As filed with the Securities and Exchange Commission on March 15, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
HOMESEEKERS.COM, INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
NEVADA 87-0397464
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
6490 SOUTH MCCARRAN BOULEVARD
SUITE D-28
RENO, NEVADA 89509
(775) 827-6886
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
GREGORY L. COSTLEY, CEO
HOMESEEKERS.COM, INCORPORATED
6490 SOUTH MCCARRAN BOULEVARD
SUITE D-28
RENO, NEVADA 89509
(775) 827-6886
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
Copies to:
TIMOTHY J. MELTON
JONES, DAY, REAVIS & POGUE
77 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60601
(312) 782-3939
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective as
determined by market conditions and other factors.
------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
<TABLE>
<CAPTION>
======================================================================================================================
CALCULATION OF REGISTRATION FEE
======================================================================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED OFFERING PRICE (1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock, par value $.001 per share....................... $75,000,000 $19,800
Warrants to purchase Common Stock.............................
======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act. In no event will the
aggregate public offering price of all Common Stock and Warrants issued
from time to time pursuant to this Registration Statement exceed
$75,000,000.
------------------------
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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
Subject to completion, Preliminary Prospectus dated March 15, 2000
HOMESEEKERS.COM, INCORPORATED
$75,000,000
COMMON STOCK
COMMON STOCK WARRANTS
---------------------------------------
We may offer from time to time in one or more issuances, (1) shares of
our Common Stock and (2) Warrants to purchase shares of our Common Stock. The
Common Stock and the Warrants are collectively referred to in this prospectus as
the "Securities." The aggregate public offering price of the Securities that are
offered will not exceed $75,000,000. We will offer the Securities in an amount
and on terms to be determined by market conditions at the time of the offering.
Our Common Stock is traded on the Nasdaq SmallCap Market under the trading
symbol "HMSK."
SEE "RISK FACTORS" ON PAGE 4 FOR VARIOUS RISKS THAT YOU SHOULD
CONSIDER BEFORE YOU PURCHASE ANY SECURITIES.
We will provide you with the specific terms of the particular
Securities being offered in supplements to this prospectus. You should read this
prospectus and any supplement carefully before you invest. This prospectus may
not be used to sell Securities unless accompanied by a prospectus supplement.
---------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------------
The date of this Prospectus is , 2000.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ABOUT THIS PROSPECTUS....................................................................................2
WHERE YOU CAN FIND MORE INFORMATION......................................................................2
RISK FACTORS.............................................................................................4
FORWARD-LOOKING INFORMATION.............................................................................14
ABOUT HOMESEEKERS.......................................................................................14
USE OF PROCEEDS.........................................................................................14
DESCRIPTION OF CAPITAL STOCK............................................................................15
DESCRIPTION OF COMMON STOCK WARRANTS....................................................................17
PLAN OF DISTRIBUTION....................................................................................19
LEGAL MATTERS...........................................................................................20
EXPERTS ...............................................................................................20
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that
HomeSeekers.com, Incorporated ("we" or "HomeSeekers") filed with the Securities
and Exchange Commission using a "shelf" registration process. Using this
process, we may offer the Securities described in this prospectus in one or more
offerings with a total public offering price of up to $75,000,000. This
prospectus provides you with a general description of the Securities we may
offer. Each time we offer Securities, we will provide you a prospectus
supplement and any pricing supplement that will contain information about the
specific terms of that particular offering. The prospectus supplement or pricing
supplement may also add, update or change information contained in this
prospectus. To obtain additional information that may be important to you, you
should read the exhibits filed by us with this registration statement or our
other filings with the Securities and Exchange Commission. You also should read
this prospectus and any prospectus supplement or pricing supplement together
with the additional information described under the heading "Where You Can Find
More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You can read and
copy any materials we file with the Securities and Exchange Commission at its
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at
its regional offices located at Seven World Trade Center, New York, New York
10048 and at 500 West Madison Street, Chicago, Illinois 60661. You can obtain
information about the operations of the Securities and Exchange Commission
Public Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. The Securities and Exchange Commission also maintains a Website
that contains information we file electronically with the Securities and
Exchange Commission, which you can access over the Internet at
http://www.sec.gov. Our Common Stock is listed on the Nasdaq SmallCap Market
under the trading symbol "HMSK," and you can obtain information about us at the
offices of the Nasdaq SmallCap Market, 1735 K Street, N.W., Washington, D.C.
20006.
This prospectus is part of a registration statement we have filed with
the Securities and Exchange Commission relating to the Securities. As permitted
by Securities and Exchange Commission rules, this prospectus does not contain
all of the information we have included in the registration statement and the
accompanying exhibits we file with the Securities and Exchange Commission. You
may refer to the registration statement and the exhibits for more information
about us and the Securities. The registration statement and the exhibits are
available at the Securities and Exchange Commission's Public Reference Room or
through its Web site.
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information we incorporate by reference is an important part of this prospectus,
and later information that we file with the Securities and Exchange Commission
will automatically update and supersede some of this information. We incorporate
by reference the documents listed below, and any future filings we make with the
Securities and Exchange Commission under Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until we sell all of the Securities. The
documents we incorporate by reference are:
2
<PAGE>
o our annual report on Form 10-KSB for the year ended June 30,
1999;
o our quarterly reports on Form 10-QSB for the periods ended
September 30, 1999 (as amended) and December 31, 1999;
o our current reports on Form 8-K filed with the Securities and
Exchange Commission on October 5, 1999 (as amended on December
1, 1999), October 15, 1999 (as amended on December 1, 1999)
and December 15, 1999; and
o the description of our Common Stock contained in Amendment No.
3 to our registration statement on Form 10-SB, Commission File
No. 000-23835, as filed with the Securities and Exchange
Commission on October 6, 1998.
You may request a copy of these filings (other than an exhibit to the
filings unless we have specifically incorporated that exhibit by reference into
the filing), at no cost, by writing or telephoning us at the following address:
HomeSeekers.com, Incorporated
6490 South McCarran Boulevard
Suite D-28
Reno, Nevada 89509
Attention: Chief Financial Officer
(775) 827-6886
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We may only use this
prospectus to sell Securities if it is accompanied by a prospectus supplement.
We are only offering these Securities in states where the offer is permitted.
You should not assume that the information in this prospectus or any applicable
prospectus supplement is accurate as of any date other than the date on the
front of those documents.
3
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE BUYING
SHARES IN THIS OFFERING. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR
BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE MATERIALLY AND
ADVERSELY AFFECTED, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE AND YOU
COULD LOSE ALL OR PART OF YOUR INVESTMENT.
INVESTING IN OUR COMMON STOCK MAY EXPOSE YOU
TO THE FOLLOWING RISKS INHERENT IN OUR BUSINESS.
WE CURRENTLY ARE NOT PROFITABLE AND MAY RECORD SIGNIFICANT LOSSES FOR THE
FORESEEABLE FUTURE.
We incurred a net loss of $7.6 million for the six months ended
December 31, 1999 and an aggregate net loss of $7.6 million for the two-year
period ended June 30, 1999, including net losses of $4.8 million and $2.8
million for the years ended June 30, 1999 and 1998, respectively. We have an
accumulated deficit as of December 31, 1999 of $22.8 million. We may record
significantly greater net losses for the foreseeable future, as we expect to
incur significant expenses in the foreseeable future. These expenses will
include product development expenses, sales and marketing costs, general and
administrative expenses and acquisition costs. There can be no assurance that we
will achieve sufficient additional revenues to offset anticipated operating and
acquisition costs. We will continue to have high levels of operating expenses
and will be required to make significant expenditures in connection with our
product development activities and our sales and marketing infrastructure
development. We may never achieve profitability. If we fail to achieve
profitability or sustain or increase profitability if we achieve it, our
business, operating results and financial condition will be materially harmed.
MARKET COMPETITION AMONG OUR EXISTING AND POTENTIAL COMPETITORS MAY ADVERSELY
AFFECT OUR BUSINESS.
