securities of the Company as shall then be issuable
upon the exercise of all outstanding Warrants ("Equity Securities"). The Company
covenants that all Equity Securities which shall be so issuable shall, upon such
issue, be duly authorized, validly issued, fully paid and non-assessable.
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The Company covenants that if any equity securities, required to be
reserved for the purpose of issue upon exercise of the Warrants hereunder,
require registration with or approval of any governmental authority under any
federal or state law before such shares may be issued upon exercise of Warrants,
the Company will use all commercially reasonable efforts to cause such
securities to be duly registered, or approved, as the case may be, and, to the
extent practicable, take all such action in anticipation of and prior to the
exercise of the Warrants, including, without limitation, filing any and all
post-effective amendments to the Company's Registration Statement on Form S-1
(Registration No. 333-74795) necessary to permit a public offering of the
securities underlying the Warrants at any and all times during the term of this
Agreement, provided, however, that in no event shall such securities be issued,
and the Company is authorized to refuse to honor the exercise of any Warrant, if
such exercise would result in the opinion of the Company's Board of Directors,
upon advice of counsel, in the violation of any law; and provided further that,
in the case of a Warrant exercisable solely for securities listed on a
securities exchange or for which there are at least two independent market
makers, in lieu of obtaining such registration or approval, the Company may
elect to redeem Warrants submitted to the Warrant Agent for exercise for a price
equal to the difference between the aggregate low asked price, or closing price,
as the case may be, of the securities for which such Warrant is exercisable on
the date of such submission and the Exercise Price of such Warrants; in the
event of such redemption, the Company will pay to the holder of such Warrants
the above-described redemption price in cash within 10 business days after
receipt of notice from the Warrant Agent that such Warrants have been submitted
for exercise. The Company will promptly notify the Warrant Agent of the
applicability of the last proviso and the Warrant Agent shall have no duties
thereunder until it has received said notice.
Section 10. Reduction of Conversion Price Below Par Value
Before taking any action that would cause an adjustment pursuant to Section
6 hereof reducing the portion of the Exercise Price required to purchase one
share of capital stock below the then par value (if any) of a share of such
capital stock, the Company will use its best efforts to take any corporate
action which, in the opinion of its counsel, may be necessary in order that the
Company may validly and legally issue fully paid and non-assessable shares of
such capital stock.
Section 11. Payment of Taxes
The Company covenant and agrees that it will pay when due and payable any
and all federal and state documentary stamp and other original issue taxes which
may be payable in respect of the original issuance of the Warrant Certificates,
or any shares of Common Stock or other securities upon the exercise of Warrants.
The Company shall not, however, be required (i) to pay any tax or charge which
may be payable in respect of any transfer involved in the transfer and delivery
of Warrant Certificates or the issuance or delivery of certificates for Common
Stock or other securities in a name other than that of the registered holder of
the Warrant Certificate surrendered for purchase or (ii) to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
any Warrant Certificate until any such tax or charge shall have been paid, all
such taxes or charges being payable by the holder of such Warrant Certificate at
the time of surrender.
Section 12. Notice of Certain Corporate Action
In case the Company after the date hereof shall propose (i) to offer to the
holders of Common Stock, generally, rights to subscribe to or purchase any
additional shares of any class of its capital stock, any evidences of its
indebtedness or assets, or any other rights or options or (ii) to effect any
reclassification of Common Stock (other than a reclassification involving merely
the subdivision or combination of outstanding shares of Common Stock) or any
capital reorganization, or any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is required, or
any sale, transfer or other disposition of its property and assets substantially
as an entirety, or the liquidation, voluntary or involuntary dissolution or
winding-up of the Company, then, in each such case, the Company shall file with
the Warrant Agent and the Company, or the Warrant Agent on its behalf, shall
mail (by first-class, postage prepaid mail) to all registered holders of the
Warrant Certificates notice of such proposed action, which notice shall specify
the date on which
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the books of the Company shall close or a record be taken for such offer of
rights or options, or the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up shall take place or commence, as the
case may be, and which shall also specify any record date for determination of
holders of Common Stock entitled to vote thereon or participate therein and
shall set forth such facts with respect thereto as shall be reasonably necessary
to indicate any adjustments in the Exercise Price and the number or kind of
shares or other securities purchasable upon exercise of Warrants which will be
required as a result of such action. Such notice shall be filed and mailed in
the case of any action covered by clause (i) above, at least ten days prior to
the record date for determining holders of the Common Stock for purposes of such
action or, if a record is not to be taken, the date as of which the holders of
shares of Common Stock of record are to be entitled to such offering; and, in
the case of any action covered by clause (ii) above, at least 20 days prior to
the earlier of the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up is expected to become effective and the
date on which it is expected that holders of shares of Common Stock of record on
such date shall be entitled to exchange their shares for securities or other
property deliverable upon such reclassification, reorganization, consolidation,
merger, sale, transfer, other disposition, liquidation, voluntary or involuntary
dissolution or winding-up.
