As filed with the Securities and Exchange Commission on November 19, 1999
Registration No. 333-____________
================================================================================
Securities and Exchange Commission
Washington, DC. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SKYMALL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEVADA 5961 86-0651100
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
1520 EAST PIMA STREET
PHOENIX, ARIZONA 85034
(602) 254-9777
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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ROBERT M. WORSLEY
PRESIDENT
SKYMALL, INC.
1520 EAST PIMA STREET
PHOENIX, ARIZONA 85034
(602) 254-9777
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
Copies to:
Christopher D. Johnson, Esq. Christine A. Aguilera, Esq.
Squire, Sanders & Dempsey L.L.P. Executive Vice President of
Two Renaissance Square Business Development,
40 North Central Avenue, Suite 2700 General Counsel and Secretary
Phoenix, Arizona 85004 SkyMall, Inc.
602-528-4000 1520 East Pima Street
Phoenix, Arizona 85034
602-254-9777
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CALCULATION OF REGISTRATION FEE
================================================================================
PROPOSED
PROPOSED PROPOSED MAXIMUM
TITLE OF MAXIMUM MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
---------------- ------------- -------------- --------- ------------
Common Stock 1,843,465 $9.97 $18,379,346 $5,109
$.001 par value
================================================================================
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(1) Includes (i) up to 700,580 shares of Common Stock to be issued upon
exercise of warrants and (ii) an indeterminate number of additional shares
of Common Stock as may from time to time become issuable upon exercise of
the warrants by reason of stock splits, stock dividends and similar
transactions, which shares are registered hereunder pursuant to Rule 416
under the Securities Act of 1933, as amended.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rule 457 of the Securities Act of 1933, as
amended, based on the average of the high and low prices for shares of
common stock of SkyMall, Inc. as reported by the Nasdaq National Market on
November 12, 1999.
Approximate date of proposed sale to public: As soon as practicable after the
effective date of this Registration Statement.
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, 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, 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 the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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-ii-
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THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING SHAREHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED
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.
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SUBJECT TO COMPLETION, DATED NOVEMBER 19, 1999
PROSPECTUS
1,843,465 SHARES
SKYMALL, INC.COMMON STOCK
We have issued 1,142,885 shares of our common stock and 700,580 warrants to
purchase 700,580 shares of our common stock in a private placement completed in
November 1999. The private placement was completed pursuant to the terms of a
Stock and Warrant Purchase Agreement. Of such shares of common stock and
warrants, 1,142,885 shares of common stock and 571,444 warrants were issued to
the investors in the private placement and 129,136 warrants were issued to the
placement agents that assisted the Company in completing the private placement.
The investors and placement agents (which we collectively refer in this
prospectus as the "selling shareholders") can use this prospectus to sell to
other purchasers some or all of the shares of common stock they currently hold
and can use this prospectus to sell to other purchasers some or all of the
shares of common stock they will receive by exercising the warrants. Each
selling shareholder may sell the common stock in ordinary broker's transactions,
directly to market makers in our common stock, in private transactions or any of
the other methods of distribution that are described in this prospectus under
the section titled "Plan of Distribution."
The selling shareholders will receive all of the amounts received upon any
sale by them of the common stock, less any brokerage commissions or other
expenses incurred by them. We will not receive any proceeds from the sale of the
common stock by the selling shareholders. However, we will receive up to
$5,678,754 as payment of the warrant exercise price for the common stock
underlying the warrants if all of the warrants are exercised. We are paying for
the costs of registering the shares covered by this prospectus.
The selling shareholders and the brokers or other third parties through
whom the selling shareholders sell the common stock may be deemed "underwriters"
as that term is defined in the Securities Act of 1933, as amended, for purposes
of the resale of the shares of common stock offered in this prospectus.
Our common stock is traded on the Nasdaq National Market ("Nasdaq") under
the symbol "SKYM." According to Nasdaq, on November 17, 1999, the last reported
sale price for our common stock was $12.9375.
BEFORE PURCHASING ANY OF THE SHARES OF COMMON STOCK COVERED BY THIS PROSPECTUS,
WE URGE YOU TO READ AND CAREFULLY CONSIDER THE RISK FACTORS DISCUSSED IN THIS
PROSPECTUS, BEGINNING ON PAGE 9. YOU SHOULD BE PREPARED TO ACCEPT ALL OF THOSE
RISKS, INCLUDING THE RISK THAT YOU COULD LOSE YOUR ENTIRE INVESTMENT IN THE
COMMON STOCK, AS WELL AS ANY OTHER RISKS THAT MAY BE DISCUSSED IN THIS
PROSPECTUS.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THE SALE OF THE
COMMON STOCK OR DETERMINED THAT THE INFORMATION IN THIS PROSPECTUS IS ACCURATE
OR COMPLETE. IT IS ILLEGAL FOR ANY PERSON TO TELL YOU OTHERWISE.
The date of this Prospectus is November ___, 1999
<PAGE>
YOU SHOULD ONLY RELY UPON THE INFORMATION INCLUDED IN OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS OR IN ANY PROSPECTUS SUPPLEMENT THAT IS DELIVERED
TO YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH ADDITIONAL OR
DIFFERENT INFORMATION.
THE COMMON STOCK IS NOT BEING OFFERED IN ANY STATE WHERE SUCH AN OFFER IS NOT
PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION INCLUDED IN OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS OR IN ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF
ANY DATE LATER THAN THE DATE OF SUCH DOCUMENT.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with
the U.S. Securities and Exchange Commission. You may read and copy any document
that we have filed at the SEC's Public Reference Room located at 450 Fifth
Street N.W., Room 1024, Washington, D.C. 20549 and at the SEC's regional offices
located at World Trade Center, 13th Floor, New York, New York, 10048 and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Please call the SEC at 1-800-732-0330 for more information about
the Public Reference Room facilities. Our SEC filings are also available to you
free of charge at the SEC's website at HTTP://WWW.SEC.GOV.
Copies of publicly available documents that we have filed with the SEC can
also be inspected and copied at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
We have filed a registration statement on Form S-3 with the SEC that covers
the resale of the common stock offered under this prospectus. This prospectus is
part of the registration statement; however, the prospectus does not include all
of the information included in the registration statement and its exhibits. As a
result, you should refer to the registration statement for additional
information about us and the common stock offered under this prospectus.
Statements that we make in this prospectus relating to any documents filed as an
exhibit to the registration statement or any document incorporated by reference
into the registration statement are not necessarily complete and you should
review the referenced document itself for a complete understanding of its terms.
INCORPORATION OF CERTAIN DOCUMENTS BY REFRENCE
Some of the information that we are required to include in the registration
statement has been "incorporated by reference." This means that we have
disclosed information to you simply by referring you to documents other than the
registration statement. The documents that have been incorporated by reference
are an important part of the prospectus, and you should be sure to review that
information in order to understand the nature of any investment by you in the
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common stock. In addition to previously filed documents that are incorporated by
reference, documents that we file with the SEC after the date of this prospectus
will automatically update the registration statement. The documents that we have
previously filed and that are incorporated by reference include the following:
o Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998;
o Our Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 1999, June 30, 1999 and September 30, 1999;
o Our Current Report on Form 8-K filed April 13, 1999;
o Our Current Report on Form 8-K filed September 23, 1999;
o Our Current Report on Form 8-K filed October 5, 1999;
o Our Definitive Proxy Statement for our 1999 Annual Meeting of
Shareholders dated May 6, 1999; and
o The description of our Common stock included in our Registration
Statement on Form 8-A, filed October 31, 1996, including all
amendments or reports filed for the purpose of updating the
description.
All documents and reports filed by us pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this prospectus and prior to the
date that this offering of our common stock is terminated, will automatically be
incorporated by reference into this prospectus. We will provide you with copies
of any of the documents incorporated by reference, at no charge to you; however,
we will not deliver copies of any exhibits to such documents unless the exhibit
itself is specifically incorporated by reference. If you would like a copy of
any document, please write or call us at:
SKYMALL, INC.
1520 EAST PIMA STREET
PHOENIX, ARIZONA 85034
ATTN: GENERAL COUNSEL
TELEPHONE: (602) 254-9777
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY SHOULD BY READ BY YOU TOGETHER WITH THE MORE DETAILED
INFORMATION INCLUDED AT OTHER SECTIONS OF THIS PROSPECTUS. IN ADDITION, YOU
SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER "RISK FACTORS" AT PAGE 9
OF THIS PROSPECTUS.
Throughout this prospectus, we refer to SkyMall, Inc. and its subsidiaries
as "us", "we", "our", "SkyMall" or the "Company".
THE COMPANY
Founded in 1989, SkyMall, Inc., a Nevada corporation, is an integrated
specialty retailer that markets high-quality products and services through a
number of unique channels and partnerships. The Company offers its products and
services via various media, including the SkyMall in-flight print catalogs,
workplace catalogs, multi-media CD-ROM and on the Internet at WWW.SKYMALL.COM,
WWW.SKYMALLTRAVEL.COM and WWW.DURHAM.SKYMALL.COM. Our products and services are
provided by more than 300 retailers, including American Country Home, Australian
Outback Collection, Balducci's, Canadian Geographic, Claire Murray,
Frontgate(R), FTD.com, Garden.com, Hammacher Schlemmer(R), Herrington(R),
Improvements(R), Langenbach, Lillian Vernon(R), L.L. Bean(R), Orvis(R), Samsung,
Seiko, Successories(R), The Sharper Image(R), T. Shipley(R), The Wine
Enthusiast(TM), and WorldClass Concierge Services(R). The Company offers a
diverse variety of products from numerous product categories, including
clothing, fashion accessories, health and beauty aids, children's toys,
executive gifts, educational products, gourmet cooking aids, exercise equipment,
jewelry, luggage, travel aids, and home accessories.
Our principal executive offices are located at and our mailing address is
1520 East Pima Street, Phoenix, Arizona 85034. Our telephone number is (602)
254-9777.
OUR OPERATIONS
SkyMall is a "one-stop" shopping source for customers who may purchase a
variety of merchandise from many different well-known merchants in a single
transaction. Although most of the merchandise offered in the SkyMall catalogs is
available from other catalog and retail companies, each of these companies
typically has its own policies for shipping and handling charges, merchandise
returns, sales taxes and price guarantees, as well as its own Web site. In
addition, each company typically has different customer service hours and credit
and payment policies. By aggregating the merchandise of our various
participating merchants into a single location in our print catalog and on our
Web site, we afford our customers access to thousands of products offered by
more than 300 merchants and the convenience of one-stop shopping.
Our print media provides consumers with a selection of only the
best-selling products from our most well-known merchant partners. This ensures
that consumers quickly see the most popular items, without having to review
hundreds of items that may be of little interest. Through our online database,
we offer online consumers a greater product selection. For the convenience of
our customers, our online database is searchable by a number of parameters that
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allow the customer to quickly locate products that are of interest to that
consumer. We plan to further expand the selection and variety of our product
offering and implement additional online technologies that will allow us to use
customer recommendation software to offer SkyMall customers personalized
recommendations based on individual tastes and preferences.
PRINT MEDIA
GENERAL. We market our merchandise through a number of print media,
including our in-flight catalogs, international catalogs and workplace catalogs.
We continue to seek additional ways to expand our print media distribution and
are currently testing a number of new channels, including hotels, consumer
loyalty programs and alliances with credit card companies which have access to
significant customer databases. The merchandise of each participating merchant
in our catalogs is presented in a separate section of each catalog to allow
browsing from "store-to-store," providing the convenience and variety of an
upscale shopping mall environment.
SKYMALL DOMESTIC IN-FLIGHT CATALOGS. Our in-flight catalogs, which are
placed in airline seat pockets, represent our largest distribution channel. Over
the past eight years, we have experienced substantial growth in our domestic
in-flight catalog business. Our in-flight catalog is available to over 70% of
all domestic airline passengers annually.
The SkyMall program offers airlines a low-risk means of incrementally
increasing their earnings. In exchange for placement of our catalogs in
seat-back pockets, we pay each airline partner a monthly commission based on net
merchandise sales generated by the Company from sales to that airline's
passengers. Some agreements also require payment of a minimum monthly commission
or a boarding cost that reimburses the airline for the increased fuel costs
attributable to the weight of the catalogs. In addition to increasing airline
earnings, our airline partners also benefit from enhancing the in-flight
experience of their passengers by providing our catalogs as an additional
amenity.
SKYMALL INTERNATIONAL IN-FLIGHT CATALOGS. We believe that the demographic
and technological trends that are driving the domestic consumer to shift from
traditional retail shopping are also present in many international markets,
which we believe are substantially under-served. In early 1998, we launched an
international initiative under which we began making specialized catalogs
available to passengers on certain international flights traveling to Japan and
serving the Pacific Rim. These catalogs feature merchandise tailored to this
audience and are offered in three languages: English, Japanese and Chinese.
In March 1999, the Company began offering SkyMall catalogs on certain
transatlantic flights originating from New York and Boston and in June 1999, the
Company began offering a European catalog on such flights which is priced in
multiple currencies (US Dollars, British Pound Sterling, French Francs, German
Deutsche Marks, and the Euro), and is printed in English, German and French.
Although international sales have been immaterial to our total net
merchandise sales, we plan to continue exploring opportunities in these markets.
SkyMall continues to gain experience in international markets, including the
areas of merchandising, customer service and fulfillment. The Company plans to
enter into other controlled and carefully planned expansions into large
international markets through cooperative ventures with its current domestic
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airline partners, as well as new international partners. The Company believes
that its experience in the domestic in-flight business, as well as its Web-based
infrastructure that allows it to quickly set-up call center operations in
foreign countries, will enable it to expand into selected international markets,
particularly those with a strong interest in U.S. products or where remote
shopping already has some level of acceptance by consumers.