The market for on-line real estate content and e-commerce providers is
rapidly evolving and highly competitive, and we expect competition to intensify
in the future. Our failure to maintain and enhance our competitive position
could seriously harm our business. The technological and other requirements to
remain competitive are changing continually, and we must be able to respond to
changes in the industry in order to remain competitive. Our competitors vary in
size and in the scope and breadth of products and services they offer.
Our principal competitors for real estate professionals, homebuyers,
sellers and renters and related content include:
o Websites offering real estate listings together with other
related services, such as homestore.com, Apartments.com,
CyberHomes, HomeHunter.com, iOwn, LoopNet, Microsoft's
HomeAdvisor, NewHomeNetwork.com and RentNet;
o Websites offering real estate related content and services
such as mortgage calculators and information on the home
buying, selling and renting processes;
o general purpose consumer Websites such as AltaVista and Yahoo!
that also offer real estate-related content on their site; and
o traditional print media such as newspapers and magazines.
Our principal competitors for advertising revenues include:
o Web portals and other general purpose consumer Websites such
as AltaVista, America Online, Excite, Lycos, Netscape's
Netcenter and Yahoo!;
o online ventures of traditional media and classified
advertising services offered through daily and other
newspapers' Websites; and
o traditional media such as newspapers, magazines and
television.
4
<PAGE>
The barriers to entry for Web-based services and businesses are low,
making it possible for new competitors to proliferate rapidly. In addition,
parties with whom we have listing and marketing agreements could choose to
develop their own Internet strategies or competing real estate sites upon the
termination of their agreements with us. Many of our existing and potential
competitors have longer operating histories in the Internet market, greater name
recognition, larger consumer bases and significantly greater financial,
technical and marketing resources than we do, and thus could respond more
quickly to changing opportunities, technology and consumer demands. Also, some
of our current and potential competitors have better name recognition and more
extensive customer bases that may allow them to gain additional market share to
our detriment. These competitors may be able to undertake more extensive
promotional activities and adopt more competitive pricing policies for
advertising and goods and services than we can. In addition, our competitors,
especially those with greater resources than we have, could significantly
enhance their product offerings by developing improved technology solutions or
offering daily updates of listings. This could significantly reduce or eliminate
any competitive advantage we currently might have and, accordingly, could
significantly harm our business.
Competitive pressures may make it difficult for us to acquire market
share. We cannot be certain that we will be able to compete successfully with
existing or new competitors. If we fail to compete successfully against current
and future competitors, our business and prospects will be seriously harmed.
WE ARE UNCERTAIN OF OUR ABILITY TO OBTAIN ADDITIONAL FINANCING FOR OUR FUTURE
CAPITAL NEEDS.
Our business is capital intensive, particularly with respect to product
development costs associated with the design and creation of software products,
and our plan to grow through acquisitions and strategic alliances. Accordingly,
we will require additional capital to support and expand our operations. To the
extent that revenues from operations are insufficient and additional funding is
required, public or private financing may not be available when needed or may
not be available on terms favorable or acceptable to us, if at all. Failure to
secure additional financing, if and when needed, may have a material adverse
affect on our ability to implement our proposed business strategy.
WE MUST CONTINUE TO OBTAIN LISTINGS FROM REAL ESTATE AGENTS, BROKERS,
HOMEBUILDERS, MULTIPLE LISTING SERVICES AND PROPERTY OWNERS.
We believe that our success depends in large part on the number of real
estate listings received from agents, brokers, homebuilders, MLSs and
residential, rental and commercial property owners. Many of our agreements with
MLSs, brokers and agents to display property listings have fixed terms,
typically 12 to 30 months. At the end of the term of each agreement, the other
party may choose not to continue to provide listing information to us and may
choose to provide this information to one or more of our competitors instead. In
addition, some of these providers of listings may choose to provide their
listings to one or more of our competitors on an exclusive basis. In particular,
at least one of our competitors has entered into exclusive listing arrangements
with a significant number of MLSs. In order for us to display listings covered
by these arrangements, we seek to obtain the consent of the individual brokers
who provide these listings to the MLSs. Accordingly, these listings can be more
difficult to obtain and involve more recruiting costs to acquire them. Our use
of these listings could potentially subject us to claims by the parties to these
exclusive listing arrangements. If our competitors are successful in increasing
the number of exclusive listing arrangements with MLSs or large groups of
brokers, we may be limited in the number of listings we are able to display on
our Website and our business may be harmed. We have expended significant amounts
to secure agreements for listings of real estate for sale and may be required to
spend additional large amounts or offer other incentives in order to renew these
agreements. If owners of large numbers of property listings, such as large
brokers, MLSs, or property owners in key real estate markets choose not to renew
their relationship with us, our Website could become less attractive to other
real estate industry participants or consumers.
OUR QUARTERLY FINANCIAL RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS.
Our results of operations could vary significantly from quarter to
quarter. In the near term, we expect to be substantially dependent on sales of
our advertising products and services. We also expect to incur significant sales
and marketing expenses to promote our brand and services. Therefore, our
quarterly revenues and operating results are likely to be particularly affected
by the number of customers purchasing advertising products and services as well
5
<PAGE>
as sales and marketing expenses for a particular period. If revenues fall below
our expectations, we may not be able to reduce our spending rapidly in response
to the shortfall.
Other factors that could affect our quarterly operating results include
those described below and elsewhere in this prospectus:
o the amount of advertising sold on our Website and the timing
of payments for this advertising;
o the level of renewals for our advertising products and
services by real estate agents and brokers;
o the amount and timing of our operating expenses and capital
expenditures;
o costs related to acquisitions of businesses or technologies;
o changes in the mix of products and services we sell; and
o increased sales, marketing, administrative and research and
development expenses.
Our quarterly revenues increased 154% from the quarter ended December
31, 1998 to the quarter ended December 31, 1999 and 88% from the quarter ended
September 30, 1999 to the quarter ended December 31, 1999. We do not believe
that these rates of growth are indicative of future growth in revenues, if any,
that we can expect in the future. Accordingly, we believe that period-to-period
comparisons of our operating results may not be meaningful, and you should not
rely on these comparisons as an indication of our future performance. Our
operating results may fall below the expectations of investors. In this event,
the market price of our Common Stock would likely fall.
OUR BRAND MAY NOT ACHIEVE THE BROAD RECOGNITION NECESSARY TO SUCCEED.
We believe that broader recognition and a favorable consumer perception
of the HomeSeekers.com brand are essential to our future success. Successful
positioning of the HomeSeekers.com brand will largely depend on the success of
our advertising, marketing and promotion efforts and our ability to continue to
provide high quality real estate content. We intend to pursue an aggressive
brand development strategy, which will include substantially larger advertising,
marketing and promotional programs than those historically undertaken by us.
These initiatives will involve significant expense. If our brand development
strategy is unsuccessful, these expenses may never be recovered and we may never
be able to generate a profit.
IT IS IMPORTANT TO OUR SUCCESS THAT WE SUPPORT OUR REAL ESTATE PROFESSIONAL
CUSTOMERS.
Since many real estate professionals are not sophisticated computer
users and often spend limited amounts of time in their offices, it is important
that these customers find that our products and services significantly enhance
their productivity and are easy to use. To meet these needs, we provide customer
training and have developed a customer support organization that seeks to
respond to customer inquiries as quickly as possible. If our real estate
professional customer base grows, we may need to expand our support organization
further to maintain satisfactory customer support levels. If we need to enlarge
our support organization, we would incur higher overhead costs. If we do not
maintain adequate support levels, these customers could choose to discontinue
using our service.
BECAUSE WE HAVE EXPANDED OUR OPERATIONS, OUR SUCCESS WILL DEPEND ON OUR ABILITY
TO MANAGE OUR GROWTH.
We have experienced, and expect to continue to experience, periods of
rapid growth that strain our administrative, financial and operational
resources. Our ability to manage any staff and facilities growth effectively
will require us to continue to improve our operational, financial and management
controls, reporting systems and procedures, to install new management
information and control systems and to train, motivate and manage our employees.