Failure to give any such notice or any defect therein shall not affect the
legality or validity of any transaction listed in this Section 12.
Section 13. Disposition of Proceeds on Exercise of Warrant Certificates, etc.
The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all moneys received by
the Warrant Agent for the purchase of securities or other property through the
exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement available for
inspection by Warrantholders during normal business hours at its stock transfer
office in Los Angeles, California. Copies of this Agreement may be obtained upon
written request addressed to the Warrant Agent at its stock transfer office in
Los Angeles, California.
Section 14. Warrantholder Not Deemed a Stockholder
No Warrantholder, as such, shall be entitled to vote, receive dividends or
be deemed the holder of Common Stock or any other securities of the Company
which may at any time be issuable on the exercise of the Warrants represented
thereby for any purpose whatever, nor shall anything contained herein or in any
Warrant Certificate be construed to confer upon any Warrantholder, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value or change of stock to no par value, consolidation, merger,
conveyance or otherwise), or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 12 hereof), or to receive
dividend or subscription rights, or otherwise, until such Warrant Certificate
shall have been exercised in accordance with the provisions hereof and the
receipt of the Exercise Price and any other amounts payable upon such exercise
by the Warrant Agent.
Section 15. Right of Action
All rights of action in respect to this Agreement are vested in the
respective registered holders of the Warrant Certificates; and any registered
holder of any Warrant Certificate, without the consent of the Warrant Agent or
of any other holder of a Warrant Certificate, may, in his own behalf for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company suitable to enforce, or otherwise in respect of, his right
to exercise the Warrants evidenced by such Warrant Certificate, for the purchase
of shares of the Common Stock in the manner provided in the Warrant Certificate
and in this Agreement.
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Section 16. Agreement of Holders of Warrant Certificates
Every holder of a Warrant Certificate by accepting the same consents and
agrees with the Company, the Warrant Agent and with every other holder of a
Warrant Certificate that:
A. the Warrant Certificates are transferable on the registry books of the
Warrant Agent only upon the terms and conditions set forth in this Agreement;
and
B. the Company and the Warrant Agent may deem and treat the person in whose
name the Warrant Certificate is registered as the absolute owner of the Warrant
(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes whatever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary.
Section 17. Cancellation of Warrant Certificates
In the event that the Company shall purchase or otherwise acquire any
Warrant Certificate or Certificates after the issuance thereof, such Warrant
Certificate or Certificates shall thereupon be delivered to the Warrant Agent
and be canceled by it and retired. The Warrant Agent shall also cancel any
Warrant Certificate delivered to it for exercise, in whole or in part, or
delivered to it for transfer, split-up, combination or exchange. Warrant
Certificates so canceled shall be delivered by the Warrant Agent to the Company
from time to time, or disposed of in accordance with the instructions of the
Company.
Section 18. Concerning the Warrant Agent
The Company agrees to pay to the Warrant Agent from time to time, on demand
of the Warrant Agent, reasonable compensation for all services rendered by it
hereunder and also its reasonable expenses, including counsel fees, and other
disbursements incurred in the preparation, execution, delivery, amendment and
administration of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Warrant Agent for, and to
hold it harmless against, any loss, liability, damage, judgment, fine, penalty,
claim, demand, settlement, cost or expense, incurred without gross negligence,
bad faith or willful misconduct on the part of the Warrant Agent, arising out of
or in connection with the acceptance and administration of this Agreement. The
indemnity provided herein shall survive the termination of this Agreement and
the termination and the expiration of the Warrants. The costs and expenses
incurred in enforcing this right of indemnification shall be paid by the
Company.