WORKPLACE MERCHANDISE CATALOGS. Through our subsidiary, Durham & Company,
we offer logo merchandise and recognition products to employees of a number of
blue-chip organizations, primarily through print catalogs and since September
1999, on the Durham Web site. Competing in the highly fragmented incentive
industry, Durham distinguishes itself by providing high-quality products and
excellent customer service and focuses its marketing efforts on large
organizations. SkyMall provides Durham's clients with unique, high-quality
merchandise offered through other SkyMall channels as well as logo merchandise
and recognition products for corporate gift giving, employee recognition, sales
promotions and incentives, and similar programs.
OTHER PRINT CHANNELS. We provide unique, upscale catalogs to the
membership-oriented airport lounges of one of our major airline partners. The
SkyMall catalogs are also available on certain Northeastern routes of Amtrak. We
continue to test distribution of our print catalogs in a number of other venues,
including hotels and in connection with loyalty and marketing programs. We are
also testing other alliances, including with major credit card companies and
with the cruise line industry. To the extent the test results of these programs
prove successful, we may expand our presence in these channels.
ELECTRONIC MEDIA
GENERAL. We launched our first Internet Web site in January of 1996 and
since then have continued to refine and develop our e-commerce strategies. Our
e-commerce channels showcase products offered in our print catalogs and provide
customers an additional means of customer service and support. In addition,
because the Internet does not pose the same size and weight constraints as our
paper catalogs, we offer products and services from a greater number of
merchants and a full complement of products from merchants who offer only their
best-selling items in our catalogs. Through our wholly-owned subsidiary,
SKYMALL.COM, INC., we plan to increase our revenues from this media by
developing SkyMall's Web site as a premier Internet shopping and travel
destination and increasing the number of partners in our affiliate program.
AFFILIATE PROGRAM. In addition to developing our own site, we have an
affiliate program through which we provide a turn-key merchant solution to
businesses that are interested in providing SkyMall's merchandise to visitors to
their own Web sites. Our unique proprietary technology and other systems allow
us to quickly and cost-effectively implement affiliate site programs, in many
cases with lead times of less than three weeks. Visitors to SkyMall's affiliate
sites go directly to a SkyMall site, which is typically co-branded with the
affiliate partner, for shopping services. After shopping, the customers are
directed back exclusively to the site from which they began so that the
affiliate partner does not lose the benefit of the traffic to its site. Although
an online store can be privately labeled for our affiliate partners, most of our
affiliate sites are co-branded to increase SkyMall's brand awareness as well as
generate affinity for our online partners.
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Under our agreements with our affiliate partners, we typically pay them a
commission based on net merchandise sales. Our affiliate program offers
advantages to both consumers and our partners. Consumers enjoy the convenience
of SkyMall's online shopping and our partner sites enjoy the benefit of
increased revenue, while ensuring that their customers return to their site.
Early participants in our affiliate program include some of our airline
partners and related entities, such as Delta Air Lines, Delta Crown Room and
Continental Air Lines. In addition, Northwest Airlines and America West Airlines
have joined our affiliate program. New participants are Visa USA, Visa
International, First USA, the largest Visa card issuer and a banking leader in
electronic commerce, and LinkShare(R), a premier provider of partnership-based
marketing on the Web, specializing in brokering revenue-producing links among
complementary e-commerce sites. We also have arrangements with a number of other
high-traffic sites, including the site offered by the best-selling book series,
Chicken Soup for the Soul, Microsoft's online shopping mall called MSN Shopping,
MSNBC, Trip.com, and The Weather Channel site at Weather.com. The Company
continues to evaluate the success of its individual affiliates and, in some
cases, has terminated relationships while it continues to pursue new
affiliations.
THE SKYMALLTRAVEL.COM WEB SITE. As part of SkyMall's previously announced
investment in e-commerce, in July 1999, SkyMall launched its
WWW.SKYMALLTRAVEL.COM Web site targeted to frequent travelers, which provides
one-stop access for all their travel needs. SKYMALLTRAVEL.COM organizes many of
the best travel resources in one place, including linked directories for
airlines, hotels, rental car and online booking services, as well as content and
tools that assist business travelers before, during and after their trips. The
site was designed to help travelers get the most out of online travel planning
while minimizing the effort and time involved. Some of the leading online travel
companies are affiliates at our SKYMALLTRAVEL.COM Web site, including
webflyer.com, Trip.com, ontheroad.com, mapquest.com, weather.com, homefair.com
and MyFamily.com.
THE DURHAM & COMPANY WEB SITE. In September 1999, Durham & Company launched
its Web site at WWW.DURHAM.SKYMALL.COM which offers high quality logo and
corporate identity merchandise to organizations.
DISC PUBLISHING, INC. In September 1999, SkyMall acquired Disc Publishing,
Inc. Disc Publishing's SkyDisc(TM) is a leading interactive CD-ROM targeted to
the business traveler that integrates high-quality print, broadcast and online
media to provide an exciting mix of topics that entertain, inform and enhance
the business travelers' life. SkyDisc offers the business traveler the option of
using the disk on their laptop computer whether onboard the aircraft, in a
hotel, at the office, or at home. While using the disk online, consumers can
link to Web sites promoted on SkyDisc to get more information and services. With
the continued proliferation of new Web sites, SkyDisc will help consumers sort
through the clutter of the Web and drive traffic to the sites of our program
participants. Every other month a new "issue" of SkyDisc is available free in
airline seatback pockets to more than 400,000 SkyWest Airlines passengers per
month. SkyDisc has already attracted many program participants such as
Amazon.com, Earthlink Network, Inc., Interplay Entertainment, Inc. and U S
WEST(R). To the extent sponsorship of this program continues to increase, the
Company will consider expanding distribution of SkyDisc.
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THE OFFERING
Securities offered by the selling
shareholders............................. 1,843,465 shares of common stock
Common stock outstanding as of
November 17, 1999........................ 10,452,264 shares(1)
Use of Proceeds.......................... We will not receive any proceeds from
the sale of the common stock by the
selling shareholders. However, we
will receive up to $5,678,754 as the
purchase price for the shares of
common stock underlying the warrants
if all of the warrants are exercised.
See "Use of Proceeds."
Risk Factors............................. The shares of common stock offered
under this prospectus involve a high
degree of risk. See "Risk Factors."
Nasdaq National Market Symbol............ SKYM
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(1) Does not include (i) 1,075,588 shares of common stock issuable upon
exercise of outstanding stock options issued pursuant to the Company's
stock option plans, (ii) an additional 681,878 shares of common stock
reserved for issuance pursuant to future awards granted under such stock
option plans, (iii) 29,700 shares of common stock issuable by the Company
upon the exercise of warrants issued to shareholders in connection with the
Company's 1996 Private Placement, which are exercisable at $8.00 per share,
(iv) 50,000 shares of common stock issuable upon exercise of warrants
issued in an acquisition, which are exercisable at $8.00 per share, (v)
25,000 shares of common stock issuable upon exercise of warrants issued to
our financial advisor, which are exercisable at $9.31 per share, (vi)
14,420 shares of common stock issuable upon exercise of warrants issued
upon conversion of an outstanding note, which are exercisable at $8.00 per
share, and (vii) 700,580 shares of common stock issuable by the Company
upon the exercise of the warrants which are a part of the shares of common
stock that are being offered hereby.
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RISK FACTORS
BEFORE YOU BUY ANY OF THE SHARES OF COMMON STOCK BEING OFFERED BY THIS
PROSPECTUS, YOU SHOULD CAREFULLY READ AND CONSIDER EACH OF THE RISK FACTORS WE
HAVE DESCRIBED IN THIS SECTION. YOU SHOULD BE PREPARED TO ACCEPT ALL OF THESE
RISKS, INCLUDING THE RISK THAT YOU MAY LOSE YOUR ENTIRE INVESTMENT, BEFORE YOU
MAKE A DECISION TO BUY ANY OF THE SHARES OF COMMON STOCK.
WE MAY NOT BE PROFITABLE IN THE FUTURE. Although we have been profitable in
recent years, we plan to significantly increase spending on our growth
initiatives from historical levels and we expect to incur losses in the
foreseeable future. In addition, although we plan to spend significant
additional resources in connection with the execution of our growth strategy,
including for marketing, technological development and personnel costs, there
can be no assurance that we can successfully deploy such resources to accomplish
the objectives of our growth strategies and increase the revenues of the
Company.
WE MAY NOT BE ABLE TO RAISE SUFFICIENT CAPITAL. We currently have a working
capital deficit and our existing line of credit is not sufficient to permit the
Company to fully implement its business plan. In order to fully implement our
growth strategy, we will need to raise additional capital from third parties or
otherwise secure additional financing for the Company. There can be no assurance
that the Company will be able to successfully raise additional capital or secure
other financing, or that such funding will be available on terms that are
favorable to the Company. To the extent we are unable to raise sufficient
additional capital or secure other financing, this could have a material adverse
effect on the Company and we may be unable to fully implement our planned growth
strategy.
OUR BUSINESS MAY NOT GROW IN THE FUTURE. Since our inception, we have
rapidly expanded our operations, growing from total revenues of $200,000 in 1990
to total revenues of $66.3 million in 1998. Our continued future growth will
depend to a significant degree on our ability to increase revenues from our
existing businesses, maintain existing channel partner relationships and develop
new channel partner relationships, expand our product and content offering to
consumers, while maintaining adequate gross margins, and implement other
programs that increase the circulation of the SkyMall print catalogs and
generate traffic for our e-commerce programs. Our ability to implement our
growth strategy will also depend on a number of other factors, many of which are
or may be beyond our control, including (i) our ability to select products that
appeal to our customer base and effectively market them to our target audience,
(ii) sustained or increased levels of airline travel, particularly in domestic
airline markets, (iii) increasing adoption by consumers of the Internet for
shopping, (iv) the continued perception by participating merchants that we offer
an effective marketing channel for their products and services, and (v) our
ability to attract, train and retain qualified employees and management. There
can be no assurance that we will be able to successfully implement our growth
strategy.
OUR FUTURE GROWTH IS IN PART DEPENDENT UPON THE CONTINUED GROWTH OF THE
ELECTRONIC COMMERCE MARKET. The market for the sale of products and services
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over the Internet is a new and rapidly evolving market. Our future growth
strategy is partially dependent upon the widespread acceptance and use of online
services as an avenue for retail purchases. Consumers have only recently begun
to make purchases over the Internet and there is no assurance that they will
continue to do so in the future. In order for us to grow our online customer
base, we will need to attract purchasers who have historically relied upon
traditional venues for making their retail purchases. If use of online services
does not continue to grow as expected, or if the technological infrastructure
for the Internet is unable to effectively support its growing use, our growth
strategy may be materially adversely affected.
WE MAY BE UNABLE TO MANAGE THE POTENTIAL GROWTH OF OUR BUSINESS. Our
potential growth may place significant demands upon our personnel, management
and financial resources. In order to manage this growth, we may have to hire
additional personnel and develop additional management infrastructure. There is
no assurance that people with the necessary skills and experience will be
available as needed or on terms favorable to us. There is no assurance that our
current and planned personnel, systems, procedures and controls will be adequate
to support our future operations, that we will be able to attract, hire, train,
retain, motivate and manage necessary personnel, or that our management will be
able to identify, manage and exploit existing and potential strategic
relationships and market opportunities. If we are unable to effectively manage
any potential growth, our business and financial condition could be adversely
affected.
OUR PLANS FOR INTERNATIONAL EXPANSION POSE ADDITIONAL RISKS. A significant
aspect of our growth strategy is to expand our business internationally, through
our in-flight catalog program as well as the Internet. We have limited
experience in selling our products and services internationally. Such expansion
will place additional burdens upon our management, personnel and financial
resources and may cause the Company to incur losses. We will also face different
and additional competition in these international markets. In addition,
international expansion has certain unique risks, such as regulatory
requirements, legal uncertainty regarding liability, tariffs and other trade
barriers, difficulties in staffing and managing foreign operations, longer
payment cycles, political instability and potentially adverse tax implications.
To the extent we expand our business internationally, we will also become
subject to risks associated with international monetary exchange fluctuations.
Any one of these risks could impair our ability to expand internationally as
well as have a material adverse impact upon our overall business operations,
growth and financial condition.
WE FACE INTENSE COMPETITION. The distribution channels for our products are
highly competitive. From time to time in our airline catalog business,
competitors, typically other catalog retailers, have attempted to secure
contracts with various airlines to offer merchandise to their customers.
American Airlines currently offers merchandise catalogs to its customers through
a competitor. In addition, in July 1999, TWA, a former SkyMall partner, began
carrying a competitor's catalog. We also face competition for customers from
airport-based retailers, duty-free retailers, specialty stores, department
stores and specialty and general merchandise catalogs, many of which have
greater financial and marketing resources than we have. In addition, we compete
for customers with other in-flight marketing media, such as airline-sponsored
in-flight magazines and airline video programming. In our electronic commerce
sales, we face intense competition from other content providers and retailers
who seek to offer their products and/or services at their own Web sites or those
of other third parties. The success of online marketing cannot be currently
determined, and further penetration in this market will require substantial
10
<PAGE>
additional financial resources, acquisition of technology, investments in
marketing and contractual relationships with third parties. Results will also be
affected by existing competition, which the Company anticipates will intensify,
and by additional entrants to the market who may already have the necessary
technology and expertise, many of whom may have substantially greater resources
than the Company.