There can be no assurance that we will install such management information and
control systems in an efficient and timely manner or that the new systems will
be adequate to support our future operations. If we are unable to hire, train
and retain qualified systems engineers and consultants to implement these
services or are unable to manage the post-sales process effectively, our ability
to attract repeat sales or provide references could be materially adversely
affected, thereby limiting our growth opportunities. If our management is unable
to manage
6
<PAGE>
growth effectively, which would happen if our sales and marketing efforts exceed
our capacity to install, maintain and service our products or if new employees
are unable to achieve adequate performance levels, our business, financial
condition and results of operations would be adversely affected.
OUR BUSINESS OPERATIONS DEPEND ON THE CONTINUING CONTRIBUTION OF OUR KEY
PERSONNEL.
Our future success depends to a significant extent on the continued
service of our key technical and senior management personnel. Loss of the
services of any of Gregory L. Costley, our Chairman of the Board and Chief
Executive Officer, John Giaimo, our President and Chief Operating Officer,
Douglas Swanson, our Vice Chairman and Executive Vice President, Greg Johnson,
our Chief Technology Officer, or James A. Dykstra, our Chief Financial Officer,
could have an adverse effect on our business, financial condition and results of
operations.
Mr. Costley joined us in August 1999 and Mr. Dykstra joined us in
September 1999. As a result, our senior management does not have a history of
working together as a team. Failure to maintain an effective team of senior
managers would adversely affect the operation of our business.
WE MUST ATTRACT AND RETAIN PERSONNEL WHILE COMPETITION FOR PERSONNEL IN OUR
INDUSTRY IS INTENSE.
We may be unable to retain our key employees or to attract, assimilate
or retain other highly qualified employees. We have from time to time in the
past experienced, and we expect in the future to continue to experience,
difficulty in hiring and retaining highly skilled employees with appropriate
qualifications as a result of our rapid growth and expansion. Attracting and
retaining qualified personnel with experience in the real estate industry, a
complex industry that requires a unique knowledge base, is an additional
challenge for us. In addition, there is significant competition among companies
in the Internet industry for qualified employees. If we do not succeed in
attracting new personnel or retaining and motivating our current personnel, our
business, financial condition and results of operations will be adversely
affected.
WE NEED TO CONTINUE TO DEVELOP OUR CONTENT AND OUR PRODUCT AND SERVICE
OFFERINGS.
To remain competitive we must continue to enhance and improve the ease
of use, responsiveness, functionality and features of our Website. These efforts
may require us to develop internally or to license increasingly complex
technologies. In addition, many companies are continually introducing new
Internet-related products, services and technologies, which will require us to
update or modify our technology. Developing and integrating new products,
services or technologies into our Website could be expensive and time consuming.
For example, we may experience difficulties in integrating, or be unable to
integrate, the technologies that we recently acquired from Terradatum with our
MLS 2000 product to create an enhanced product for MLS data handling solutions.
Any new features, functions or services may not achieve market acceptance or
enhance our brand loyalty. If we fail to develop and introduce or acquire new
features, functions or services effectively and on a timely basis, we may not
continue to attract new users and may be unable to retain our existing users.
Furthermore, we may not succeed in incorporating new Internet technologies or,
in order to do so, we may incur substantial expenses.
OUR RECENT ACQUISITIONS AND ANY FUTURE ACQUISITIONS MAY RESULT IN OUR NOT
ACHIEVING THE DESIRED BENEFITS OF THE TRANSACTION. RISKS RELATED TO OUR
ACQUISITIONS INCLUDE:
o difficulties in assimilating the operations of the acquired
businesses;
o potential disruption of our existing businesses;
o assumption of unknown liabilities and litigation;
o our inability to integrate, train, retain and motivate
personnel of the acquired businesses;
o diversion of our management from our day-to-day operations;
o our inability to incorporate acquired products, services and
technologies successfully into our products;
7
<PAGE>
o potential impairment of relationships with our employees,
customers and strategic partners; and
o inability to maintain uniform standards, controls procedures
and policies.
Our inability to successfully address any of these risks could
adversely affect our business, financial condition and results of operations.
WE DEPEND ON THIRD-PARTY RELATIONSHIPS, MANY OF WHICH ARE SHORT-TERM OR
TERMINABLE, TO GENERATE ADVERTISING AND PROVIDE US WITH CONTENT.
We depend, and will continue to depend, on a number of third-party
relationships to increase traffic on HomeSeekers.com and thereby generate
advertising and other revenues. Outside parties on which we depend include
unrelated Website operators that provide links to HomeSeekers.com and providers
of real estate content. Many of our relationships with third-party Websites and
other third-party service providers are not exclusive and are short-term or may
be terminated at the convenience of either party. We cannot assure you that
third parties regard our relationship with them as important to their respective
businesses and operations. They may reassess their commitment to us at any time
in the future and may develop their own competitive services or products.
We cannot assure you that we will be able to maintain relationships
with third parties that supply us with content or related products or services
that are crucial to our success, or that such content, products or services will
be able to sustain any third-party claims or rights against their use. Also, we
cannot assure you that the content, products or services of those companies that
provide access or links to our Website will achieve market acceptance or
commercial success. Accordingly, we cannot assure you that our existing
relationships will result in sustained business partnerships, successful product
or service offerings or the generation of significant revenues for us.
OUR SUCCESS IS DEPENDENT UPON THE INTELLECTUAL PROPERTY THAT WE USE IN OUR
BUSINESS.
We regard our Internet domain name, copyrights, service marks,
trademarks, trade secrets and similar intellectual property that we use in our
business as critical to our success. We rely on a combination of copyright,
trademark and trade secret laws, confidentiality procedures, contractual
provisions and license and other agreements with employees, customers and others
to protect our intellectual property rights. In addition, we may also rely on
the third party owners of the intellectual property rights we license to protect
those rights. Effective Internet domain name, copyright, service mark, trademark
and trade secret protection may not be available in every country in which our
products and services are made available online. The steps taken by us and other
third parties to protect our intellectual property rights may not be adequate,
and third parties may infringe upon or misappropriate the intellectual property
and similar proprietary rights used in our business, which could have an adverse
effect on our business, financial condition and results of operations.
We are also subject to the risk of adverse claims and litigation
alleging infringement of the intellectual property rights we use. The resolution
of any infringement claims may result in lengthy and costly litigation.
Moreover, resolution of a claim may require us to obtain a license to use those
intellectual property rights or possibly to cease using those rights altogether.
Any of those events could have a material adverse effect on our business,
financial condition and results of operations.
OUR INTERNATIONAL BUSINESS IS SUBJECT TO A NUMBER OF RISKS ASSOCIATED WITH DOING
BUSINESS ABROAD.
Although we have not actively marketed our products and services to
brokers, agents, homebuilders and other real estate professionals located
outside of North America, we intend to market our Website and products and
services globally. Our international business is subject to a number of risks
generally associated with doing business abroad, including:
o fluctuations in currency exchange rates, the impact of
recessions in economies outside the United States and
regulatory and political changes in foreign markets;
o reduced protection for intellectual property rights in some
countries; and
8
<PAGE>
o potential limits on use of some of our trademarks and licensed
trademarks outside the United States.
These factors could adversely affect our business, financial condition
and results of operations. In addition, expansion into new international markets
may present competitive challenges different from those we currently face. We
cannot assure you that we will expand internationally or that any such expansion
will result in profitable operations.
INVESTORS IN OUR COMMON STOCK ARE SUBJECT TO
THE FOLLOWING RISKS ASSOCIATED WITH THE REAL ESTATE INDUSTRY.
OUR BUSINESS IS DEPENDENT ON THE STRENGTH OF THE REAL ESTATE INDUSTRY, WHICH IS
BOTH CYCLICAL AND SEASONAL.
The real estate industry traditionally has been cyclical. Recently,
sales of real estate in the United States have been at historically high levels.
Economic swings in the real estate industry may be caused by various factors.
When interest rates are high or general national and global economic conditions
are or are perceived to be weak, there typically is less sales activity in real
estate. A decrease in the current level of sales of real estate and products and
services related to real estate could adversely affect demand for our Website
and our advertising products and services. In addition, reduced traffic on our
Website would likely cause our advertising revenues to decline, which would
adversely affect our business, financial condition and results of operations.