Section 19. Merger or Consolidation or Change of Name of Warrant Agent
Any entity into which the Warrant Agent may be merged or with which it may
be consolidated, or any entity resulting from any merger or consolidation to
which the Warrant Agent shall be a party, or any entity succeeding to the
business of the Warrant Agent, shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such entity would be eligible
for appointment as a successor warrant agent under the provisions of Section 21
hereof. In case at the time such successor to the Warrant Agent shall succeed to
the agency created by this Agreement, any of the Warrant Certificates shall have
been countersigned but not delivered, any such successor to the Warrant Agent
may adopt the countersignature of the original Warrant Agent and deliver such
Warrant Certificates so countersigned; and in case at that time any of the
Warrant Certificates shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrant Certificates either in the name of
the predecessor Warrant Agent or in the name of the successor Warrant Agent; and
in all such cases such Warrant Certificates shall have the full force provided
in the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior name
and deliver Warrant Certificates so countersigned; and in case at that time
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any of the Warrant Certificates shall not have been countersigned, the Warrant
Agent may countersign such Warrant Certificates either in its prior name or in
its changed name; and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.
Section 20. Duties of Warrant Agent
The Warrant Agent undertakes only the duties and obligations expressly
imposed by this Agreement upon the following terms and conditions, by all of
which the Company and the holders of Warrant Certificates, by their acceptance
thereof, shall be bound:
A. The Warrant Agent may consult with counsel satisfactory to it (who may
be counsel for the Company or the Warrant Agent's in-house counsel), and the
advice or opinion of such counsel shall be full and complete authorization and
protection to the Warrant Agent as to any action taken, suffered or omitted by
it in good faith and in accordance with such advice or opinion; provided,
however, that the Warrant Agent shall have exercised reasonable care in the
selection of such counsel. Fees and expenses of such counsel, to the extent
reasonable, shall be paid by the Company.
B. Whenever in the performance of its duties under this Agreement, the
Warrant Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking, suffering or omitting to
take any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by a Chairman or co-Chairman of
the Board or the President or a Vice President or the Secretary of the Company
and delivered to the Warrant Agent; and such certificate shall be full
authorization and protection for the Warrant Agent, and the Warrant Agent shall
incur no liability in respect of, any action taken, or omitted to be taken or
suffered by it under the provisions of this Agreement in reliance upon such
certificate.
C. The Warrant Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct. Anything to the contrary
notwithstanding, in no event shall the Warrant Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Warrant
Agent has been advised of the likelihood of such loss or damage. Any liability
of the Warrant Agent under this Agreement will be limited to the amount of fees
paid by the Company to the Warrant Agent.
D. The Warrant Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Warrant
Certificates (except its countersignature on the Warrant Certificates and such
statements or recitals as describe the Warrant Agent or action taken or to be
taken by it) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.
E. The Warrant Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Warrant Agent) or in respect of the validity or
execution of any Warrant Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Warrant Certificate; nor shall
it be responsible for the making of any change in the number of shares of Common
Stock for which a Warrant is exercisable required under the provisions of
Section 6 or responsible for the manner, method or amount of any such change or
the ascertaining of the existence of facts that would require any such
adjustment or change (except with respect to the exercise of Warrant
Certificates after actual notice of any adjustment of the Exercise Price); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of Common Stock to be
issued pursuant to this Agreement or any Warrant Certificate or as to whether
any shares of Common Stock will, when issued, be validly issued, fully paid and
non-assessable.
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F. The Warrant Agent shall be under no obligation to institute any action,
suit or legal proceeding or take any other action likely to involve expense
unless the Company or one or more registered holders of Warrant Certificates
shall furnish the Warrant Agent with security and indemnity for any costs and
expenses which may be incurred. All rights of action under this Agreement or
under any of the Warrants may be enforced by the Warrant Agent without the
possession of any of the Warrants or the production thereof at any trial or
other proceeding relative thereto, and any such action, suit or proceeding
instituted by the Warrant Agent shall be brought in its name as Warrant Agent,
and any recovery of judgment shall be for the ratable benefit of the registered
holders of the Warrant Certificates, as their respective rights or interests may
appear.