DEPENDENCE ON CHANNEL RELATIONSHIPS. Our business depends significantly on
our relationships with the airlines, affiliate Web sites, hotels and other
channel partners. Our agreements with our channel partners are typically
short-term allowing the partner to terminate the relationship on 60-to-180 days'
advance notice. There is no assurance that our channel partners will continue
their relationships with us and the loss of one or more of our significant
channel partners could have a material adverse effect on our financial condition
and results of operations.
WE MAY BE UNABLE TO MAINTAIN HISTORICAL MARGIN LEVELS. We may be unable to
increase or maintain our gross margins at historical levels, particularly for
our electronic commerce initiatives. As competition in online shopping
intensifies, our merchant participants may be unable or unwilling to participate
in our programs when more favorable economic arrangements may be available from
other third parties. Although many of our merchants have participated with us
for several years, most of our relationships are short-term and may be
re-negotiated by the merchant every 90 days. To the extent our gross margins
decline from historical levels, our financial condition and results of
operations may be adversely affected.
WE FACE CREDIT RISKS. Some participating merchants agree to pay a placement
fee to us for including their merchandise in our programs. We record an account
receivable from the merchant for the placement fee. In some cases, we collect
the placement fee either from the merchant or by withholding it from amounts due
to the merchant for merchandise sold. To the extent that the placement fee
receivable exceeds the sales of the merchant's products and the merchant is
unable or unwilling to pay the difference to us, we may experience credit losses
which could have a material adverse effect on our financial condition and
results of operations.
WE ARE VULNERABLE TO INCREASES IN PAPER COSTS AND AIRLINE FUEL PRICES. The
cost of paper used to print our catalogs and the fees paid to airlines to
reimburse them for the increased fuel costs associated with carrying our
catalogs are significant expenses of our operations. Historically, paper and
airline fuel prices have fluctuated significantly from time to time. Prices in
the paper market can and often do change dramatically over a short period of
time. Any significant increases in paper or airline fuel costs that we must pay
could have a material adverse effect on our financial condition and results of
operations.
OUR INFORMATION AND TELECOMMUNICATIONS SYSTEMS MAY FAIL OR BE INADEQUATE.
We process a large volume of relatively small orders. Consequently, our success
depends to a significant degree on the effective operation of our information
and telecommunications systems. These systems could fail for unanticipated
reasons or they may be inadequate to process any increase in our sales volume
that may occur. Any extended failure of our information and telecommunications
systems could have a material adverse effect on our financial condition and
results of operations.
11
<PAGE>
WE FACE RISKS ASSOCIATED WITH ONLINE SECURITY BREACHES OR FAILURES. In
order to successfully make sales over the Internet, it is necessary that we be
able to ensure the secure transmission of confidential customer information over
public telecommunications networks. We employ certain technology in order to
protect such information, including customer credit card information. However,
there is no assurance that such information will not be intercepted illegally.
Advances in cryptography or other developments that could compromise the
security of confidential customer information could have a direct negative
impact upon our electronic commerce business. In addition, the perception by
consumers that making purchases over the Internet is not secure, even if
unfounded, will mean that fewer consumers are likely to make purchases through
that medium. Finally, any breach in security, whether or not a result of our
acts or omissions, may cause us to be the subject of litigation, which could be
very time-consuming and expensive to defend.
OUR BUSINESS IS SEASONAL. Our business is seasonal in nature, with the
greatest volume of sales typically occurring during the Holiday selling season
of the fourth calendar quarter. During 1998, approximately 41% of our net
merchandise sales were generated in the fourth quarter. Any substantial decrease
in sales for the fourth quarter could have a material adverse effect on our
results of operations.
WE FACE RISKS OF INCREASED GOVERNMENTAL REGULATION AND OTHER LEGAL
UNCERTAINTIES. Our electronic commerce activities are not currently subject to
significant regulation, other than those applicable to businesses generally.
However, electronic commerce is a new market and it is likely that regulations
and laws may be enacted in the future which would apply to our electronic
commerce activities. Any such laws or regulations could result in additional
costs associated with such activities, reduce or inhibit the growth of Internet
use, thereby reducing the growth of our electronic commerce business, or have
other adverse effects. Additionally, certain states or international
jurisdictions could enact laws that would require us to register in such
jurisdictions, pay fees or otherwise increase our costs of doing business.
WE FACE A RISK OF PRODUCT LIABILITY CLAIMS. Our catalogs and our electronic
commerce sites feature products and services from more than 300 participating
merchants. Generally, our agreements with these participating merchants require
the merchants to indemnify us and thereby be solely responsible for any losses
arising from product liability claims made by customers, including the costs of
defending any such claims, and to carry product liability insurance that names
SkyMall as an additional insured. In addition, we maintain product liability
insurance in the aggregate amount of $2.0 million and $1.0 million per
occurrence. If a merchant was unable or unwilling to indemnify us as required,
and any such losses exceeded our insurance coverage or were not covered by our
insurer, our financial condition and results of operations could be materially
adversely affected.
WE RELY UPON OUR PRESIDENT AND OTHER KEY PERSONNEL. We depend on the
continued services of Robert M. Worsley, our chairman, president and chief
executive officer, and on the services of certain other executive officers. The
loss of Mr. Worsley's services or of the services of certain other executive
officers could have a material adverse effect on our business.
THE WORSLEYS CAN CONTROL MANY IMPORTANT COMPANY DECISIONS. As of November
17, 1999, Mr. Worsley and his wife (the "Worsleys") beneficially owned 4,798,530
shares, or approximately 46% of our outstanding common stock. As a result, the
12
<PAGE>
Worsleys have the ability to significantly influence the affairs of the Company
and matters requiring a shareholder vote, including the election of the
Company's directors, the amendment of the Company's charter documents, the
merger or dissolution of the Company, and the sale of all or substantially all
of the Company's assets. The voting power of the Worsleys may also discourage or
prevent any proposed takeover of the Company pursuant to a tender offer.
THE PRICE OF OUR COMMON STOCK IS EXTREMELY VOLATILE. The market price of
our common stock has been highly volatile. Occurrences that could cause the
trading price of our common stock to fluctuate dramatically in the future
include:
o new merchant agreements
o the acquisition or loss of one or more airline, electronic commerce or
other channel partners
o fluctuations in our operating results
o analyst reports, media stories, Internet chat room discussions, news
broadcasts and interviews
o market conditions for retailers and electronic commerce companies in
general
o changes in airline fuel, paper or our other significant expenses
o changes in the commissions we are able to negotiate with our merchants
The stock market has from time to time experienced extreme price and volume
fluctuations that have particularly affected the market price for companies that
do some or all of their business on the Internet. During the third quarter of
1999, net merchandise sales from the Internet represented approximately 21% of
our net merchandise sales. Accordingly, the price of our common stock may be
impacted by these or other trends.
OUR OUTSTANDING SHARES MAY BE DILUTED. The market price of our common stock
may decrease as more shares of common stock become available for trading.
Certain events over which you have no control result in the issuance of
additional shares of our common stock, which would dilute your ownership
percentage in SkyMall. We may issue additional shares of common stock or
preferred stock:
o to raise additional capital or finance acquisitions; or
o upon the exercise or conversion of outstanding options and warrants
There are currently outstanding warrants and options to acquire up to
1,895,288 additional shares of common stock at prices ranging from $2.13 to
$24.50 per share, including the 700,580 warrants issued in the private
placement. If exercised, these securities will dilute your percentage ownership
of common stock. These securities, unlike the common stock, provide for
antidilution protection upon the occurrence of stock splits, redemptions,
mergers, reclassifications, reorganizations and other similar corporate
transactions, and, in some cases, major corporate announcements. If one or more
of these events occurs, the number of shares of common stock that may be
acquired upon conversion or exercise would increase.
RISK THAT FORWARD-LOOKING STATEMENTS MAY NOT COME TRUE. This prospectus and
the documents incorporated herein by reference, contain forward-looking
statements that involve risks and uncertainties. We use words such as "believe,"
"expect," "anticipate," "plan" or similar words to identify forward-looking
statements. Forward-looking statements are made based upon our belief as of the
13
<PAGE>
date that such statements are made. These forward-looking statements are based
largely on our current expectations and are subject to a number of risks and
uncertainties, many of which are beyond our control. You should not place undue
reliance on these forward-looking statements, which apply only as of the date of
such documents. Our actual results could differ materially from those
anticipated in these forward-looking statements for many reasons, including the
risks faced by us described above and elsewhere in this prospectus.
WE FACE RISKS ASSOCIATED WITH THE YEAR 2000. Many software programs use
only two digits to identify the year in the date field. If such programs are not
corrected, data that includes a date in the Year 2000 or later could cause many
computer applications to fail, lock-up or generate erroneous results. Further,
certain computer programs may not properly process certain dates. This potential
problem is generally referred to as the "Year 2000 Issue." We have initiated a
program to evaluate and address our exposure to the Year 2000 Issue. If not
corrected, many computer applications could fail or create erroneous results.
We have a program in process to identify our exposure to the Year 2000
Issue and we have begun to implement measures to mitigate any problems. We
believe we have identified all significant internal systems and applications
that require attention of some form in order to address Year 2000 Issue risks.
Our information or production systems which consist of order entry, order
conveyance and customer service are primarily based on the Microsoft suite of
products and the hardware is principally late model Compaq and Dell servers,
which are designed and represented to meet Year 2000 Issue functional
requirements. A testing program has been performed by an outside contractor to
certify that such systems are Year 2000 compliant. The certification program
also included the hardware and operating systems that support the applications.
We have other non-production systems such as internal security systems,
telephone systems, and network computer equipment, which we are also currently
reviewing for Year 2000 compliance. In addition, we are surveying certain third
parties, such as our vendor partners, banks and telephone service providers, to
attempt to determine the Year 2000 Issue capability of their critical systems
upon which our essential business operations are dependent.
We believe we have identified all of the major information systems used in
our internal operations and have substantially completed all modifications,
upgrades or replacements to minimize the possibility of a material disruption of
our business. The expenditures that we have incurred to date and the
expenditures we expect to incur in this regard have not been and are not
expected to be material to our business, results of operations and financial
condition. However, failure of third-party equipment, software or content to
operate properly with regard to the Year 2000 Issue could require the Company to
incur unanticipated expenses to remedy problems, which could have a material
adverse effect on its business, operating results and financial condition.
We believe that our most significant worst case Year 2000 Issue scenarios
involve the inability of our vendors to process orders and conduct business such
as arranging deliveries to customers and replenishing inventories and that the
computer systems necessary to maintain the viability of the Internet or the Web
14
<PAGE>
sites that direct consumers to the Company's online catalog and related sites
may not be Year 2000 compliant. In addition, computers used by customers to
access the Company's online catalog and related sites may not be Year 2000
compliant, delaying customers' product purchases. Furthermore, a reduction in
airline travel due to concerns about the Year 2000 Issue in the airline
industry, even if based on unfounded fears, could materially impact the
Company's business.
The Company has initiated formal communications with significant suppliers
and service providers to determine the extent to which its systems may be
vulnerable if they fail to address and correct their own Year 2000 Issues. The
Company cannot guarantee that the systems of suppliers or other companies on
which it relies will be Year 2000 compliant. Failure by suppliers or other
companies to convert their systems could disrupt the Company's systems.
To the extent we are unable to adequately identify, evaluate and address
all of the Year 2000 Issues relating to our business, or are unable to develop
and implement effective contingency plans, we could experience a significant
disruption of our ability to receive and process customer orders, in which case
our financial condition and results of operations would be likely to be
materially adversely affected.
FORWARD-LOOKING STATEMENTS
Certain statements made herein, in future filings by the Company with the
SEC and in the Company's written and oral statements made by or with the
approval of an authorized executive officer, constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, and the Company intends that
such forward-looking statements be subject to the safe harbors created thereby.
These statements discuss, among other items, the Company's growth strategy and
anticipated trends in our business. Words and phrases such as "should be," "will
be," "believes," "expects," "anticipates," "plans," "intends," "may" and similar
expressions identify forward-looking statements. Forward-looking statements are
made based upon our belief as of the date that such statements are made. These
forward-looking statements are based largely on our current expectations and are
subject to a number of risks and uncertainties, many of which are beyond our
control. Actual results could differ materially from these forward-looking
statements as a result of the factors described herein, including, among others,
regulatory or economic influences. Examples of uncertainties which could cause
such differences include, but are not limited to, the Company's dependence on
its relationships with its airline, merchant, and other partners, the ability of
the Company to attract and retain key personnel, especially highly skilled
technology personnel, the ability of the Company to secure additional capital to
finance its business strategy, fluctuations in paper prices and airline fuel
costs, customer credit risks, competition from other catalog companies,
retailers and e-commerce companies, and the Company's reliance on technology and
information and telecommunications systems, all of which are discussed more
fully above and in the Company's other filings with the Securities and Exchange
Commission. The Company undertakes no obligation to publicly update or revise
any forward-looking statements whether as a result of new information, future
events, or otherwise.
15
<PAGE>
SELLING SHAREHOLDERS
The shares being offered by the selling shareholders were issued in the
private placement pursuant to a Stock and Warrant Purchase Agreement. We are
registering the shares in order to permit the selling shareholders to offer
these shares for resale from time to time.
The following table provides certain information with respect to the common
stock beneficially owned by each selling shareholder as of November 17, 1999.