We may experience seasonality in our business. The real estate industry
experiences a decrease in activity during the winter. However, because of our
limited operating history under our current business model, it is difficult for
us to fully assess the impact of seasonal factors on our business. If we are
unable to effectively manage our resources in anticipation of any seasonality of
our revenues and the increased costs we may incur during periods of lower
revenues, our business would be materially harmed.
WE MAY PARTICULARLY BE AFFECTED BY GENERAL ECONOMIC CONDITIONS.
Purchases of real property and related products and services are
particularly affected by negative trends in the general economy. The success of
our operations depends to a significant extent upon a number of factors relating
to discretionary consumer and business spending and the overall economy, as well
as regional and local economic conditions in markets where we operate,
including:
o perceived and actual economic conditions;
o interest rates;
o taxation policies;
o availability of credit;
o employment levels; and
o wage and salary levels.
In addition, because a consumer's purchase of real property and related
products and services is a significant investment and is relatively
discretionary, any reduction in disposable income in general may affect us more
significantly than companies in other industries.
WE HAVE RISKS ASSOCIATED WITH CHANGING LEGISLATION IN THE REAL ESTATE INDUSTRY.
Real estate is a heavily regulated industry in the U.S. These
regulations include the Fair Housing Act, the Real Estate Settlement Procedures
Act and state advertising laws. In addition, states could enact legislation or
regulatory policies in the future that could require us to expend significant
resources to comply. These laws and related regulations may limit or restrict
our activities. For example, we are limited in the criteria upon which we
9
<PAGE>
may base searches of our real estate listings and may not use criteria such as
age or race. As the real estate industry evolves in the Internet environment,
legislators, regulators and industry participants may advocate additional
legislative or regulatory initiatives. Should existing laws or regulations be
amended or new laws or regulations be adopted, we may need to comply with
additional legal requirements and incur resulting costs, or we may be precluded
from certain activities. To date, we have not spent significant resources on
lobbying or related government issues. Any need to significantly increase our
lobbying or related activities could substantially increase our operating costs.
THE FOLLOWING RISKS INHERENT IN DOING BUSINESS
OVER THE INTERNET COULD ADVERSELY AFFECT OUR BUSINESS.
WE DEPEND ON INCREASED USE OF THE INTERNET TO EXPAND OUR REAL ESTATE RELATED
ADVERTISING PRODUCTS AND SERVICES.
If the Internet fails to become a viable marketplace for real estate
content, information and e-commerce, our business will not grow. Broad
acceptance and adoption of the Internet by consumers and businesses when
searching for real estate and related products and services will only occur if
the Internet provides them with greater efficiencies and improved access to
information.
IN ADDITION TO SELLING ADVERTISING PRODUCTS AND SERVICES TO REAL ESTATE
PROFESSIONALS, WE DEPEND ON SELLING OTHER TYPES OF ADVERTISEMENTS ON OUR
WEBSITE.
Our business would be adversely affected if the market for Internet
advertising fails to develop or develops more slowly than expected. Our ability
to generate advertising revenues from selling banner advertising and
sponsorships on our Website and products targeted at real estate professionals
will depend on, among other factors, the development of the Internet as an
advertising medium, the amount of traffic on our Website and our ability to
achieve and demonstrate demographic characteristics among the users of our
Website and other products and services that are attractive to advertisers. Many
potential advertisers and their advertising agencies have only limited
experience with the Internet as an advertising medium and have not devoted a
significant portion of their advertising expenditures to Internet-based
advertising. No standards have been widely accepted to measure the effectiveness
of Internet advertising. If these standards do not develop, existing advertisers
might reduce their current levels of Internet advertising or eliminate their
spending entirely. The widespread adoption of technologies that permit Internet
users to selectively block out unwanted graphics, including advertisements
attached to Webpages, could also adversely affect the growth of the Internet as
an advertising medium. In addition, advertisers in the real estate industry,
including real estate professionals, have traditionally relied upon other
advertising media, such as newsprint and magazines, and have invested
substantial resources in other advertising methods. These persons may be
reluctant to adopt a new strategy and advertise on the Internet.
GOVERNMENT REGULATIONS AND LEGAL UNCERTAINTIES COULD AFFECT THE GROWTH OF THE
INTERNET.
A number of legislative and regulatory proposals under consideration by
federal, state, local and foreign governmental organizations may lead to laws or
regulations concerning various aspects of the Internet, including online
content, user privacy, access charges, liability for third-party activities and
jurisdiction. Additionally, it is uncertain as to how existing laws will be
applied to the Internet. The adoption of new laws or the application of existing
laws may decrease the growth in the use of the Internet, which could in turn
decrease the usage and demand for our services or increase our cost of doing
business.
Some local telephone carriers have asserted that the increasing
popularity and use of the Internet have burdened the existing telecommunications
infrastructure, and that many areas with high Internet use have begun to
experience interruptions in telephone service. These carriers have petitioned
the Federal Communications Commission to impose access fees on Internet service
providers and online service providers. If access fees are imposed, the costs of
communicating on the Internet could increase substantially, potentially slowing
the increasing use of the Internet. This could in turn decrease demand for our
services or increase our cost of doing business.
10
<PAGE>
OUR INABILITY TO SECURE AND PROTECT OUR INTERNET DOMAIN NAME MAY ADVERSELY
AFFECT OUR BUSINESS OPERATION.
The www.HomeSeekers.com Internet domain name is our brand on the
Internet. The acquisition and maintenance of Internet domain names generally is
regulated by governmental agencies and their designees. Until recently, Network
Solutions, Inc. was the exclusive registrar for the ".com," ".net" and ".org"
generic top-level Internet domains in the U.S. In April 1999, however, the
Internet Corporation for Assigned Names and Numbers, or ICANN, a new global
non-profit corporation formed to oversee a set of the Internet's core technical
management functions, opened the market for registering Internet domain names to
an initial group of five companies. Network Solutions, Inc. still maintains the
registry containing all the registrations in the generic top-level Internet
domains. The market for registering these Internet domain names in the U.S. and
in foreign countries is expected to undergo further changes in the near future.
We expect the requirements for registering Internet domain names also to be
affected. The relationship between regulations governing Internet domain names
and laws protecting trademarks and similar proprietary rights is unclear. We may
be unable to prevent third parties from acquiring Internet domain names that are
similar to, infringe upon or otherwise decrease the value of our Internet domain
name, the trademarks and other intellectual property rights used by us and we
may need to protect our rights through litigation. If we are unable to
adequately protect our Internet domain name, our trademarks and other
intellectual property rights or incur substantial costs in doing so, it could
have an adverse effect on our business, financial condition and results of
operations.
TAXATION OF INTERNET TRANSACTIONS COULD SLOW THE USE OF THE INTERNET.
The tax treatment of the Internet and electronic commerce is currently
unsettled. A number of proposals have been made at the federal, state and local
level and by various foreign governments to impose taxes on the sale of goods
and services and other Internet activities. Recently, the Internet Tax
Information Act was signed into law placing a three-year moratorium on new state
and local taxes on Internet commerce. However, future laws may impose taxes or
other regulations on Internet commerce, which could substantially impair the
growth of e-commerce.
WE DEPEND ON CONTINUED IMPROVEMENTS TO OUR COMPUTER NETWORK AND THE
INFRASTRUCTURE OF THE INTERNET.
Any failure of our computer systems that causes interruption or slower
response time of our Website or services could result in a smaller number of
users of our Website or the Websites and Webpages that we host for real estate
professionals. If sustained or repeated, these performance issues could reduce
the attractiveness of our Website to consumers and our advertising products and
services to real estate professionals, providers of real estate related products
and services and other Internet advertisers. Increases in the volume of our
Website traffic could also strain the capacity of our existing computer systems,
which could lead to slower response times or system failures. This would cause
the number of real property search inquiries, advertising impressions, other
revenue producing offerings and our informational offerings to decline, any of
which could hurt our revenue growth and our brand loyalty. We expect that we
will incur additional costs to upgrade our computer systems in order to
accommodate increased demand if our systems cannot handle current or higher
volumes of traffic.