G. The Warrant Agent and any stockholder, director, affiliate, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.
H. The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from a
Chairman or co-Chairman of the Board or President or a Vice President or the
Secretary or the Controller of the Company, and to apply to such officers for
advice or instructions in connection with the Warrant Agent's duties, and it
shall not be liable for any action taken or suffered or omitted by it in good
faith in accordance with instructions of any such officer.
I. The Warrant Agent will not be responsible for any failure of the Company
to comply with any of the covenants contained in this Agreement or in the
Warrant Certificates to be complied with by the Company.
J. The Warrant Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys, agents or employees and the Warrant Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such
attorneys, agents or employees or for any loss to the Company resulting from
such neglect or misconduct; provided, however, that reasonable care shall have
been exercised in the selection and continued employment of such attorneys,
agents and employees.
K. The Warrant Agent will not incur any liability or responsibility to the
Company or to any holder of any Warrant Certificate for any action taken, or any
failure to take action, in reliance on any notice, resolution, waiver, consent,
order, certificate, or other paper, document or instrument reasonably believed
by the Warrant Agent to be genuine and to have been signed, sent or presented by
the proper party or parties.
L. The Warrant Agent will act hereunder solely as agent of the Company in a
ministerial capacity, and its duties will be determined solely by the provisions
hereof.
M. No provision of this Agreement shall require the Warrant Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
it believes that repayment of such funds or adequate indemnification against
such risk or liability is not assured to it.
Section 21. Change of Warrant Agent
The Warrant Agent may resign and be discharged from its duties under this
Agreement upon 30 days' prior notice in writing mailed, by registered or
certified mail, to the Company. The Company may remove the Warrant Agent or any
successor warrant agent upon 30 days' prior notice in writing, mailed to the
Warrant Agent or successor warrant agent, as the case may be, by registered or
certified mail. If the Warrant Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Warrant Agent and shall, within 15 days following such appointment, give
notice thereof in writing to each registered holder of the Warrant Certificates.
If the Company shall fail to make such appointment within a period
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of 15 days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Warrant Agent, then the Company agrees to perform the duties of the Warrant
Agent hereunder until a successor Warrant Agent is appointed. After appointment
and execution of a copy of this Agreement in effect at that time, the successor
Warrant Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed, but the former Warrant Agent shall deliver and transfer to
the successor Warrant Agent, within a reasonable time, any property at the time
held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Failure to give any notice provided for
in this Section, however, or any defect therein shall not affect the legality or
validity of the resignation or removal of the Warrant Agent or the appointment
of the successor warrant agent, as the case may be.
Section 22. Issuance of New Warrant Certificates
Notwithstanding any of the provisions of this Agreement or the several
Warrant Certificates to the contrary, the Company may, at its option, issue new
Warrant Certificates in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Exercise Price or the number or kind
of shares purchasable under the several Warrant Certificates made in accordance
with the provisions of this Agreement.
Section 23. Notices
Notice or demand pursuant to this Agreement to be given or made on the
Company by the Warrant Agent or by the registered holder of any Warrant
Certificate shall be sufficiently given or made if sent by first-class or
registered mail, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent) as follows:
3Dshopping.com
517 Boccaccio Avenue
Venice, CA 90291
Subject to the provisions of Section 21, any notice pursuant to this
Agreement to be given or made by the Company or by the holder of any Warrant
Certificate to or on the Warrant Agent shall be sufficiently given or made if
sent by first-class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Warrant Agent with the Company) as
follows:
ChaseMellon Shareholder Services, L.L.C.
400 South Hope Street
Fourth Floor
Los Angeles, CA 90071
Any notice or demand authorized to be given or made to the registered
holder of any Warrant Certificate under this Agreement shall be sufficiently
given or made if sent by first-class or registered mail, postage prepaid, to the
last address of such holder as it shall appear on the registers maintained by
the Warrant Agent.