None of these selling shareholders has a material relationship with us except
Robert M. Worsley, who is the Chairman of the Board, President and Chief
Executive Officer of the Company, and Ryan Beck & Co., Inc., who is a financial
advisor to the Company, including Michael Kollender and Randy Rock who are
representatives of Ryan, Beck. We believe that the selling shareholders named in
the following table have sole voting and investment power with respect to the
respective shares of common stock set forth opposite their names. The shares of
common stock offered by this prospectus may be offered from time to time by the
selling shareholders named below or their nominees.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior Number of Owned After
to the Offering Shares the Offering
------------------------- Offered ------------------------
---------
Name Number Percent(1) Number Percent(2)
- ---- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
American High Growth 214,286 (3) 2.1% 214,286 0 0%
Equities Retirement Trust
Trump Tower - 24th Floor
725 5th Avenue
New York, New York 10022
Quintel Communications, Inc. 642,857 (4) 6.2% 642,857 0 0%
One Blue Hill Plaza
Pearl River, New York 10965
Special Situations Private 257,100 (6) 2.5% 257,100 0 0%
Equity Fund L.P.(5)
153 E. 53rd Street
New York, New York 10022
Special Situations Fund III L.P.(5) 289,350 (7) 2.8% 289,350 0 0%
153 E. 53rd Street
New York, New York 10022
Special Situations Cayman Fund, 96,450 (8) * 96,450 0 0%
L.P.(5)
153 E. 53rd Street
New York, New York 10022
Robert M. Worsley and Christi M. 4,798,530 (9) 45.9% 214,286 4,584,244 41.1%
Worsley as Trustees of The Robert
Merrill Worsley and Christi Marie
Worsley Family Revocable Trust
dated July 28, 1998
c/o SkyMall, Inc.
1520 Pima Street
Phoenix, Arizona 85034
Ryan, Beck & Co., Inc. 56,112 (10) * 31,112 25,000 *
200 Park Avenue
New York, New York 10166
Michael J. Kollender 19,012 (11) * 19,012 0 0%
c/o Ryan, Beck & Co., Inc.
200 Park Avenue
New York, New York 10166
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior Number of Owned After
to the Offering Shares the Offering
------------------------- Offered ------------------------
---------
Name Number Percent(1) Number Percent(2)
- ---- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Randy Rock 19,012 (12) * 19,012 0 0%
c/o Ryan, Beck & Co., Inc.
200 Park Avenue
New York, New York 10166
Shoreline Pacific Institutional 60,000 (13) * 60,000 0 0%
Finance
3 Harbor Drive, Suite 211
Sausalito, California 94965
</TABLE>
_______________
* Less than 1%.
(1) Percentages are based upon 10,452,264 shares of the Company's common stock
outstanding as of November 17, 1999.
(2) Percentages are based upon 11,152,844 shares of the Company's common stock
being outstanding if all of the shares of common stock offered pursuant to
this prospectus are sold by the selling shareholders.
(3) Includes 71,429 shares of common stock issuable upon exercise of the
warrants issued in the private placement.
(4) Includes 214,286 shares of common stock issuable upon exercise of the
warrants issued in the private placement.
(5) MGP Advisers Limited Partnership (MGP), a Delaware limited partnership, is
the general partner of the Special Situations Fund III, L.P., a Delaware
limited partnership. AWM Investment Company, Inc. (AWM), a Delaware
corporation, is the general partner of MGP and the general partner of and
investment adviser to the Special Situations Cayman Fund, L.P. MG Advisers
L.L.C. (MG), a New York limited liability company, is the general partner
of the Special Situations Private Equity Fund, L.P., a Delaware limited
partnership. Austin W. Marxe and David M. Greenhouse are the principal
owners of MG, MGP and AWM and are principally responsible for the
selection, acquisition and disposition of the portfolios securities by the
investment advisers on behalf of their funds.
(6) Includes 85,700 shares of common stock issuable upon exercise of the
warrants issued in the private placement.
(7) Includes 96,450 shares of common stock issuable upon exercise of the
warrants issued in the private placement.
(8) Includes 32,150 shares of common stock issuable upon exercise of the
warrants issued in the private placement.
(9) Includes 71,429 shares of common stock issuable upon exercise of the
warrants issued in the private placement and 900 shares of common stock
issuable upon exercise of certain warrants acquired in the Company's 1996
private placement.
(10) Ryan, Beck & Co., Inc. acted as a placement agent in connection with the
private placement. The 31,112 shares of common stock being registered
hereby on behalf of Ryan, Beck are issuable upon exercise of the warrants
issued to Ryan, Beck by the Company as a placement agent pursuant to the
private placement. Also includes 25,000 shares of common stock issuable
upon exercise of certain previously issued warrants to purchase common
stock of the Company.
(11) The selling shareholder is an associate of Ryan, Beck, a placement agent in
connection with the private placement. The 19,012 shares of common stock
being registered hereby on behalf of Mr. Kollender are issuable upon
exercise of warrants granted to such selling shareholder as an associate of
Ryan, Beck who acted as a placement agent pursuant to the private
placement.
(12) The selling shareholder is an associate of Ryan, Beck, a placement agent in
connection with the private placement. The 19,012 shares of common stock
being registered hereby on behalf of Mr. Rock are issuable upon exercise of
warrants granted to such selling shareholder as an associate of Ryan, Beck
who acted as a placement agent pursuant to the private placement.
(13) Shoreline Pacific Institutional Finance acted as a placement agent in
connection with the private placement. The 60,000 shares of common stock
being registered hereby on behalf of Shoreline Pacific are issuable upon
exercise of the warrants issued to Shoreline Pacific by the Company as a
placement agent pursuant to the private placement.
17
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock by the
selling shareholders. However, we will receive up to $5,678,754 upon payment of
the exercise price for the common stock underlying the warrants if all of the
warrants are exercised. We will use all of these proceeds for working capital
for our operations.
DETERMINATION OF OFFERING PRICE
Because this prospectus relates only to the resale of previously issued
shares of common stock, we did not determine an offering price. The selling
shareholders will individually determine the offering price of the common stock.
The selling shareholders may use this prospectus from time to time to sell their
common stock. The price at which the common stock is sold may be based on market
prices prevailing at the time of sale, at prices relating to such prevailing
market prices, or at negotiated prices.
PLAN OF DISTRIBUTION
In connection with our issuance to the selling shareholders of our common
stock and warrants, we provided to them certain registration rights and have
subsequently filed a registration statement on Form S-3 with the Securities and
Exchange Commission. That registration statement covers the resale of the common
stock from time to time on the Nasdaq National Market or other national security
exchange or automated quotation system upon which our common stock is then
traded or in privately negotiated transactions. This prospectus forms a part of
that registration statement. We have also agreed to prepare and file any
amendments and supplements to the registration statement as may be necessary to
keep it effective until this prospectus is no longer required for the selling
shareholders to sell their shares of common stock and to indemnify and hold the
selling shareholders harmless against certain liabilities under the Securities
Act that could arise in connection with the selling shareholders' sale of their
shares. We have agreed to pay all reasonable fees and expenses incident to the
filing of the registration statement.
The selling shareholder may sell the shares of common stock described in
this prospectus directly or through underwriters, broker-dealers or agents. The
selling shareholders may also transfer, devise or gift their shares by other
means not described in this prospectus. As a result, pledgees, donees,
transferees or other successors in interest that receive such shares as a gift,
partnership distribution or other non-sale related transfer may offer shares of
common stock. In addition, if any shares covered by this prospectus qualify for
sale pursuant to Rule 144 under the Securities Act, the selling shareholders may
sell such shares under Rule 144 rather than pursuant to this prospectus.
The selling shareholders may sell shares of common stock from time to time
in one or more transactions:
18
<PAGE>
o at fixed prices that may be changed,
o at market prices prevailing at the time of sale, or
o at prices related to such prevailing market prices or at negotiated
prices.
The selling shareholders may offer their shares of common stock in one or
more of the following transactions:
o on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale, including
the Nasdaq National Market,
o in the over-the-counter market,
o in privately negotiated transactions,
o through options,
o by pledge to secure debts and other obligations,
o by a combination of the above methods of sale, or
o to cover short sales made pursuant to this prospectus.
In effecting sales, brokers or dealers engaged by the selling shareholders
may arrange for other brokers or dealers to participate in the resales. The
selling shareholders may enter into hedging transactions with broker-dealers,
and in connection with those transactions, broker-dealers may engage in short
sales of the shares. The selling shareholders also may sell shares short and
deliver the shares to close out such short positions. The selling shareholders
also may enter into option or other transactions with broker-dealers that
require the delivery to the broker-dealer of the shares, which the broker-dealer
may resell pursuant to this prospectus. The selling shareholders also may pledge
the shares to a broker or dealer, and upon a default, the broker or dealer may
effect sales of the pledged shares pursuant to this prospectus.
In order to comply with the securities laws of certain states, the selling
shareholders must offer or sell the shares only through registered or licensed
brokers or dealers. In addition, in certain states, the selling shareholders can
not offer or sell the shares 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.
The SEC may deem the selling shareholders and any underwriters,
broker-dealers or agents that participate in the distribution of the shares of
common stock to be "underwriters" within the meaning of the Securities Act. The
Commission may deem any profits on the resale of the shares of common stock and
any compensation received by any underwriter, broker-dealer or agent to be
underwriting discounts and commission under the Securities Act.
Under the Exchange Act, any person engaged in the distribution of the
shares of common stock may not simultaneously engage in market-making activities
with respect to the common stock for five business days prior to the start of
the distribution. In addition, each selling shareholder and any other person
participating in a distribution will be subject to the Exchange Act, which may
limit the timing of purchases and sales of common stock by the selling
shareholder or any such other person.
19
<PAGE>
DESCRIPTION OF SECURITIES
COMMON STOCK
For a description of our common stock, see our Registration Statement on
Form 8-A filed with the SEC on October 31, 1996 and incorporated by reference
into this prospectus.
RIGHTS
In September 1999, we adopted a Shareholder Rights Plan for the protection
of our shareholders. For a description of the Rights relating to our Shareholder
Rights Plan, see our Form 8-K filed with the SEC on September 23, 1999 and
incorporated by reference into this prospectus.
WARRANTS ISSUED TO SELLING SHAREHOLDERS PURSUANT TO THE STOCK AND WARRANT
PURCHASE AGREEMENT
Pursuant to the Stock and Warrant Purchase Agreement, we issued the
warrants to the investors in the private placement. The warrants expire five
years after issuance.
EXERCISE OF WARRANTS. The warrants may be exercised at any time after
issuance.
EXERCISE PRICE. The exercise price of each warrant is $8.00 per share of
common stock represented by the warrant. The exercise price of the warrants is
subject to customary anti-dilution adjustments upon such events as the
subdivision or combination of the common stock, the distribution of our assets
to holders of common stock, and other similar events.
CASHLESS EXERCISE OPTION. If the common stock to be issued in exchange for
the warrants is not registered for resale in accordance with the Stock and
Warrant Purchase Agreement, the warrant holders are entitled to a "cashless
exercise" option. This option entitles the warrant holders to elect to receive
fewer shares of common stock without paying the cash exercise price. The number
of shares to be issued would be determined by a formula based on the total
number of shares to which the warrant holder is entitled, the last reported sale
price of the common stock and the applicable exercise price of the warrants.
FAILURE TO DELIVER THE COMMON STOCK UNDERLYING THE WARRANTS. If we fail to
deliver the common stock underlying the warrants upon exercise of such warrants
within two business days of receipt of the notice of exercise, we will be
required to pay to the exercising holder of the warrant an amount equal to 0.5%
of the product of:
o the number of shares of common stock not issued to the holder, and
o the average last closing price of the common stock for the five
consecutive trading days immediately preceding the last possible day
we could have issued the common stock.
REDEMPTION AT OUR ELECTION. We may redeem the warrants upon 30 days prior
written notice to the holder, in our sole discretion, at $.01 per share of
common stock underlying the warrants provided the following conditions have been
met:
20
<PAGE>
o this Registration Statement is effective;
o the closing bid price of our common stock is greater than $12.00 (as
equitably adjusted to reflect any merger, consolidation or
reorganization of the Company or any stock split, subdivision, reverse
stock split or combination effected by the Company) for twenty
consecutive trading days immediately preceding our exercise; and
o our common stock is listed on Nasdaq National Market, the American
Stock Exchange or the New York Stock Exchange.
COVENANTS. We made certain customary covenants with respect to the
warrants, including, among others:
o the warrants, and any common stock to be issued upon exercise of the
warrants, are and will be duly authorized and validly issued;
o we will have 100% of the underlying shares of common stock authorized
and reserved for issuance during the term of the warrants;
o we must reserve at least 100% of the number of shares of common stock
issuable upon exercise of the warrants;
o the common stock issuable upon exercise of the warrants shall be
listed on each national securities exchange or automated quotation
system upon which our common stock is then listed; and
o we will act in good faith in carrying out the provisions of the
warrants.
If we grant any dividend rights to holders of common stock, the holders of
the warrants and entitled to acquire the aggregate amount of rights which such
holder could have acquired if such holder had completely exercised their warrant
immediately prior to the record date for the granting of such rights.
In addition, upon any conveyance or exchange of all or substantially all of
our assets to another corporation or entity, or a recapitalization,
reorganization, reclassification, consolidation, or merger in which the holders
of our common stock are entitled to receive stock, securities or assets with
respect to or in exchange for our common stock in which we are not the surviving
entity, we will obtain from the acquiring person or entity a written agreement
to deliver to each holder of the warrants, in exchange for the warrants, a
security from the acquiring entity evidenced by a written instrument
substantially similar in form and substance to the warrant.
AMENDMENT. The provisions of the warrants may be amended only after we have
obtained the written consent of warrant holders representing 66.7% of the shares
of common stock issuable upon exercise of the warrants then outstanding.
However, we may not increase the exercise price of the warrants, decrease the
term of the warrants or decrease the amount of common stock issuable upon
exercise of any warrant or otherwise materially adversely effect the rights of
the holder without the written consent of the holder of such warrant.