The recent growth in Internet traffic has caused frequent periods of
decreased performance. Our ability to increase the speed with which we provide
services to consumers and to increase the scope of these services is limited by
and dependent upon the speed and reliability of the Internet. Consequently, the
emergence and growth of the market for our services is dependent on the
performance of and future improvements to the Internet.
OUR INTERNAL NETWORK INFRASTRUCTURE COULD BE DISRUPTED.
Our operations depend upon our ability to maintain and protect our
computer systems, most of which are located at our facilities in Brea,
California and Minden, Nevada. Our systems are vulnerable to damage from
break-ins, unauthorized access, vandalism, fire, floods, earthquakes, power
loss, telecommunications failures and similar events. Although we maintain
insurance against fires and general business interruptions, the amount of
coverage may not be adequate in any particular case.
Experienced computer programmers, or hackers, may attempt to penetrate
our network security from time to time. Although we have not experienced any
material security breaches to date, a hacker who penetrates our network security
could misappropriate proprietary information or cause interruptions in our
services. We might be
11
<PAGE>
required to expend significant capital and resources to protect against, or to
alleviate, problems caused by hackers. We also may not have a timely remedy
against a hacker who is able to penetrate our network security. In addition to
purposeful security breaches, the inadvertent transmission of computer viruses
could expose us to litigation or to a material risk of loss.
WE COULD FACE LIABILITY FOR INFORMATION ON OUR WEBSITE AND FOR PRODUCTS AND
SERVICES SOLD OVER THE INTERNET.
We provide third-party content on our Website, particularly real estate
listings. We could be exposed to liability with respect to this third-party
information. Persons might assert, among other things, that, by directly or
indirectly providing links to Websites operated by third parties, we should be
liable for copyright or trademark infringement or other wrongful actions by the
third parties operating those Websites. They could also assert that our third
party information contains errors or omissions, and consumers could seek damages
for losses incurred if they rely upon incorrect information.
We enter into agreements with other companies under which we share with
these other companies revenues resulting from advertising or the purchase of
services through direct links to or from our Website. These arrangements may
expose us to additional legal risks and uncertainties, including local, state,
federal and foreign government regulation and potential liabilities to consumers
of these services, even if we do not provide the services ourselves. We cannot
assure you that any indemnification provided to us in our agreements with these
parties, if available, will be adequate.
Even if these claims do not result in liability to us, we could incur
significant costs in investigating and defending against these claims. Our
general liability insurance may not cover all potential claims to which we are
exposed and may not be adequate to indemnify us for all liability that may be
imposed.
PURCHASERS OF OUR COMMON STOCK ARE SUBJECT
TO THE FOLLOWING RISKS ASSOCIATED WITH OUR COMMON STOCK.
A SUBSTANTIAL NUMBER OF OUR SHARES ARE AVAILABLE FOR SALE IN THE PUBLIC MARKET
AND SALES OF THOSE SHARES COULD ADVERSELY AFFECT OUR STOCK PRICE.
Sales of a substantial number of shares of Common Stock into the public
market, or the perception that those sales could occur, could adversely affect
our stock price or could impair our ability to obtain capital through an
offering of equity securities. As of February 18, 2000, we have outstanding
17,533,311 shares of Common Stock. Of these shares, 11,855,420 are freely
transferable without restriction under the Securities Act of 1933 and 5,677,891
may be sold subject to the volume restrictions, manner-of-sale provisions and
other conditions of Rule 144 under the Securities Act of 1933.
We have granted various parties registration rights that enable those
parties to require us to register an aggregate of 313,207 of the shares of our
Common Stock outstanding as of February 18, 2000, including shares of Common
Stock issuable upon the exercise of outstanding warrants to purchase Common
Stock. These registration rights also require us to include those shares in
registrations of Common Stock made by us in the future.
The Company anticipates requesting shareholder approval to increase the
number of shares available under the Company's 1996 Stock Option Plan.
Additionally, the Company will request shareholder approval to grant
approximately 2,100,000 options at an average price of $8.00 per share.
THE MARKET PRICE FOR OUR COMMON STOCK IS LIKELY TO BE HIGHLY VOLATILE BECAUSE
THE MARKET FOR INTERNET-RELATED AND TECHNOLOGY COMPANIES IN PARTICULAR HAS BEEN
HIGHLY VOLATILE.
Investors may not be able to resell their shares of Common Stock
following periods of volatility because the market reacts adversely to
volatility. The trading prices of many technology and Internet-related
companies' stocks reached historical highs within the last 52 weeks and reflect
relative valuations that are substantially above historical levels.
During the same period, these companies' stocks also have recorded lows
well below historical highs. We cannot assure you that our stock will trade at
the same levels of other Internet stocks or that we can sustain our Common
Stock's trading price.
12
<PAGE>
Many of the factors that might cause volatility in the market price of
our Common Stock are beyond our control. These factors may materially and
adversely affect the market price of our Common Stock, regardless of how we
operate.
WE COULD BE REQUIRED TO REGISTER AS AN INVESTMENT COMPANY AND BECOME SUBJECT TO
SUBSTANTIAL REGULATION THAT WOULD INTERFERE WITH OUR ABILITY TO CONDUCT OUR
BUSINESS.
We plan to invest in short-term government securities consistent with
prudent cash management and not primarily for the purpose of achieving
investment returns. Investment in securities primarily for the purpose of
achieving investment returns could result in our being treated as an "investment
company" under the Investment Company Act of 1940. In addition, the Investment
Company Act requires the registration of companies that are primarily in the
business of investing, reinvesting or trading securities or that fail to meet
various statistical tests regarding the composition of their assets and the
sources of their income even though they consider themselves not to be primarily
engaged in investing, reinvesting or trading securities.
If we are required to register as an investment company pursuant to the
Investment Company Act, we would be subject to substantial regulation with
respect to our capital structure, management, operations, transactions with
affiliated persons and other matters. Application of the provisions of the
Investment Company Act to us would materially and adversely affect our business,
financial condition and results of operations.
WE MAY BE LIABLE FOR PRIOR FAILURES TO REGISTER SECURITIES IN A TIMELY MANNER.
We have, from time to time, issued securities in private offerings and
in connection with business combination transactions and have agreed to register
those securities for subsequent public sale. We have not met our obligation to
timely register those securities. As a result, we may be liable to some of our
securityholders, which could adversely affect our business, financial condition
and results of operations. Some of these registration rights may require us to
register securities in the future. It is possible that we may not meet those
obligations, which would subject us to further liability and could adversely
affect our business, financial condition and results of operations.
ANTI-TAKEOVER PROVISIONS COULD DELAY OR PREVENT A CHANGE OF CONTROL.
Provisions of our articles of incorporation and amended and restated
bylaws and Nevada law, as well as provisions in our existing employment
agreements with Gregory L. Costley, our Chairman of the Board and Chief
Executive Officer, John Giaimo, our President and Chief Operating Officer, Doug
Swanson, our Vice Chairman and Executive Vice President, and Greg Johnson, our
Chief Technology Officer, could make it more difficult for a third party to
acquire us, even if doing so would be beneficial to our stockholders. In
addition, BuySellBid.com has agreed not to vote its shares in favor of various
business combination transactions unless that transaction has been approved by
our board of directors.
INVESTORS SHOULD NOT PURCHASE OUR COMMON STOCK WITH THE EXPECTATION OF RECEIVING
CASH DIVIDENDS.
We currently intend to retain any future earnings for funding growth
and, as a result, do not expect to pay any cash dividends in the foreseeable
future.
13
<PAGE>
FORWARD-LOOKING INFORMATION
Some of the statements contained in this prospectus and the documents
incorporated herein by reference constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. In some
cases, you can identify forward-looking statements by terms such as "may,"
"will," "should," "expect," "plan," "anticipate," "believe," "estimate,"
"predict," "potential," or "continue," or the negative of these terms or other
comparable terminology. The forward-looking statements contained or incorporated
by reference in this prospectus involve known and unknown risks, uncertainties
and other factors that may cause our or our industry's actual results, level of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
these statements. These factors include those listed under "Risk Factors" and
elsewhere in this prospectus and the documents incorporated herein by reference.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. You should not place undue
reliance on these forward-looking statements.