Section 24. Modification of Agreement
The Warrant Agent may, without the consent or concurrence of the
Warrantholders, by supplemental agreement or otherwise, concur with the Company
in making any changes or corrections in this Agreement that the Warrant Agent
shall have been advised by counsel (who may be counsel for the Company) are
necessary or desirable to cure any ambiguity or to correct any defective or
inconsistent provision or clerical omission or mistake or manifest error herein
contained, or to make any other provisions in regard to matters or questions
arising hereunder and which shall not be inconsistent with the provisions of the
Warrant Certificates and which shall not adversely affect the interests of the
Warrantholders and which shall not adversely affect or change the
14
<PAGE>
rights, duties or immunities of the Warrant Agent. As of the date hereof, this
Agreement contains the entire and only agreement, understanding, representation,
condition, warranty or covenant between the parties hereto with respect to the
matters herein, supersedes any and all other agreements between the parties
hereto relating to such matters, and may be modified or amended only by a
written agreement signed by both parties hereto pursuant to the authority
granted by the first sentence of this Section.
Section 25. Successors
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 26. California Contract
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of California and for
all purposes shall be construed in accordance with the laws of said State;
provided, however, that all provisions regarding the rights, duties and
obligations of the Warrant Agent shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
Section 27. Termination
This Agreement shall terminate as of the close of business on the
Expiration Date, or such earlier date upon which all Warrants shall have been
exercised or redeemed, except that the Warrant Agent shall account to the
Company as to all Warrants outstanding and all cash held by it as of the close
of business on the Expiration Date.
Section 28. Benefits of this Agreement
Nothing in this Agreement or in the Warrant Certificates shall be construed
to give to any person or corporation other than the Company, the Warrant Agent,
and their respective successors and assigns hereunder and the registered holders
of the Warrant Certificates any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Warrant Agent, their respective successors and assigns
hereunder and the registered holders of the Warrant Certificates.
Section 29. Descriptive Headings
The descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
Section 30. Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute one and
the same instrument.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
3Dshopping.com
a California corporation
By: LAWRENCE WEISDORN
------------------------------
Lawrence Weisdorn
Chief Executive Officer
ChaseMellon Shareholder Services, L.L.C.
a New Jersey limited liability company
By: SHARON KNEPPER
------------------------------
Name: Sharon Knepper
Title: AVP
16
<PAGE>
Exhibit A
VOID AFTER 5 P.M. PACIFIC TIME ON JULY 23, 2004
WARRANTS TO PURCHASE COMMON STOCK
W________ ____________ Warrants
3Dshopping.com
CUSIP 885793 11 7
THIS CERTIFIES THAT
or registered assigns, is the registered holder of the number of Warrants
("Warrants") set forth above. Each Warrant entitles the holder thereof to
purchase from 3Dshopping.com, a corporation incorporated under the laws of the
State of California ("Company"), subject to the terms and conditions set forth
hereinafter and in the Warrant Agreement hereinafter more fully described (the
"Warrant Agreement") referred to, at any time on or before the close of business
on July 23, 2004 or, if such Warrant is redeemed as provided in the Warrant
Agreement, at any time prior to the effective time of such redemption (the
"Expiration Date"), one fully paid and non-assessable share of Common Stock of
the Company ("Common Stock") upon presentation and surrender of this Warrant
Certificate, with the instructions for the registration and delivery of Common
Stock filled in, at the stock transfer office in Ridgefield Park, New Jersey, of
ChaseMellon Shareholder Services, L.L.C., Warrant Agent of the Company ("Warrant
Agent") or of its successor warrant agent or, if there be no successor warrant
agent, at the corporate offices of the Company, and upon payment of the Exercise
Price (as defined in the Warrant Agreement) and any applicable taxes paid either
in cash, or by certified or official bank check, payable in lawful money of the
United States of America to the order of the Warrant Agent. Each Warrant
initially entitles the holder to purchase one share of Common Stock for $18. The
number and kind of securities or other property for which the Warrants are
exercisable are subject to further adjustment in certain events, such as
mergers, splits, stock dividends, recapitalizations and the like, to prevent
dilution. The Company may redeem any or all outstanding and unexercised Warrants
at any time after January 19, 2000 if the Daily Price has equaled or exceeded
$24 for ten consecutive trading days immediately preceding the date of notice of
such redemption, upon 30 days notice, at a price equal to $0.25 per Warrant. For
the purpose of the foregoing sentence, the term "Daily Price" shall mean, for
any relevant day, the closing bid price on that day as reported by the principal
exchange or quotation system on which prices for the Common Stock are reported.