21
<PAGE>
WARRANTS ISSUED THE PLACEMENT AGENTS IN CONNECTION WITH THE PRIVATE PLACEMENT
In connection with services performed as placement agents, we issued
warrants to the placement agents in connection with the private placement. The
warrants expire five years after issuance.
EXERCISE OF WARRANTS. The warrants may be exercised at any time after
issuance.
EXERCISE PRICE. The exercise prices of the warrants range from $8.10 to
$9.12 per share of common stock represented by the warrants. The exercise price
of the warrants is subject to customary anti-dilution adjustments upon such
events as the subdivision or combination of the common stock, the distribution
of our assets to holders of common stock, and other similar events.
CASHLESS EXERCISE OPTION. The placement agents are entitled to a "cashless
exercise" option. This option entitles the placement agents to elect to receive
fewer shares of common stock without paying the cash exercise price. The number
of shares to be issued would be determined by a formula based on the total
number of shares to which the warrant holder is entitled, the last reported sale
price of the common stock and the applicable exercise price of the warrants.
COVENANTS. We made certain customary covenants with respect to the
warrants, including, among others:
o the warrants, and any common stock to be issued upon exercise of the
warrants, are and will be duly authorized and validly issued;
o we will have 100% of the underlying shares of common stock authorized
and reserved for issuance during the term of the warrants;
o we must reserve at least 100% of the number of shares of common stock
issuable upon exercise of the warrants;
o the common stock issuable upon exercise of the warrants shall be
listed on each national securities exchange or automated quotation
system upon which our common stock is then listed; and
o we will act in good faith in carrying out the provisions of the
warrants.
In addition, upon any conveyance or exchange of all or substantially all of
our assets to another corporation or entity, or a recapitalization,
reorganization, reclassification, consolidation, or merger in which the holders
of our common stock are entitled to receive stock, securities or assets with
respect to or in exchange for our common stock in which we are not the surviving
entity, we will obtain from the acquiring person or entity a written agreement
to deliver to each holder of the warrants, in exchange for the warrants, a
security from the acquiring entity evidenced by a written instrument
substantially similar in form and substance to the warrants.
AMENDMENT. We may not increase the exercise price of the warrants, decrease
the term of the warrants or decrease the amount of common stock issuable upon
22
<PAGE>
exercise of any warrant or otherwise substantially alter the rights of the
holder without the written consent of the holder of such warrant.
LEGAL MATTERS
Certain legal matters have been passed upon for the Company by Squire,
Sanders & Dempsey L.L.P., Phoenix, Arizona.
EXPERTS
The audited financial statements of the Company as of and for each of the
three years in the period ended December 31, 1998, incorporated by reference in
this prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
23
<PAGE>
<TABLE>
<S> <C>
============================================ ============================================
No dealer, salesman or other person has
been authorized to give any information
or to make any representations other than
those contained or incorporated by
reference in this prospectus in connection
with the offering described herein, and,
if given or made, such information or
representation must not be relied upon as
having been authorized by the Company or
by any selling shareholder. This prospectus
does not constitute an offer to sell, or a
solicitation of an offer to buy, any
securities other than the registered
securities to which it relates, or an offer
to sell, or a solicitation of an offer to
buy, in any jurisdiction in which it is
unlawful to make such offer or solicitation. SKYMALL, INC.
Neither the delivery of this prospectus nor
any sale made hereunder shall, under any
circumstances, create an implication that
there has been no change in the affairs of
the Company since the date hereof or that 1,843,465 SHARES
the information contained herein is correct COMMON STOCK
as of any time subsequent to the date hereof.
---------------------
PROSPECTUS
TABLE OF CONTENTS
Page
----
Where You Can Find More Information...... 2
Incorporation of Certain Documents
By Reference............................ 2
Prospectus Summary....................... 4
The Company.............................. 4
Our Operations........................... 4 NOVEMBER ___, 1999
The Offering............................. 8
Risk Factors............................. 9
Selling Shareholders..................... 16
Use of Proceeds.......................... 18
Determination of Offering Price.......... 18
Plan of Distribution..................... 18
Description of Securities................ 20
Legal Matters............................ 23
Experts.................................. 23
============================================ ============================================
</TABLE>
<PAGE>
PART II TO FORM S-3
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated costs and expenses of the
Company in connection with the offering other than commissions and discounts, if
any.
SEC Registration Fee.............................$ 5,109
Legal Fees and Expenses.......................... 10,000
Accounting Fees and Expenses..................... 5,000
Printing and Engraving Expenses.................. 1,000
Blue Sky Fees and Expenses....................... 1,000
Miscellaneous.................................... 3,891
---------
Total...........................................$ 26,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Articles 11 and 12 of the Company's Articles of Incorporation provide as
follows:
1. To the fullest extent permitted by the laws of the State of Nevada, as
the same exist or may hereinafter be amended, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for monetary damages for breach of fiduciary duty as a director or officer,
provided, however, that nothing contained herein shall eliminate or limit the
liability of a director or officer of the Corporation to the extent provided by
applicable laws (i) for acts or omissions which involve intentional misconduct,
fraud or knowing violation of law or (ii) for authorizing the payment of
dividends in violation of Nevada Revised Statutes Section 78.300. The limitation
of liability provided herein shall continue after a director or officer has
ceased to occupy such position as to acts or omissions occurring during such
director's or officer's term or terms of office. No repeal, amendment or
modification of this Article, whether direct or indirect, shall eliminate or
reduce its effect with respect to any act or omission of a director or officer
of the Corporation occurring prior to such repeal, amendment or modification.
2. The Corporation shall indemnify, defend and hold harmless any person who
incurs expenses, claims, damages or liability by reason of the fact that he or
she is, or was, an officer, director, employee or agent of the Corporation, to
the fullest extent allowed pursuant to Nevada law.
II-1
<PAGE>
ITEM 16. EXHIBITS
Exhibit
Number Description Method of Filing
- ------- ----------- ----------------
4.1 Form of Common Stock Certificate (1)
4.2 Form of Warrant issued to investors in the
private placement (2)
4.3 Form of Warrant issued to Ryan, Beck & Co., Inc.,
Michael J. Kollender and Randy Rock as placement
agents in the private placement (1)
4.4 Warrant issued to Shoreline Pacific as a placement
agent in the private placement (1)
5 Opinion re: legality of the securities being
registered (1)
10.1 Stock and Warrant Purchase Agreement (2)
23.1 Consent of Independent Public Accountants (1)
23.2 Consent of Counsel See Exhibit 5
24 Powers of Attorney See Signature Page
- ---------------
(1) Filed herewith.
(2) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the Quarter Ended September 30, 1999.
ITEM 17. UNDERTAKINGS
1. The undersigned Registrant hereby undertakes to file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement; provided, however, that paragraphs (a) and (b) shall not apply if
such information is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference into this Registration Statement.
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
II-2
<PAGE>
2. The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
3. The undersigned Registrant hereby undertakes to remove from
registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering.
4. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference into this
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.
5. The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
6. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 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 Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Phoenix, State of Arizona, on November 18, 1999.
SKYMALL, INC.,
a Nevada Corporation
By: /s/ Robert M. Worsley
------------------------------
Robert M. Worsley, President
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, constitute and
appoint ROBERT M. WORSLEY, STEPHEN R. PETERSON and CHRISTINE A. AGUILERA, and
each of them, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign any and all pre- and post-effective amendments
(including any amendments pursuant to Rule 462(b) to this Form S-3 Registration
Statement, and to file the same with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting such
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully and to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that such
attorney-in-fact and agents, or each of them, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert M. Worsley Chairman of the Board, November 18, 1999
- ------------------------ President and Chief Executive
Robert M. Worsley Officer (Principal Executive
Officer)
/s/ Stephen R. Peterson Chief Financial Officer November 18, 1999
- ------------------------ (Principal Financial and
Stephen R. Peterson Accounting Officer)
S-1
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Lyle R. Knight Director November 18, 1999
- ------------------------
Lyle R. Knight
/s/ Thomas J. Litle Director November 18, 1999
- ------------------------
Thomas J. Litle
/s/ Randy Petersen Director November 18, 1999
- ------------------------
Randy Petersen
S-2
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Method of Filing
- ------- ----------- ----------------
4.1 Form of Common Stock Certificate (1)
4.2 Form of Warrant issued to investors in the
private placement (2)
4.3 Form of Warrant issued to Ryan, Beck & Co., Inc.,
Michael J. Kollender and Randy Rock as placement
agents in the private placement (1)
4.4 Warrant issued to Shoreline Pacific as a placement
agent in the private placement (1)
5 Opinion re: legality of the securities being
registered (1)
10.1 Stock and Warrant Purchase Agreement (2)
23.1 Consent of Independent Public Accountants (1)
23.2 Consent of Counsel See Exhibit 5
24 Powers of Attorney See Signature Page
- ---------------
(1) Filed herewith.
(2) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the Quarter Ended September 30, 1999.
EXHIBIT 4.1
FORM OF COMMON STOCK CERTIFICATE
Stock Certificate with a Certificate No., the number of shares and the SkyMall,
Inc. logo, with the following text:
"SkyMall, Inc., incorporated under the laws of Nevada, CUSIP No. 830859 10 4.
The Corporation is authorized to issue 50,000,000 shares of Common Stock, par
value $.001 each. This certifies that ________________ is the owner of ________
shares of fully paid and non-assessable Common Stock of SkyMall, Inc.,
transferable only on the books of the Corporation by the holder hereof in person
or by duly appointed attorney-in-fact upon surrender of this Certificate
properly endorsed. This Certificate is not valid until countersigned and
registered by the Transfer Agent and Registrar. This certificate and the shares
of Common Stock represented hereby are received and held subject to the laws of
the State of Nevada and to the Articles of Incorporation and the Bylaws of the
Corporation, all as from time to time amended and the owner of this Certificate
by accepting the same expressly asserts thereto.
In witness whereof, the said
Corporation has caused this Certificate to be signed by its duly authorized
officers and its Corporate Seal to be hereunto affixed."
Dated: ______________________
_____________________________ _______________________________
Secretary President
Corporate Seal
Countersigned and Registered:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
(Jersey City, NJ)
TRANSFER AGENT AND REGISTRAR
BY _______________________________________
AUTHORIZED OFFICER
<PAGE>
Back of Certificate: various abbreviations and the language:
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:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT - ________ Custodian _________
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants in Act__________________________
common (State)
UNIF TRF MIN ACT - _______ Custodian (until age _____)
(Cust)
_________ under Uniform Transfers
(Minor)
to Minors Act _____________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received _________________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
| |
| |
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
_________________________________________________________________________ Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________________ Attorney-in-fact
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated _____________________
_________________________________________
_________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By __________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
This certificate also evidences and entitles the holder hereof to certain Rights
as set forth in the Rights Agreement between SkyMall, Inc. ("SkyMall") and
Continental Stock Transfer & Trust Company, as Rights Agent, dated as of
September 15, 1999, as the same may be amended from time to time (the "Rights
Agreement"), the terms of which are incorporated herein by reference and a copy
of which is on file at the principal executive office of SkyMall. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. SkyMall will mail to the holder of this certificate a copy of the
Rights Agreement without charge after receipt by it of a written request
therefor. UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO, BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) OR AN ASSOCIATE
OR AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT) THEREOF AND CERTAIN
TRANSFEREES THEREOF WILL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Exhibit 4.3
- --------------------------------------------------------------------------------
SKYMALL, INC.
AND
________________________
PLACEMENT AGENT'S
WARRANT AGREEMENT
DATED AS OF NOVEMBER 4, 1999
- --------------------------------------------------------------------------------
PLACEMENT AGENT'S WARRANT AGREEMENT dated as of November 4, 1999 between
SKYMALL, INC., a Nevada corporation (the "Company"), and
_________________________ (hereinafter referred to variously as the "Holder",
"_________" or the "Placement Agent").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to _______________ or its designees
warrants ("Warrants") to purchase up to an aggregate _________ shares of common
stock of the Company ("Common Stock"); and
WHEREAS, _______________ has agreed pursuant to a Placement Agent agreement
(the "Placement Agent's Agreement") dated August 2, 1999 and amended October 25,
1999 between _______________ (the "Placement Agent"), and the Company to act as
Placement Agent to the Company; and
WHEREAS, the Company proposes to issue to _______________ (and/or
designees) the Warrants in connection with payment for Placement Agent's
services;
NOW, THEREFORE, in consideration of the premises, the payment by
___________ to the Company of an aggregate of six dollars and ninety one cents
($6.91), the agreements herein set forth and other good and valuable
consideration, hereby acknowledged, the parties hereto agree as follows:
<PAGE>
1. GRANT. __________ is hereby granted the right to purchase, at any time
from November 4, 1999, until 5:30 P.M., New York time, on November 4, 2004, up
to an aggregate of _____________ shares of Common Stock (the "Shares") at an
initial exercise price (subject to adjustment as provided in SECTION 8 hereof)
of $8.10 per share of Common Stock subject to the terms and conditions of this
Agreement. Except as set forth herein, the Shares issuable upon exercise of the
Warrants are in all respects identical to the shares of Common Stock that have
been issued to the public.
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 in 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 WARRANT.