ABOUT HOMESEEKERS
We are one of the leading Internet destinations for residential real
estate content and e-commerce. We provide consumers, brokers and agents with a
nationwide source of residential real estate listings that are updated on a
daily basis. In addition to providing the consumer with the necessary tools to
find a home on the Internet, including the ability to view 360 degree panoramic
"virtual tours" of selected homes, we also enable the real estate professional
to more effectively interact with consumers with our customizable Web-based
marketing solutions. The key components of our revenue model are (1) Website
creation, development and hosting; (2) advertising sales; and (3) technology and
other services to real estate professionals. We seek to enhance our competitive
position by pursuing strategic alliances such as we currently have in place with
Microsoft under which we provide Microsoft real estate listing aggregation
services. In addition, an important component of our branding strategy is our
agreement with BuySellBid.com under which we are the exclusive real estate
portal for Clear Channel Communications' nationwide system of radio stations.
Our objective is to become the premier provider of Web-based real
estate services, thereby enabling consumers, agents and brokers, as well as
providers of ancillary services such as mortgage, insurance, moving, inspection
and home improvement/maintenance, to connect through the Internet at
www.HomeSeekers.com. We believe that our suite of products and services enhances
and expedites the flow of information among all parties involved in the various
aspects of a real estate transaction. We believe that these Web-based
interactions will lead to better-enabled professionals and service providers who
will, in turn, be able to interact more effectively with well-informed consumers
in a time- and cost-efficient manner. As of February 18, 2000, we had listings
of approximately 800,000 of the nearly 1,200,000 million homes that we estimate
were listed nationally for sale at that time.
USE OF PROCEEDS
Unless we inform you otherwise in the prospectus supplement, we will
use the net proceeds from the sale of the Securities offered by this prospectus
for general corporate purposes. These purposes may include repayment and
refinancing of debt, acquisitions, working capital, capital expenditures and
repurchases and redemptions of securities. Pending any specific application, we
may initially invest funds in short-term marketable securities or apply them to
the reduction of short-term indebtedness.
14
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
Our authorized capital stock consists of 50,000,000 shares of Common
Stock, 5,000,000 shares of Class A preferred stock, par value $.001 per share,
and 200,000 shares of Class B preferred stock, par value $10.00 per share. As of
February 18, 2000, 17,533,311 shares of Common Stock were issued and outstanding
and no shares of Class A preferred stock or Class B preferred stock were issued
and outstanding.
The additional shares of our authorized stock available for issuance
might be issued at times and under circumstances so as to have a dilutive effect
on earnings per share and on the equity ownership of the holders of our Common
Stock. The ability of our board of directors to issue additional shares of stock
could enhance the board's ability to negotiate on behalf of the stockholders in
a takeover situation but could also be used by the board to make a
change-in-control more difficult, thereby denying stockholders the potential to
sell their shares at a premium and entrenching current management. The following
description is a summary of the material provisions of our capital stock. You
should refer to our articles of incorporation and bylaws for additional
information.
COMMON STOCK
Subject to the dividend rights of the holders of preferred stock,
holders of shares of our Common Stock are entitled to share ratably in any
dividends that may be declared by our board of directors out of funds legally
available therefor. In the event of a liquidation, dissolution or winding up,
holders of our Common Stock would be entitled to share ratably in all of our
assets available for distribution to holders of Common Stock remaining after
payment of liabilities and liquidation preference of any outstanding preferred
stock.
Each share of Common Stock entitles the holders thereof to one vote.
Holders of Common Stock do not have cumulative voting rights, which means that
the holders of more than 50% of the shares voting for the election of directors
can elect all of the directors standing for election if they choose to do so. In
that event, the holders of the remaining shares will not be able to elect any
directors. Our bylaws provide that only a majority of the issued and outstanding
shares of capital stock entitled to vote need be represented to constitute a
quorum and to transact business at any meeting of stockholders. Our Common Stock
has no preemptive, subscription or conversion rights and is not redeemable by
us. All of the outstanding shares of our Common Stock are fully paid and
nonassessable.
PREFERRED STOCK
Our board of directors has the authority, within the limitations and
restrictions stated in our articles of incorporation, to provide by resolution
for the issuance of shares of preferred stock, and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preference
and the number of shares constituting any series of the designation of such
series. The issuance of preferred stock could have the effect of decreasing the
market price of the Common Stock, impeding or delaying a possible takeover and
adversely affecting the voting and other rights of the holders of our Common
Stock. At present, we have no plans to issue preferred stock.
STOCK OPTIONS
As of February 18, 2000:
o options to purchase a total of 4,501,943 shares of Common
Stock were outstanding, 3,345,967 of which were vested and
exercisable within 60 days, at a weighted average exercise
price of $3.99 per share; and
o up to 201,651 additional shares of Common Stock may be issued
under our 1996 Stock Option Plan.
15
<PAGE>
WARRANTS
As of February 18, 2000, there were outstanding warrants to purchase a
total of 965,704 shares of Common Stock at a weighted average exercise price of
$3.44 per share.
ANTI-TAKEOVER EFFECTS OF NEVADA LAW AND SOME PROVISIONS OF OUR ARTICLES OF
INCORPORATION AND BYLAWS
Some provisions of our articles of incorporation and bylaws, which
provisions are summarized in the following paragraphs, may be deemed to have an
anti-takeover effect and may delay, defer or prevent a tender offer or takeover
attempt that a stockholder might consider to be in its best interest, including
those attempts that might result in a premium over the market price for the
shares held by stockholders.
CLASSIFIED BOARD OF DIRECTORS. Our board of directors is divided into
two classes serving staggered two-year terms. As a result, approximately
one-half of the board of directors will be elected each year. These provisions,
when coupled with the provisions of our articles of incorporation and bylaws
authorizing the board of directors to fill vacant directorships or increase the
size of the board of directors, may deter a stockholder from removing incumbent
directors and simultaneously gaining control of the board of directors by
filling the vacancies created by such removal with its own nominees.
CUMULATIVE VOTING. Our articles of incorporation expressly deny
stockholders the right to cumulate votes in the election of directors.
SPECIAL MEETING OF STOCKHOLDERS. Our bylaws provide that special
meetings of our stockholders may be called only by the chairman of the board of
directors, a majority of the board of directors or by holders of at least 51% of
our issued and outstanding capital stock.
AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued shares of
Common Stock and preferred stock are available for future issuance without
stockholder approval. These additional shares may be utilized for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The existence of
authorized but unissued shares of Common Stock and preferred stock could render
more difficult or discourage an attempt to obtain control of us by means of a
proxy contest, tender offer, merger or otherwise.
AMENDMENTS. The Nevada General Corporation Law provides generally that
the affirmative vote of a majority of the shares entitled to vote on any matter
is required to amend a corporation's articles of incorporation or bylaws.
SECTION 78.438 OF THE NEVADA GENERAL CORPORATION LAW. Section 78.438 of
the Nevada General Corporation Law regulates a wide range of "Combinations"
between a resident domestic corporation that has 200 or more stockholders and
the beneficial owner (or an affiliate of that beneficial owner) of 10% or more
of the voting power of the outstanding voting shares of the corporation, who is
considered to be an "Interested Stockholder." Combinations are broadly defined
to include, among other things,
o mergers or consolidations with,
o sales, leases, mortgages, pledges or other dispositions of
assets having a market value of 5% or more of the market value of the
corporation's assets or outstanding shares, or representing 10% or more of the
corporation's earning power or net income, to,
o various transactions resulting in the issuance or transfer
of any shares having a market value equal to 5% or more of the market value of
all outstanding shares of the corporation to,
o the adoption of a plan or proposal of the liquidation or
dissolution of that corporation proposed by,
o various transactions that would result in increasing the
proportionate share of shares of the corporation owned by, or
16
<PAGE>
o the receipt of benefits, except proportionately as a
stockholder, of any loans, advances or other financial benefits by, an
Interested Stockholder.