All Warrants not theretofore exercised or redeemed will expire on July 23, 2004.
This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of July 23, 1999 ("Warrant
Agreement"), between the Company and the Warrant Agent, to all of which terms,
provisions and conditions the registered holder of this Warrant Certificate
consents by acceptance hereof. The Warrant Agreement is incorporated herein by
reference and made a part hereof and reference is made to the Warrant Agreement
for a full description of the rights, limitations of rights, obligations, duties
and immunities of the Warrant Agent, the Company and the holders of the Warrant
Certificates. Copies of the Warrant Agreement are available for inspection at
the above referenced stock transfer office of the Warrant Agent or may be
obtained upon written request addressed to the Company at 517 Boccaccio Avenue,
Venice, CA 90291, Attention: Chief Financial Officer.
i
<PAGE>
The Company shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractions of Warrants, Common
Stock or other securities, but shall make adjustment therefor in cash on the
basis of the current market value of any fractional interest as provided in the
Warrant Agreement.
In certain cases, the sale of securities by the Company upon exercise of
Warrants would violate the securities laws of the United States, certain states
thereof or other jurisdictions. The Company has agreed to use all commercially
reasonable efforts to cause a registration statement to continue to be effective
during the term of the Warrants with respect to such sales under the Securities
Act of 1933, and to take such action under the laws of various states as may be
required to cause the sale of securities upon exercise to be lawful. However,
the Company will not be required to honor the exercise of Warrants if, in the
opinion of the Board of Directors, upon advice of counsel, the sale of
securities upon such exercise would be unlawful. In certain cases, the Company
may, but is not required to, purchase Warrants submitted for exercise for a cash
price equal to the difference between the market price of the securities
obtainable upon such exercise and the exercise price of such Warrants.
This Warrant Certificate, with or without other Certificates, upon
surrender to the Warrant Agent, any successor warrant agent or, in the absence
of any successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Warrants as the Warrant Certificate or Certificates
so surrendered. If the Warrants evidenced by this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof another Warrant Certificate or Certificates evidencing the number of
Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be entitled to vote,
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose whatever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof or give or withhold consent to any corporate
action (whether upon any matter submitted to stockholders at any meeting
thereof, or give or withhold consent to any merger, recapitalization, issuance
of stock, reclassification of stock, change of par value or change of stock to
no par value, consolidation, conveyance or otherwise) or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Warrant Agreement) or to receive dividends or subscription rights or otherwise
until the Warrants evidenced by this Warrant Certificate shall have been
exercised and the Common Stock purchasable upon the exercise thereof shall have
become deliverable as provided in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise within any
period during which the transfer books for the Company's Common Stock or other
class of stock purchasable upon the exercise of the Warrants evidenced by this
Warrant Certificate are closed for any purpose, the Company shall not be
required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.
Every holder of this Warrant Certificate by accepting the same consents and
agrees with the Company, the Warrant Agent, and with every other holder of a
Warrant Certificate that:
(a) this Warrant Certificate is transferable on the registry books of the
Warrant Agent only upon the terms and conditions set forth in the Warrant
Agreement, and
(b) the Company and the Warrant Agent may deem and treat the person in
whose name this Warrant Certificate is registered as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes whatever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary.
ii
<PAGE>
The Company shall not be required to issue or deliver any certificate for
shares of Common Stock or other securities upon the exercise of Warrants
evidenced by this Warrant Certificate until any tax or charge which may be
payable in respect thereof by the holder of this Warrant Certificate pursuant to
the Warrant Agreement shall have been paid, such tax or charge being payable by
the holder of this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Warrant Agent.
WITNESS the facsimile signature of the proper officer of the Company.
Dated:
3Dshopping.com
By: _____________________________________
Name:
Title:
ChaseMellon Shareholder Services, L.L.C.
_________________________________________
By: _____________________________________
Authorized Officer
<PAGE>
FORM OF ELECTION TO PURCHASE
c/o ChaseMellon Shareholder Services, L.L.C.