3.1 METHOD OF EXERCISE. The Warrants initially are exercisable at an
aggregate initial exercisE price per share of Common Stock set forth in SECTION
6 hereof payable by certified or official bank check in New York Clearing House
funds, subject to adjustment as provided in SECTION 8 hereof. Upon surrender of
a 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 of Common Stock purchased at the Company's principal offices in
Phoenix, Arizona (presently located at 1520 East Pima Street, Phoenix, Arizona
85034) the registered holder of a Warrant Certificate ("Holder" or "Holder")
shall be entitled to receive a certificate or certificates for the shares of
Common Stock so purchased. The purchase rights represented by each Warrant
Certificate are exercisable at the option of the Holder thereof, in whole or in
part (but not as to fractional shares of the Common Stock underlying the
Warrants). Warrants may be exercised to purchase all or part of the shares of
Common Stock represented thereby. In the case of the purchase of less than all
the shares of Common Stock 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 of Common Stock purchasable thereunder.
3.2 EXERCISE BY SURRENDER OF WARRANT. In addition to the method of
payment set forth in SECTION 3.1 and in lieu of any cash payment required
thereunder, the Holder(s) of the Warrants shall have the right at any time and
from time to time to exercise the Warrants in full or in part by surrendering
the Warrant Certificate in the manner specified in SECTION 3.1 in exchange for
the number of Shares equal to the product of (x) the number of Shares as to
which the Warrants are being exercised multiplied by (y) a fraction, the
numerator of which is the Market Price (as defined in SECTION 3.3 below) of the
Shares less the Exercise Price and the denominator of which is such Market
Price. Solely for the purposes of this paragraph, Market Price shall be
calculated either (i) on the date which the form of election attached hereto is
deemed to have been sent to the Company pursuant to SECTION 13 hereof ("Notice
Date") or (ii) as the average of the Market Prices for each of the five trading
days preceding the Notice Date, whichever of (i) or (ii) is greater.
3.3 DEFINITION OF MARKET PRICE. As used herein, the phrase "Market
Price" at any date shall bE deemed to be the last reported sale price, or, in
2
<PAGE>
case no such reported sale takes place on such day, the average of the last
reported sale prices for the last three (3) trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading or by the Nasdaq National Market ("NNM"),
or, if the Common Stock is not listed or admitted to trading on any national
securities exchanged or quoted by NNM, the average closing bid price as
furnished by the NASD through NNM or similar organization if NNM is no longer
reporting such information, or if the Common Stock is not quoted on NNM, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.
4. ISSUANCE OF CERTIFICATES. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock and/or other securities,
properties or rights underlying such Warrants, shall be made forthwith (and in
any event within five (5) 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 (subject to the provisions
of SECTIONS 5 and 7 hereof) 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 the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
underlying the Warrants (and/or other securities, property or rights issuable
upon the exercise of the Warrants) shall be executed on behalf of the Company by
the manual or facsimile signature of the then Chairman or Vice Chairman of the
Board of Directors or President or Vice President of the Company. Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
5. RESTRICTION ON TRANSFER OF WARRANTS. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof, except to officers or employees of the Holder.
6. EXERCISE PRICE.
6.1 INITIAL AND ADJUSTED EXERCISE PRICE. Except as otherwise
provided in SECTION 8 hereof, thE initial exercise price of each Warrant shall
be $8.10 per share of Common Stock. 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 SECTION 8 hereof.
Any transfer of a Warrant shall constitute an automatic transfer and assignment
of the registration rights set forth in SECTION 7 hereof with regard to the
Common Stock, properties or rights underlying the Warrants.
6.2 EXERCISE PRICE. The term "Exercise Price" herein shall mean
the initial exercise price or the adjusted exercise price, depending upon the
context.
3
<PAGE>
7. REGISTRATION RIGHTS.
7.1 PIGGYBACK REGISTRATION. If, at any time commencing after the
date hereof and expiring seven (7) years from the effective date, the Company
proposes to register any of its equity securities under the Act (other than in
connection with a merger or pursuant to Form S-8 or S-4) it will give written
notice by registered mail, at least thirty (30) days prior to the filing of each
such registration statement, to ____________ and to all other Holder(s) of the
Warrants and/or the Warrant Securities of its intention to do so. If
_______________ or other Holder(s) of the Warrants and/or Warrant Securities
notify the Company within twenty (20) business days after receipt of any such
notice of its or their desire to include any such securities in such proposed
registration statement, the Company shall afford ____________ and such Holder(s)
of the Warrants and/or Warrant Securities the opportunity to have any such
Warrant Securities registered under such registration statement (sometimes
referred to herein as the "Piggyback Registration").
Notwithstanding the provisions of this SECTION 7.1, the Company
shall have the right at any time after it shall have given written notice
pursuant to this SECTION 7.1 (irrespective of whether a written request for
inclusion of any such securities shall have 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.
If a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing underwriters advise the
Company in writing that in their reasonable opinion based upon market conditions
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering the Company will include in such
registration (i) first, the securities the Company proposes to sell, (ii)
second, the Warrant Securities requested to be included in such registration,
pro rata among the Holders of such Warrant Securities, on the basis of the
number of shares requested by such holders to be included, and (iii) third,
other securities to be included in such registration.
7.2 DEMAND REGISTRATION.
(a) At any time after the date hereof and expiring five (5)
years from the effective date, the Holder of the Warrants and/or Warrant
Securities representing a "Majority" (as hereinafter defined) of such securities
(assuming the exercise of all of the Warrants) shall have the right (which right
is in addition to the registration rights under SECTION 7.1 hereof), exercisable
by written notice to the Company, to have the Company prepare and file with the
Securities and Exchange Commission (the "Commission"), on one occasion, a
registration statement and such other documents, including a prospectus, as may
be necessary in the opinion of both counsel for the Company and counsel for
_______________ and Holder, in order to comply with the provisions of the Act,
so as to permit a public offering and sale of their respective Warrant
Securities for nine (9) consecutive months by such Holder and any other Holder
of the Warrants and/or Warrant Securities who notify the Company within ten (10)
days after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of
any registration request under this SECTION 7.2 by any Holder or Holder(s) to
all other registered Holder(s) of the Warrants and the Warrant Securities within
ten (10) days from the date of the receipt of any such registration request.
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(c) In addition to the registration rights under SECTION 7.1 and
subsection (a) of this SECTION 7.2, at any time commencing after the date hereof
and expiring five (5) years from the effective date, any Holder of Warrants
and/or Warrant Securities shall have the right, exercisable by written request
to the Company, to have the Company prepare and file, on one occasion, with the
Commission a registration statement so as to permit a public offering and sale
for nine (9) consecutive months by any such Holder of its Warrant Securities,
provided, however, that the provisions of SECTION 7.3(b) hereof shall not apply
to any such registration request and registration and all costs incident thereto
shall be at the expense of the Holder or Holders making such request.
(d) Notwithstanding anything to the contrary contained herein,
if the Company shall not have filed a registration statement for the Warrant
Securities within the time period specified in SECTION 7.3(a) hereof pursuant to
the written notice specified in SECTION 7.2(a) of a Majority of the Holders of
the Warrants and/or Warrant Securities, the Company shall have the option, upon
the written notice of election of a Majority of the Holders of the Warrants
and/or Warrant Securities, to repurchase (i) any and all Warrant Securities at
the higher of the Market Price per share of Common Stock on (x) the date of the
notice sent pursuant to SECTION 7.2(a) or (y) the expiration of the period
specified in SECTION 7.3(a) and (ii) any and all Warrants at such Market Price
less the Exercise Price of such Warrant. Such repurchase shall be in immediately
available funds and shall close within two (2) days after the later of (i) the
expiration of the period specified in SECTION 7.3(a) or (ii) the delivery of the
written notice of election specified in this SECTION 7.2(d). The Company shall
have no obligation to exercise the option that may be granted pursuant to the
terms of this paragraph (d) of SECTION 7.2 hereof.
7.3 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In
connection with any registration under SECTION 7.1 or 7.2 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement within thirty (30) days of receipt of any demand
therefor, shall use its best efforts to have any registration statements
declared effective at the earliest possible time, and shall furnish each Holder
desiring to sell Warrant Securities such number of prospectuses as shall
reasonably be requested.
(b) The Company shall pay all costs (excluding fees and expenses
of Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
SECTIONS 7.1 and 7.2(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue sky fees and expenses. The
Holder(s) will pay all costs, fees and expenses in connection with any
registration statement filed pursuant to SECTION 7.2(c). If the Company shall
fail to comply with the provisions of SECTION 7.3(a), the Company shall, in
addition to any other equitable or other relief available to the Holder(s), be
liable for any or all incidental or special damages sustained by the Holder(s)
requesting registration of their Warrant Securities.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrant Securities included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided that
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<PAGE>
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant
Securities to be sold pursuant to any registration statement and each person, if
any, who controls such Holder within the meaning of SECTION 15 of the Act or
SECTION 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from such registration statement.
(e) The Holder(s) of the Warrant Securities to be sold pursuant
to a registration statement, and their successors and assigns, shall severally,
and not jointly, indemnify the Company, its officers and directors and each
person, if any, who controls the Company within the meaning of SECTION 15 of the
Act or SECTION 20(a) of the Exchange Act, against all loss, claim, damage or
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holder, or their successors
or assigns, for specific inclusion in such registration statement.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities
other than the Warrant Securities to be included in any registration statement
filed pursuant to SECTION 7.2 hereof, without the prior written consent of the
Holder(s) of the Warrants and Warrant Securities representing a Majority of such
securities.
(h) The Company shall furnish to each Holder participating in
the offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(i) The Company shall as soon as practicable after the effective
date of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
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<PAGE>
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with SECTION 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(j) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriters, copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect
to the registration statement and permit each Holder and underwriters to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. ("NASD"). Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such Holder
or underwriter shall reasonably request.
(k) The Company shall enter into an underwriting agreement with
the managing underwriters selected for such underwriting by Holder(s) holding a
Majority of the Warrant Securities requested to be included in such
underwriting, which may be ___________. Such agreement shall be satisfactory in
form and substance to the Company, each Holder and such managing underwriters,
and shall contain such representations, warranties and covenants by the Company
and such other terms as are customarily contained in agreements of that type
used by the managing underwriter. The Holder(s) shall be parties to any
underwriting agreement relating to an underwritten sale of their Warrant
Securities and may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the benefit
of such underwriters shall also be made to and for the benefit of such
Holder(s). Such Holder(s) shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters except as they
may relate to such Holder(s) and their intended methods of distribution.
(l) In addition to the Warrant Securities, upon the written
request therefor by any Holder(s), the Company shall include in the registration
statement any other securities of the Company held by such Holder(s) as of the
date of filing of such registration statement, including without limitation
restricted shares of Common Stock, options, warrants or any other securities
convertible into shares of Common Stock.
(m) For purposes of this Agreement, the term "Majority" in
reference to the Holder(s) of Warrants or Warrant Securities, shall mean in
excess of fifty percent (50%) of the then outstanding Warrants or Warrant
Securities that (i) are not held by the Company, an affiliate, officer,
creditor, employee or agent thereof or any of their respective affiliates,
members of their family, persons acting as nominees or in conjunction therewith
and (ii) have not been resold to the public pursuant to a registration statement
filed with the Commission under the Act.
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8. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
8.1 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.
8.2 STOCK DIVIDENDS AND DISTRIBUTIONS. In case the Company shall pay
a dividend in, or make A distribution of, shares of Common Stock or of the
Company's capital stock convertible into Common Stock, the Exercise Price shall
forthwith be proportionately decreased. An adjustment made pursuant to this
SECTION 8.2 shall be made as of the record date for the subject stock dividend
or distribution.
8.3 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this SECTION 8, the number of
Warrant Securities issuable upon the exercise at the adjusted exercise price of
each Warrant shall be adjusted to the nearest full amount by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Securities issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
8.4 DEFINITION OF COMMON STOCK. For the purpose of this Agreement,
the term "Common Stock" shalL mean (i) the class of stock designated as Common
Stock in the Articles of Incorporation of the Company as may be amended as of
the date hereof, 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.
8.5 MERGER OR CONSOLIDATION. In case of any consolidation of the
Company with, or merger of thE Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, 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
identical to the adjustments provided in SECTION 8. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
8.6 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment
of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or the shares of Common
Stock issuable upon the exercise of the Warrants;
8
<PAGE>
(b) If the amount of said adjustment shall be less than two cents
(2(cent)) per WarRAnt Security, 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 two cents (2(cent)) per Warrant Security.
9. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof 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 Warrant Securities 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.
10. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants, nor shall it 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 or other securities,
properties or rights.
11. 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 or other securities, properties or rights 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 and other securities issuable upon such exercise
shall be duly and validly issued, fully paid, non-assessable and not subject to
the preemptive rights of any stockholder. 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 (subject to
official notice of issuance) on all securities exchanges on which the Common
Stock issued to the public in connection herewith may then be listed and/or
quoted.
12. NOTICES TO WARRANT HOLDER. Nothing contained in this Agreement
shall be construed as conferring upon the Holder the right to vote or to consent
or to receive notice as a stockholder in respect of any meetings of stockholders
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder 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
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<PAGE>
(b) the Company shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any option,
right or warrant to subscribe therefor; or
(c) 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
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
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 the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent 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 hereof
or to such other address as the Company may designate by notice to the Holder;
or
(c) If to ___________, to __________________________________________,
Attention: ___________________.
14. SUPPLEMENTS AND AMENDMENTS. The Company and _______________ may
from time to time supplement or amend this Agreement without the approval of any
holder of Warrant Certificates (other than ___________) 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 ___________ may deem necessary or desirable and which the Company and
___________ deem shall not adversely affect the interests of the Holder(s) of
Warrant Certificates.
15. SUCCESSORS. All the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the Holder(s) and
their respective successors and assigns hereunder.