Section 78.438 provides that an Interested Stockholder may not engage
in a Combination with the corporation for a period of three years from the date
of becoming an Interested Stockholder unless, prior to the date on which the
Interested Stockholder becomes an Interested Stockholder, the Combination or the
purchase of shares by the Interested Stockholder resulting in 10% ownership is
approved by the board of directors of that corporation. Following the expiration
of the three-year period, a Combination with an Interested Stockholder is
permitted if the Combination meets all the requirements specified in the
articles of incorporation of the corporation and either (i)(A) the board of
directors of the corporation approves, prior to that person becoming an
Interested Stockholder, the Combination or the purchase of shares by the
Interested Stockholder resulting in 10% ownership and (B) the Combination is
approved by the affirmative vote of holders of a majority of voting power not
beneficially owned by the Interested Stockholder at a meeting called no earlier
than three years after the Interested Stockholder became an Interested
Stockholder or (ii)(A) the aggregate amount of cash and the market value of
consideration other than cash to be received by holders of common stock and
holders of any other class or series of stock meets the minimum requirements set
forth in Sections 78.441 through 78.443, inclusive, of the Nevada General
Corporation Law and (B) prior to the consummation of the Combination, except in
limited circumstances, the Interested Stockholder will not have become the
beneficial owner of additional voting shares of the corporation.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our securities is Atlas Stock
Transfer Company. Its address is 5899 South State Street, Salt Lake City, Utah
84107, and its telephone number at that location is (801) 266-7151.
DESCRIPTION OF COMMON STOCK WARRANTS
We may issue, separately or together with other securities, Warrants to
purchase shares of our Common Stock. Warrants may be attached to or separate
from those other securities. We will issue the Warrants under warrant agreements
which may be entered into between us and a bank or trust company, as stock
warrant agent, or directly with holders of the Warrants, as set forth in the
applicable prospectus supplement. We have summarized selected provisions of the
form of Warrant agreement below. This is a summary and is not complete. It does
not describe some exceptions and qualifications contained in the Warrant
agreement or the certificates representing the Warrants. If you would like more
information on the provisions of an agreement, you should review the form of
agreement, including the Warrant certificate, which we have filed as an exhibit
to the registration statement for the securities.
A supplement to this prospectus will describe specific terms relating
to the Warrants being offered. These terms will include some or all of the
following:
o the manner in which Warrants may be exercised;
o the number of shares of Common Stock purchasable upon exercise
of each Warrant and the exercise price;
o the date on which the right to exercise the Warrants commences
and the expiration date;
o whether we can call the Warrants for redemption and if so,
when we can do so, whether the right to purchase or convert
the Warrants will be forfeited unless it is exercised by the
date specified in the redemption notice, the expiration date
of the Warrants and the kinds and timing of notice of
redemption; and
o any other material terms of the Warrants.
Prior to the exercise of their Warrants, holders will not have any of
the rights of holders of the Common Stock purchasable upon such exercise and
will not be entitled to dividend payments on those shares of Common Stock.
17
<PAGE>
EXERCISE OF WARRANTS
Each Warrant will entitle its holder to purchase for cash the number of
shares of Common Stock at the exercise price set forth in the applicable
prospectus supplement. Commencing on the date the Warrants become exercisable,
holders may exercise their Warrants at any time up to the close of business on
the expiration date, after which time any unexercised Warrants will become void.
Upon receipt of the exercise price and the Warrant certificate properly
completed and executed, we will forward to the holder, as soon as practicable, a
certificate representing the number of shares of Common Stock purchased upon
such exercise. If less than all the Warrants represented by a certificate are
exercised, we will issue a new Warrant certificate for the remaining amount of
Warrants.
ANTIDILUTION PROVISIONS
Unless otherwise described in a prospectus supplement, the exercise
price payable and number of shares of Common Stock purchasable upon exercise of
a Warrant will be adjusted to prevent the holder's beneficial interest in the
Common Stock from being diluted in the event we:
o issue a stock dividend to holders of Common Stock or combine,
subdivide or reclassify our Common Stock;
o issue rights, warrants or options to all holders of Common
Stock entitling them to purchase shares of our Common Stock at
a price per share less than the current market price per share
of Common Stock; or
o distribute to holders of Common Stock any of our assets or
evidences of our indebtedness which are not payable out of our
capital surplus.
18
<PAGE>
PLAN OF DISTRIBUTION
We may sell the Securities offered under this prospectus through
underwriters, agents or dealers or directly to purchasers.
UNDERWRITERS
The applicable prospectus supplement will identify any agents or
underwriters and describe their compensation, including underwriting discount.
The prospectus supplement will also describe other terms of the offering,
including any discounts or concessions allowed or reallowed or paid to dealers
and any securities exchanges on which the offered Securities may be listed.
The distribution of Securities under this prospectus may occur from
time to time in one or more transactions at a fixed price or prices, which may
be changed, at market prices prevailing at the time of sale, at prices related
to those prevailing market prices or at negotiated prices.
DEALERS OR AGENTS
If the applicable prospectus supplement indicates, we will authorize
dealers or our agents to solicit offers by various institutions to purchase
offered Securities from us pursuant to contracts that provide for payment and
delivery on a future date. We must approve all institutions, but they may
include, among others:
o commercial and savings banks;
o insurance companies;
o pension funds;
o investment companies; and
o educational and charitable institutions.
The institutional purchaser's obligations under a contract will be
subject only to the condition that the purchase of the offered Securities at the
time delivery is allowed by any laws that govern the purchaser. The dealers and
our agents will not be responsible for the validity or performance of the
contracts.
DIRECT SALES
We may sell Securities directly to the public, without the use of
underwriters, dealers or agents.
GENERAL INFORMATION
Underwriters, dealers and agents participating in a sale of Securities
may be deemed to be underwriters as defined in the Securities Act of 1933, and
any discounts and commissions received by them and any profit realized by them
on resale of the Securities may be deemed to be underwriting discounts and
commissions under the Securities Act. We may have agreements with the agents,
underwriters and dealers to indemnify them against various civil liabilities,
including liabilities under the Securities Act, or to contribute to payments
that the agents, underwriters or dealers may be required to make as a result of
those civil liabilities.
Unless we indicate differently in a prospectus supplement, we will not
list the Securities on any securities exchange. If we sell a security offered
under this prospectus to an underwriter for public offering and sale, the
underwriter may make a market for that security but is not obligated to do so.
Therefore, we cannot give any assurances to you concerning the liquidity of any
security offered under this prospectus.
Agents and underwriters and their affiliates may be customers of,
engage in transactions with, or perform services for us or our subsidiary
companies in the ordinary course of business.
19
<PAGE>
LEGAL MATTERS
The validity of the Securities will be passed upon for HomeSeekers by
Jenkins & Carter, Reno, Nevada. Jones, Day, Reavis & Pogue, Chicago, Illinois
and Cleveland, Ohio, from time to time acts as counsel for HomeSeekers and its
subsidiaries.
EXPERTS
The financial statements of HomeSeekers as of June 30, 1999 and 1998,
and for each of the two years in the period ended June 30, 1999 have been
incorporated by reference herein in reliance upon the report of Albright,
Persing & Associates, Limited, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
20
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with the
issuance and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimated,
except the Securities and Exchange Commission registration fee.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee......................... $ 19,800
Legal fees and expenses..................................................... 150,000
Printing and engraving...................................................... 50,000
Fees of accountants......................................................... 100,000
Blue sky fees and expenses.................................................. 10,000
Miscellaneous............................................................... 70,200
----------
$ 400,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the Nevada General Corporation Law, provides as
follows:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, he must be indemnified by the corporation
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense.
II-1
<PAGE>
4. Any indemnification under subsections 1 and 2, unless ordered by a
court or advanced pursuant to subsection 5, must be made by the corporation only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper under the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the Board of Directors by majority vote of a
quorum consisting of directors who were not parties
to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of
directors who were not parties to the act, suit or
proceeding so orders, by independent legal counsel in
a written opinion; or
(d) If a quorum consisting of directors who were not
parties to the act, suit or proceeding cannot be
obtained, by independent legal counsel in a written
opinion.