Overpeck Center
85 Challenger Road
Ridgefield Park, NJ 07660
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right
of survivorship and not
as tenants in common
UNIF GIFT MIN ACT - _______________________ Custodian - ________________________
(Cust) (Minor)
Under Uniform Gift to Minors Act _______________________________________________
(State)
Additional abbreviations may also be used, though not in the above list.
The undersigned Holder of the within Warrant hereby (1) irrevocably elects to
exercise the right to purchase represented by the within Warrant for, and to
purchase hereunder ________ Common Shares which the undersigned is entitled to
purchase thereunder, (2) tenders the full payment therefor called for by the
within Warrant, and (3) directs that the Certificates for such shares be issued
as set forth below:
Name in which shares are to be issued
(if other than to the undersigned): _____________________________
Address _____________________________
_____________________________
If said number of shares shall not be all the shares purchasable thereunder, a
new Warrant Certificate for the balance of the shares purchasable under the
within Warrant shall be delivered to the undersigned holder at the address set
forth below:
DATED: Signature of Holder
________________________ ________________________________________
Signature Guaranteed:
Social Security or other
identifying number Name (please print)
________________________ ________________________________________
Address
________________________________________
________________________________________
NOTICE
The signature to the foregoing Subscription must correspond to the name of
the registered holder of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ASSIGNMENT TO BE EXECUTED UPON TRANSFER OF WARRANT
FOR VALUE RECEIVED, ___________________________ hereby sells, assigns and
transfers to ____________________ (Social Security or other identifying number
____________________) the within Warrant, together with all rights, title and
interest herein, and does hereby irrevocably constitute and appoint __________
____________________ attorney to transfer such Warrant on the warrant register
of 3Dshopping.com, with full power of substitution.
Signature of transferor:
_________________________________________
DATED: __________________________________
Address of transferee:
_____________________________ Signature Guaranteed:
_____________________________ _____________________________
_____________________________
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever and should be guaranteed by a
commercial bank or trust company having an office or correspondent in the United
Sates or by a member firm of a registered national securities exchange or the
National Association of Securities Dealers, Inc.
3Dshopping.com
517 Boccaccio Avenue
Venice, CA 90291
May 21, 1999
Brian Smith
10859 Burbank Blvd.
North Hollywood, California
Re: Offer letter
Dear Brian:
3Dshoppping.com ("3D") is pleased to offer you full-time employment with
the title and responsibilities of President, Creative Division. Per our earlier
discussions, this is a salaried position at a starting salary of $10,000.00 per
month, and you will not be compensated for overtime. You will report directly to
me and the 3D board of directors (the "board"), and will have the duties
identified during the interviewing process.
You will be immediately eligible to participate in all extant 3D employee
benefits. 3D will also create a bonus incentive system (the "bonus plan")
pursuant to which you and your progress will be reviewed each six months for the
purpose, among other things, of determining if you shall receive a bonus based
on your contributions made during that six moth period. Additionally, you will
participate in the 3Dshopping.com 1999 Stock Option Plan at levels that will
from time to time be determined by the board of directors of 3D.
Employment with 3D is not for a specific term and may be terminated by you
or 3D at any time for any reason, with or without cause. If terminated for no
cause, Smith shall receive six months severance. If any contrary representations
were made to you, they were without authority and are superseded by this offer.
You will be expected, if requested, to sign one or more 3D confidentiality
and/or inventions agreements, and to at all times abide by 3D's policies
regarding safeguarding the proprietary nature of its information. You will also
be required to sign the covenant not to compete which you agreed to in
conjunction with the transaction memorialized by that certain Agreement and Plan
of Reorganization dated as of April 1, 1999 by and among 3D, Design Base Los
Angeles Inc., Todd Hosaka and yourself. Any modification or addition to these
terms must be in writing and signed by you and an authorized signatory of 3D
other than yourself.
<PAGE>
Brian Smith
Offer Letter
May 21, 1999
Page 1
Please signify your acceptance of the terms of this offer by signing in the
line set forth below.
Very truly yours,
3Dshopping.com
LAWRENCE WEISDORN
-----------------------------------------
Lawrence Weisdorn
President
Reviewed and accepted
BRIAN SMITH
- ----------------------------------
Brian Smith