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16. TERMINATION. This Agreement shall terminate at the close of
business on November 4, 2006. Notwithstanding the foregoing, the indemnification
provisions of SECTION 7 shall survive such termination until the close of
business on November 4, 2012.
17. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement and
each Warrant Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be construed
in accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
The Company, ___________ and the Holder hereby agree that any action,
proceeding or claim against it arising out of, or relating in any way to, this
Agreement shall be brought and enforced in the courts of the State of New York
or of the United States of America for the Southern District of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.
The Company, _______________ and the Holder hereby irrevocably waive any
objection to such exclusive jurisdiction or inconvenient forum. Any such process
or summons to be served upon any of the Company, ___________ and the Holder(s)
(at the option of the party bringing such action, proceeding or claim) may be
served by transmitting a copy thereof, by registered or certified mail, return
receipt requested, postage prepaid, addressed to it at the address set forth in
SECTION 13 hereof. Such mailing shall be deemed personal service and shall be
legal and binding upon the party so served in any action, proceeding or claim.
The Company, _______________ and the Holder(s) agree that the prevailing
party(ies) in any such action or proceeding shall be entitled to recover from
the other party(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.
18. ENTIRE AGREEMENT; MODIFICATION. This Agreement contains the
entire understanding between the parties hereto with respect to the subject
matter hereof and may not be modified or amended except by a writing duly signed
by the party against whom enforcement of the modification or amendment is
sought.
19. SEVERABILITY. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
20. CAPTIONS. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
21. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and
____________ and any other registered Holder(s) of the Warrant Certificates or
Warrant Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole benefit of the Company and
___________ and any other registered Holder(s) of Warrant Certificates or
Warrant Securities.
22. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
SKYMALL, INC.
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Attest:
____________________________________
Secretary
_________________________________________
By: _____________________________________
Name: ___________________________________
Title: __________________________________
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<PAGE>
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE 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
5:30 P.M., NEW YORK TIME, November 4, 2004
No. W-_________ Warrants to Purchase
______ Shares of Common Stock
WARRANT CERTIFICATE
This Warrant Certificate certifies that , or registered assigns, is the
registered holder of ______ Warrants to purchase initially, at any time from
November 4, 1999 until 5:30 p.m. New York time on November 4, 2004 ("Expiration
Date"), up to (______) __________________________________________ fully-paid and
non-assessable shares of common stock, ("Common Stock") of SKYMALL, INC., a
Nevada corporation (the "Company"), (one share of Common Stock referred to
individually as a "Security" and collectively as the "Securities") at the
initial exercise price, subject to adjustment in certain events (the "Exercise
Price"), of $8.10 per share of Common Stock 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 November 4, 1999 between the Company, and _____________
(the "Warrant Agreement"). Payment of the Exercise Price shall be made by
certified or official bank check in New York Clearing House funds payable to the
order of the Company or by surrender of this Warrant Certificate in connection
with an election to purchase pursuant to Section 3.2.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
A-1
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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 for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holder(s) (the words "holder" or "holder(s)" meaning the registered holder or
registered holder(s)) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type 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 transferee(s) 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 with such transfer.
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 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.
A-2
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of NOVEMBER 4, 1999
SKYMALL, INC.
[SEAL]
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Attest:
____________________________________
Secretary
A-3
<PAGE>
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
________ shares of Common Stock;
and herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of SkyMall, Inc. in
the amount of $ , all in accordance with the terms of Section 3.1 of the
Placement Agent's Warrant Agreement dated as of November 4, 1999 between
SkyMall, Inc. and ______________________. The undersigned requests that a
certificate for such securities 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)
A-4
<PAGE>
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase shares of Common Stock of
SKYMALL, INC., in accordance with the terms of Section 3.2 of that certain
Warrant Agreement dated as of November 4, 1999 between Skymall, Inc. and
_______________ and herewith tenders in payment for such securities
__________________________ Warrants. The undersigned requests that a certificate
for such securities 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)
A-5
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[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)
A-6
Exhibit 4.4
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. EXCEPT AS
OTHERWISE SET FORTH HEREIN, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM,
SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE
TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SUCH ACT.
Right to
Purchase
60,000
Shares of
Common Stock,
par value $.001
per share
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, SHORELINE PACIFIC INSTITUTIONAL
FINANCE or its registered assigns, is entitled to purchase from SKYMALL, INC., a
Nevada corporation (the "Company"), at any time or from time to time during the
period specified in Paragraph 2 hereof, Sixty Thousand (60,000) fully paid and
nonassessable shares of the Company's Common Stock, par value $.001 per share
(the "Common Stock"), at an exercise price of $9.12 per share (the "Exercise
Price"). The term "Warrant Shares," as used herein, refers to the shares of
Common Stock purchasable hereunder. The Warrant Shares and the Exercise Price
are subject to adjustment as provided in Paragraph 4 hereof. The term Warrants
means this Stock Purchase Warrant.
This Warrant is subject to the following terms, provisions, and conditions:
1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
Subject to the provisions hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), and upon (i)
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company of the Exercise Price for the Warrant
Shares specified in the Exercise Agreement or (ii) delivery to the Company of a
written notice of an election to effect a "Cashless Exercise" (as defined in
Section 11(c) below) for the Warrant Shares specified in the Exercise Agreement.
The Warrant Shares so purchased shall be deemed to be issued to the holder
hereof or such holder's designee, as the record owner of such shares, as of the
close of business on the date on which this Warrant shall have been surrendered,
the completed Exercise Agreement shall have been delivered, and payment shall
have been made for such shares (or an election to effect a Cashless Exercise has
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been made) as set forth above. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise Agreement,
shall be delivered to the holder hereof within a reasonable time, not exceeding
two (2) business days, after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested by
the holder hereof and shall be registered in the name of such holder or such
other name as shall be designated by such holder. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised.
Notwithstanding anything in this Warrant to the contrary, in no event
shall the Holder of this Warrant be entitled to exercise a number of Warrants
(or portions thereof) in excess of the number of Warrants (or portions thereof)
upon exercise of which the sum of (i) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates and (ii) the number of
shares of Common Stock issuable upon exercise of the Warrants (or portions
thereof) with respect to which the determination described herein is being made,
would result in beneficial ownership by the Holder and its affiliates of more
than 4.9% of the outstanding shares of Common Stock. For purposes of the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13D-G thereunder, except as otherwise provided in clause
(i) hereof.
2. PERIOD OF EXERCISE. This Warrant is exercisable at any time or from
time to time on or after the date on which this Warrant is issued and delivered
(the "Issue Date") and before 5:00 p.m., New York City time on the third (3rd)
anniversary of the Issue Date (the "Exercise Period").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon issuance
in accordance with the terms of this Warrant, be validly issued, fully paid, and
nonassessable and free from all taxes, liens, and charges with respect to the
issue thereof.
(b) RESERVATION OF SHARES. During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.
(c) LISTING. The Company shall promptly secure the listing of the
shares of Common Stock issuable upon exercise of the Warrant upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance upon
exercise of this Warrant) and shall maintain, so long as any other shares of
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Common Stock shall be so listed, such listing of all shares of Common Stock from
time to time issuable upon the exercise of this Warrant; and the Company shall
so list on each national securities exchange or automated quotation system, as
the case may be, and shall maintain such listing of, any other shares of capital
stock of the Company issuable upon the exercise of this Warrant if and so long
as any shares of the same class shall be listed on such national securities
exchange or automated quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment of
its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect, and (ii)
will take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
(e) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of all
or substantially all the Company's assets.
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Paragraph 4.
In the event that any adjustment of the Exercise Price as required
herein results in a fraction of a cent, such Exercise Price shall be rounded up
to the nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES UPON ISSUANCE
OF COMMON STOCK. Except as otherwise provided in Paragraphs 4(c) and 4(e)
hereof, if and whenever on or after the Issue Date of this Warrant, the Company
issues or sells, or in accordance with Paragraph 4(b) hereof is deemed to have
issued or sold, any shares of Common Stock for no consideration or for a
consideration per share (before deduction of reasonable expenses or commissions
or underwriting discounts or allowances in connection therewith) less than the
Market Price (as hereinafter defined) on the date of issuance (or deemed
issuance) of such Common Stock (a "Dilutive Issuance"), then immediately upon
the Dilutive Issuance, the Exercise Price will be reduced to a price determined
by multiplying the Exercise Price in effect immediately prior to the Dilutive
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Issuance by a fraction, (i) the numerator of which is an amount equal to the sum
of (x) the number of shares of Common Stock actually outstanding immediately
prior to the Dilutive Issuance, plus (y) the quotient of the aggregate
consideration, calculated as set forth in Paragraph 4(b) hereof, received by the
Company upon such Dilutive Issuance divided by the Market Price in effect
immediately prior to the Dilutive Issuance, and (ii) the denominator of which is
the total number of shares of Common Stock Deemed Outstanding (as defined below)
immediately after the Dilutive Issuance.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price under Paragraph 4(a) hereof, the
following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any manner
issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Common Stock or
other securities convertible into or exchangeable for Common Stock
("Convertible Securities") (such warrants, rights and options to purchase
Common Stock or Convertible Securities are hereinafter referred to as
"Options") and the price per share for which Common Stock is issuable upon
the exercise of such Options is less than the Market Price on the date of
issuance or grant of such Options, then the maximum total number of shares
of Common Stock issuable upon the exercise of all such Options will, as of
the date of the issuance or grant of such Options, be deemed to be
outstanding and to have been issued and sold by the Company for such price
per share. For purposes of the preceding sentence, the "price per share for
which Common Stock is issuable upon the exercise of such Options" is
determined by dividing (i) the total amount, if any, received or receivable
by the Company as consideration for the issuance or granting of all such
Options, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exercise of all such Options, plus, in
the case of Convertible Securities issuable upon the exercise of such
Options, the minimum aggregate amount of additional consideration payable
upon the conversion or exchange thereof at the time such Convertible
Securities first become convertible or exchangeable, by (ii) the maximum
total number of shares of Common Stock issuable upon the exercise of all
such Options (assuming full conversion of Convertible Securities, if
applicable). No further adjustment to the Exercise Price will be made upon
the actual issuance of such Common Stock upon the exercise of such Options
or upon the conversion or exchange of Convertible Securities issuable upon
exercise of such Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in any
manner issues or sells any Convertible Securities, whether or not
immediately convertible (other than where the same are issuable upon the
exercise of Options) and the price per share for which Common Stock is
issuable upon such conversion or exchange is less than the Market Price on
the date of issuance of such Convertible Securities, then the maximum total
number of shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities will, as of the date of the issuance of
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such Convertible Securities, be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. For the purposes
of the preceding sentence, the "price per share for which Common Stock is
issuable upon such conversion or exchange" is determined by dividing (i)
the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange thereof at the time
such Convertible Securities first become convertible or exchangeable, by
(ii) the maximum total number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities. No further
adjustment to the Exercise Price will be made upon the actual issuance of
such Common Stock upon conversion or exchange of such Convertible
Securities.
(iii)CHANGE IN OPTION PRICE OR CONVERSION RATE. If there is a
change at any time in (i) the amount of additional consideration payable to
the Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the conversion or
exchange of any Convertible Securities; or (iii) the rate at which any
Convertible Securities are convertible into or exchangeable for Common
Stock (other than under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time of such change
will be readjusted to the Exercise Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding
provided for such changed additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. If, in any case, the total number of shares of Common Stock
issuable upon exercise of any Option or upon conversion or exchange of any
Convertible Securities is not, in fact, issued and the rights to exercise
such Option or to convert or exchange such Convertible Securities shall
have expired or terminated, the Exercise Price then in effect will be
readjusted to the Exercise Price which would have been in effect at the
time of such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such expiration
or termination (other than in respect of the actual number of shares of
Common Stock issued upon exercise or conversion thereof), never been
issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock,
Options or Convertible Securities are issued, granted or sold for cash, the
consideration received therefor for purposes of this Warrant will be the
amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable
expenses paid or incurred by the Company in connection with such issuance,
grant or sale. In case any Common Stock, Options or Convertible Securities
are issued or sold for a consideration part or all of which shall be other
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than cash, the amount of the consideration other than cash received by the
Company will be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company will be the Market Price thereof as
of the date of receipt. In case any Common Stock, Options or Convertible
Securities are issued in connection with any acquisition, merger or
consolidation in which the Company is the surviving corporation, the amount
of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving corporation as
is attributable to such Common Stock, Options or Convertible Securities, as
the case may be. The fair value of any consideration other than cash or
securities will be determined in good faith by the Board of Directors of
the Company.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No adjustment to
the Exercise Price will be made (i) upon the exercise of any warrants,
options or convertible securities granted, issued and outstanding on the
date of issuance of this Warrant; (ii) upon the grant or exercise of any
stock or options which may hereafter be granted or exercised under any
employee benefit plan of the Company now existing or to be implemented in
the future, so long as the issuance of such stock or options is approved by
a majority of the independent members of the Board of Directors of the
Company or a majority of the members of a committee of independent
directors established for such purpose; or (iii) upon the exercise of the
Warrants or the securities issued or issuable pursuant to the Securities
Purchase Agreement.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company at any
time combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock acquirable hereunder
into a smaller number of shares, then, after the date of record for effecting
such combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.
(d) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Paragraph 4, the number of
shares of Common Stock issuable upon exercise of this Warrant shall be adjusted
by multiplying a number equal to the Exercise Price in effect immediately prior
to such adjustment by the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
(e) CONSOLIDATION, MERGER OR SALE. In case of any consolidation of
the Company with, or merger of the Company into any other corporation, or in
case of any sale or conveyance of all or substantially all of the assets of the
Company other than in connection with a plan of complete liquidation of the
Company, then as a condition of such consolidation, merger or sale or
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conveyance, adequate provision will be made whereby the holder of this Warrant
will have the right to acquire and receive upon exercise of this Warrant in lieu
of the shares of Common Stock immediately theretofore acquirable upon the
exercise of this Warrant, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore acquirable and receivable upon exercise of
this Warrant had such consolidation, merger or sale or conveyance not taken
place. In any such case, the Company will make appropriate provision to insure
that the provisions of this Paragraph 4 hereof will thereafter be applicable as
nearly as may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant. The Company will not effect any
consolidation, merger or sale or conveyance unless prior to the consummation
thereof, the successor or acquiring entity (if other than the Company) and, if
an entity different from the successor or acquiring entity, the entity whose
capital stock or assets the holders of the Common Stock of the Company are
entitled to receive as a result of such consolidation, merger or sale or
conveyance assumes by written instrument the obligations under this Paragraph 4
and the obligations to deliver to the holder of this Warrant such shares of
stock, securities or assets as, in accordance with the foregoing provisions, the
holder may be entitled to acquire.
(f) DISTRIBUTION OF ASSETS. In case the Company shall declare or make
any distribution of its assets (including cash) to holders of Common Stock as a
partial liquidating dividend, by way of return of capital or otherwise, then,
after the date of record for determining stockholders entitled to such
distribution, but prior to the date of distribution, the holder of this Warrant
shall be entitled upon exercise of this Warrant for the purchase of any or all
of the shares of Common Stock subject hereto, to receive the amount of such
assets which would have been payable to the holder had such holder been the
holder of such shares of Common Stock on the record date for the determination
of stockholders entitled to such distribution.
(g) NOTICE OF ADJUSTMENT. Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the holder of this Warrant, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease in the number of Warrant Shares purchasable at such price upon
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall be certified
by the chief financial officer of the Company.
(h) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
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(i) NO FRACTIONAL SHARES. No fractional shares of Common Stock are to
be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.
(j) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution
(including dividends or distributions payable in cash out of retained
earnings) to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or
other rights;
(iii)there shall be any capital reorganization of the Company,
or reclassification of the Common Stock, or consolidation or merger of the
Company with or into, or sale of all or substantially all its assets to,
another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive
any such dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable approximation thereof by the
Company) when the same shall take place. Such notice shall also specify the date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company's books are closed in
respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
and (iv) above.
(k) CERTAIN EVENTS. If any event occurs of the type contemplated by
the adjustment provisions of this Paragraph 4 but not expressly provided for by
such provisions, the Company will give notice of such event as provided in
Paragraph 4(g) hereof, and the Company's Board of Directors will make an
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appropriate adjustment in the Exercise Price and the number of shares of Common
Stock acquirable upon exercise of this Warrant so that the rights of the Holder
shall be neither enhanced nor diminished by such event.
(l) CERTAIN DEFINITIONS.
(i) "COMMON STOCK DEEMED OUTSTANDING" shall mean the number of
shares of Common Stock actually outstanding (not including shares of Common
Stock held in the treasury of the Company), plus (x) pursuant to Paragraph
4(b)(i) hereof, the maximum total number of shares of Common Stock issuable
upon the exercise of Options, as of the date of such issuance or grant of
such Options, if any, and (y) pursuant to Paragraph 4(b)(ii) hereof, the
maximum total number of shares of Common Stock issuable upon conversion or
exchange of Convertible Securities, as of the date of issuance of such
Convertible Securities, if any.
(ii) "MARKET PRICE," as of any date, (i) means the average of the
last reported sale prices for the shares of Common Stock on the Nasdaq
National Market ("Nasdaq") for the five (5) trading days immediately
preceding such date as reported by Bloomberg Financial Markets or an
equivalent reliable reporting service mutually acceptable to and hereafter
designated by the holder of this Warrant and the Company ("Bloomberg"), or
(ii) if Nasdaq is not the principal trading market for the shares of Common
Stock, the average of the last reported sale prices on the principal
trading market for the Common Stock during the same period as reported by
Bloomberg, or (iii) if market value cannot be calculated as of such date on
any of the foregoing bases, the Market Price shall be the fair market value
as reasonably determined in good faith by (a) the Board of Directors of the
Corporation or, at the option of a majority-in-interest of the holders of
the outstanding Warrants, by (b) an independent investment bank of
nationally recognized standing in the valuation of businesses similar to
the business of the corporation. The manner of determining the Market Price
of the Common Stock set forth in the foregoing definition shall apply with
respect to any other security in respect of which a determination as to
market value must be made hereunder.
(iii)"COMMON STOCK," for purposes of this Paragraph 4, includes
the Common Stock, par value $.001 per share, and any additional class of
stock of the Company having no preference as to dividends or distributions
on liquidation, provided that the shares purchasable pursuant to this
Warrant shall include only shares of Common Stock, par value $.001 per
share, in respect of which this Warrant is exercisable, or shares resulting
from any subdivision or combination of such Common Stock, or in the case of
any reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Paragraph 4(e) hereof, the stock or other
securities or property provided for in such Paragraph.
5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
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Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
6. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
7. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights granted to
the holder hereof are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Paragraph 7(e)
below, provided, however, that any transfer or assignment shall be subject to
the conditions set forth in Paragraph 7(f) hereof. Until due presentment for
registration of transfer on the books of the Company, the Company may treat the
registered holder hereof as the owner and holder hereof for all purposes, and
the Company shall not be affected by any notice to the contrary.
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Paragraph 7(e) below, for new Warrants of
like tenor representing in the aggregate the right to purchase the number of
shares of Common Stock which may be purchased hereunder, each of such new
Warrants to represent the right to purchase such number of shares as shall be
designated by the holder hereof at the time of such surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this Paragraph 7, this Warrant shall be promptly canceled by the Company. The
Company shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the Holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Paragraph 7.
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(e) REGISTER. The Company shall maintain, at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to the holder hereof), a register for this Warrant, in which the Company
shall record the name and address of the person in whose name this Warrant has
been issued, as well as the name and address of each transferee and each prior
owner of this Warrant.
(f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time of the
surrender of this Warrant in connection with any exercise, transfer, or exchange
of this Warrant, this Warrant (or, in the case of any exercise, the Warrant
Shares issuable hereunder), shall not be registered under the Securities Act and
under applicable state securities or blue sky laws, the Company may require at
its expense, as a condition of allowing such exercise, transfer, or exchange,
(i) that the holder or transferee of this Warrant, as the case may be, furnish
to the Company a written opinion of counsel, which opinion and counsel are
acceptable to the Company, to the effect that such exercise, transfer, or
exchange may be made without registration under said Act and under applicable
state securities or blue sky laws, (ii) that the holder or transferee execute
and deliver to the Company an investment letter in form and substance acceptable
to the Company and (iii) that the transferee be an "accredited investor" as
defined in Rule 501(a) promulgated under the Securities Act; provided that no
such opinion, letter or status as an "accredited investor" shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act. The
first holder of this Warrant, by taking and holding the same, represents to the
Company that such holder is acquiring this Warrant for investment and not with a
view to the distribution thereof.
8. REGISTRATION RIGHTS. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the letter agreement, dated
September 8, 1999, between the Company and the initial holder of this Warrant.
The Company hereby covenants to include the Warrant Shares in each Registration
Statement filed pursuant to the Stock and Warrant Purchase Agreement, dated as
of November 2, 1999, among the Company and each Investor listed therein (the
"Stock and Warrant Purchase Agreement"). In the event the initial holder
transfers this Warrant, or any portion thereof, on one occasion to its employees
following the Issue Date, then the Company further covenants to promptly amend
such Registration Statement to include the resale of the Warrant Shares by the
new holders thereof. Each holder of this Warrant shall be entitled to the
benefits of Article IV of the Stock and Warrant Purchase Agreement as if he were
a party thereto.
9. NOTICES. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered, or shall be sent by certified
or registered mail or by recognized overnight mail courier, postage prepaid and
addressed, to such holder at the address shown for such holder on the books of
the Company, or at such other address as shall have been furnished to the
Company by notice from such holder. All notices, requests, and other
Page 11
<PAGE>
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to the office of the Company at 1520 East Pima Street,
Phoenix, Arizona 85034 Attention: President and Chief Executive Officer, or at
such other address as shall have been furnished to the holder of this Warrant by
notice from the Company. Any such notice, request, or other communication may be
sent by facsimile, but shall in such case be subsequently confirmed by a writing
personally delivered or sent by certified or registered mail or by recognized
overnight mail courier as provided above. All notices, requests, and other
communications shall be deemed to have been given either at the time of the
receipt thereof by the person entitled to receive such notice at the address of
such person for purposes of this Paragraph 9, or, if mailed by registered or
certified mail or with a recognized overnight mail courier upon deposit with the
United States Post Office or such overnight mail courier, if postage is prepaid
and the mailing is properly addressed, as the case may be.
10. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN THE STATE OF DELAWARE (WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS). BOTH PARTIES IRREVOCABLY CONSENT TO THE JURISDICTION OF THE
UNITED STATES FEDERAL COURTS AND THE STATE COURTS LOCATED IN DELAWARE WITH
RESPECT TO ANY SUIT OR PROCEEDING BASED ON OR ARISING UNDER THIS AGREEMENT, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY AND IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH SUIT
OR PROCEEDING MAY BE DETERMINED IN SUCH COURTS. BOTH PARTIES IRREVOCABLY WAIVE
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR
PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY
MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL
AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER.
11. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and the holder hereof.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for purposes of reference only, and
shall not affect the meaning or construction of any of the provisions hereof.
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<PAGE>
(c) CASHLESS EXERCISE. Notwithstanding anything to the contrary
contained in this Warrant, this Warrant may be exercised by presentation and
surrender of this Warrant to the Company at its principal executive offices with
a written notice of the holder's intention to effect a cashless exercise,
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless Exercise").
In the event of a Cashless Exercise, in lieu of paying the Exercise Price in
cash, the holder shall surrender this Warrant for that number of shares of
Common Stock determined by multiplying the number of Warrant Shares to which it
would otherwise be entitled by a fraction, the numerator of which shall be the
difference between the then current Market Price per share of the Common Stock
and the Exercise Price, and the denominator of which shall be the then current
Market Price per share of Common Stock.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer.
SKYMALL, INC.
By: /s/ Robert M. Worsley
----------------------------------
Robert M. Worsley
Chairman, President and Chief
Executive Officer
Dated as of November ____, 1999
<PAGE>
FORM OF EXERCISE AGREEMENT
Dated: ________ __, 199_
To: SkyMall, Inc.
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase ________ shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the price per share
provided by such Warrant in cash or by certified or official bank check in the
amount of, or, if the resale of such Common Stock by the undersigned is not
currently registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended, by surrender of securities issued by the
Company (including a portion of the Warrant) having a market value (in the case
of a portion of this Warrant, determined in accordance with Section 11(c) of the
Warrant) equal to $_________. Please issue a certificate or certificates for
such shares of Common Stock in the name of and pay any cash for any fractional
share to:
Name: _________________________________________
Signature: ____________________________________
Address: ______________________________________
______________________________________
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.
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<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
NAME OF ASSIGNEE ADDRESS NO OF SHARES
, and hereby irrevocably constitutes and appoints _____________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated: ________ __, 199_
In the presence of:
_______________________
Name: _________________________________________
Signature: ____________________________________
Title of Signing Officer or Agent (if any):
_______________________________________________
Address: ______________________________________
______________________________________
Note: The above signature should correspond
exactly with the name on the face of the
within Warrant.
Page 16
Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, Arizona 85004
Phone: (602) 528-4000
Facsimile: (602) 253-8129
November 18, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
This firm is counsel for SkyMall, Inc., a Nevada corporation (the
"Company"). As such, we are familiar with the Certificate of Incorporation, as
amended, and the Bylaws, as amended, of the Company, as well as resolutions
adopted by its Board of Directors authorizing the issuance and sale of 1,843,465
shares of the Company's common stock, par value $.001 per share (the "Common
Stock"), including 700,580 shares of Common Stock issuable upon exercise of
outstanding Warrants (the "Warrants"), which are the subject of a Registration
Statement on Form S-3 (the "Registration Statement") under the Securities Act of
1933, as amended (the "1993 Act").
We also have examined all instruments, documents, and records which we
deemed relevant and necessary for the basis of our opinion hereinafter
expressed. In such examination, we have assumed the genuineness and authority of
all signatures and the authenticity of all documents submitted to us as
originals and the conformity to the originals of all documents submitted to us
as copies.
Based on such examination, we are of the opinion that the 1,142,885 shares
of Common Stock are validly issued, fully paid and nonassessable, and that upon
receipt by the Company of the consideration provided for upon exercise of the
Warrants, the Common Stock, when issued in compliance with the Warrants, will be
validly issued, fully paid and nonassessable.
We acknowledge that we are referred to under the heading "Legal Matters" in
the Prospectus which is part of the Registration Statement and we hereby consent
to the use of our name in such Registration Statement. We further consent to the
filing of this opinion as Exhibit 5.1 to the Registration Statement and with the
<PAGE>
Securities and Exchange Commission November 18, 1999
Page 2
state regulatory agencies in such states as may require such filing in
connection with the registration of the Common Stock for offer and sale in such
states.
Respectfully submitted,
Squire, Sanders & Dempsey L.L.P.
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 1, 1999
included in SkyMall, Inc.'s Form 10-K for the year ended December, 31 1998 and
to all references to our firm included in this registration statement.
ARTHUR ANDERSEN LLP
Phoenix, Arizona,
November 17, 1999.