5. The articles of incorporation, the bylaws or an agreement made by
the corporation may provide that the expenses of officers and directors incurred
in defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses
may be entitled under the articles of incorporation
or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an
action in his official capacity or an action in
another capacity while holding his office, except
that indemnification, unless ordered by a court
pursuant to subsection 2 or for the advancement of
expenses made pursuant to subsection 5, may not be
made to or on behalf of any director or officer if a
final adjudication establishes that his acts or
omissions involved intentional misconduct, fraud or a
knowing violation of the law and was material to the
cause of action.
(b) Continues for a person who has ceased to be a
director, officer, employee or agent and inures to
the benefit of the heirs, executors and
administrators of such a person.
Article IX of the Company's Revised Bylaws provides as follows:
Every person who was or is a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or a person of
whom he is the legal representative is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation or for its
benefit as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless to the fullest extent legally permissible under
the General Corporation Law of the State of Nevada from time to time against all
expenses, liability and loss (including attorneys' fees, judgments, fines and
amounts paid or to be paid in settlement) reasonably incurred or suffered by him
in connection therewith. Such right of indemnification shall be a contract right
which may be enforced in any manner desired by such person. Such right of
indemnification shall not be exclusive of any other right which such directors,
officers or representatives may have or hereafter acquire and, without limiting
the generality of such statement, they shall be entitled to their respective
rights of indemnification under any by-law, agreement, vote of shareholders,
provision of law or otherwise, as well as their rights under Article IX.
II-2
<PAGE>
The Board of Directors may cause the Corporation to purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the Corporation would have the power to indemnify
such person.
The indemnification provisions above provided shall include, but not be
limited to, reimbursement of all fees, including amounts paid in settlement and
attorneys' fees actually and reasonably incurred, in connection with the defense
or settlement of any action or suit if such party to be indemnified acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the Corporation. Indemnification may not be made for any
claim, issue or matter as to which the person claiming indemnity has been
adjudged by a court of competent jurisdiction, after exhaustion of all appeals
therefrom to be liable to the Corporation or for amounts paid in settlement to
the Corporation unless and only to the extent that the court in which the action
or suit was brought or other court of competent jurisdiction determines upon
application that the person is fairly and reasonably entitled to indemnify for
such expenses as the court deems proper.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
1.1 Form of Underwriting Agreement.*
4.1 Articles of Incorporation of the Company.
4.2 Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2(a) to the Company's annual report on
Form 10-KSB for the year ended June 30, 1999).
4.3 Form of Common Stock Warrant.
5.1 Opinion of Jenkins & Carter regarding the validity of the Securities.
23.1 Consent of Albright, Persing & Associates, Limited.
23.2 Consent of Jenkins & Carter (included in Exhibit 5.1).
24.1 Powers of Attorney (included on the signature page of this Registration Statement).
</TABLE>
- ----------
* To be filed by amendment or 8-K.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) 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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if,
II-3
<PAGE>
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in
the effective registration Statement;
(iii) 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;
PROVIDED, HOWEVER, that paragraphs (a) (1) (i) and (a) (1) (ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration Statement.
(2) 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) 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.
(b) 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 in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
(c) 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 Securities and
Exchange Commission 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 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-4
<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 Reno, State of Nevada, on the 15th day of March,
2000.
HOMESEEKERS.COM, INCORPORATED
By: /s/ Gregory L. Costley
--------------------------------------------------
Gregory L. Costley, Chairman and Chief Executive
Officer
Each person whose signature appears below hereby constitutes and
appoints Gregory L. Costley his or her true and lawful attorney-in-fact and
agent with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign any and all
(i) amendments (including post-effective amendments) and additions to this
Registration Statement and (ii) Registration Statements, and any and all
amendments thereto (including post-effective amendments), and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and hereby grants to such attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent or his substitute may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Gregory L. Costley Chairman of the Board and Chief March 15, 2000
- ------------------------------------------------- Executive Officer
Gregory L. Costley (Principal Executive Officer)
Chief Financial Officer
/s/ James A. Dykstra (Principal Accounting Officer and March 15, 2000
- ------------------------------------------------- Principal Financial Officer)
James A. Dykstra
President, Chief Operating Officer
/s/ John Giaimo and Director March 15, 2000
- -------------------------------------------------
John Giaimo
Vice Chairman of the Board,
/s/ Doug Swanson Executive Vice President and March 15, 2000
- ------------------------------------------------- Director
Doug Swanson
/s/ Greg Johnson Chief Technology Officer March 15, 2000
- ------------------------------------------------- and Director
Greg Johnson
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Bradley N. Rotter
- -------------------------------------------------
Bradley N. Rotter Director March 15, 2000
/s/ David Holmes Director March 15, 2000
- -------------------------------------------------
David Holmes
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
1.1 Form of Underwriting Agreement.*
4.1 Articles of Incorporation of the Company.
4.2 Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2(a) to the Company's annual report on
Form 10-KSB for the year ended June 30, 1999).
4.3 Form of Common Stock Warrant.
5.1 Opinion of Jenkins & Carter regarding the validity of the Securities.
23.1 Consent of Albright, Persing & Associates, Limited.
23.2 Consent of Jenkins & Carter (included in Exhibit 5.1).
24.1 Powers of Attorney (included on the signature page of this
Registration Statement).
</TABLE>
- ----------
* To be filed by amendment or 8-K.
RESTATED ARTICLES OF INCORPORATION
OF
HOMESEEKERS.COM, INC.
ARTICLE I
NAME
----
The name of the Corporation shall be HomeSeekers.com, Incorporated.
ARTICLE II
PURPOSES
--------
The purpose for which the Corporation is formed is to engage in any
lawful business or activity under the laws of the State of Nevada.
ARTICLE III
CAPITAL STOCK
-------------
Section 1. Authorized Shares. The total number of shares of stock which
the Corporation shall have authority to issue is Fifty-Five Million Two Hundred
Thousand (55,200,000) shares, consisting of Fifty Million (50,000,000) shares of
common stock, par value One-Tenth of One Cent ($.001) per share (the "Common
Stock"), Five Million (5,000,000) shares of Class A preferred stock, par value
One-Tenth of One Cent ($.001) per share (the
<PAGE>
"Class A Preferred Stock"), and Two Hundred Thousand (200,000) shares of Class B
preferred stock, par value Ten Dollars ($10.00) per share (the "Class B
Preferred Stock"). The voting powers, designations, preferences, limitations,
restrictions, and relative, participating, optional and other rights, and the
qualifications, limitations, or restrictions thereof, of the Class A and Class B
Preferred Stock shall hereinafter be prescribed by resolution of the Board of
Directors pursuant to Section 4 of this Article III.
Section 2. Common Stock.
(a) Dividend Rate. The holders of Common Stock shall be
entitled to receive dividends when, as and if declared by the board of directors
out of assets legally available therefor.
(b) Voting Rights. The holders of the issued and outstanding
shares of Common Stock shall be entitled to one vote for each share of Common
Stock.
(c) Liquidation Rights. In the event of liquidation,
dissolution, or winding up of the affairs of the Corporation, whether voluntary
or involuntary, the Common Stock shareholders shall share equally and ratably in
the Corporation's assets available for distribution according to the laws of the
State of Nevada.
(d) No Cumulative Voting, Conversion, Redemption, or
Preemptive Rights.
The holders of Common Stock shall not have any cumulative voting, conversion,
redemption, or preemptive rights.
Section 3. Stockholders.
(a) Special Meetings of Stockholders. Special meetings of
stockholders of the Corporation may be called only in the manner provided in the
Bylaws.
(b) Action of Stockholders. Any action required or permitted
to be taken by the holders of the Common Stock of the Corporation may be
effected at a duly called annual or
2
<PAGE>
special meeting of such holders or by the written consent of a majority of the
shareholders entitled to vote.
Section 4. Preferred Stock.
(a) Consideration. The Board of Directors is hereby vested
with the authority from time to time to provide by resolution for the issuance
of shares of Preferred Stock in one or more classes or series not exceeding the
aggregate number of shares of Preferred Stock authorized by these Articles of
Incorporation, as amended from time to time, and to determine with respect to
each such class or series the voting powers, if any (which voting powers if
granted may be full or limited), designations, preferences, and relative,
participating, optional, or other special rights, and the qualifications,
limitations, or restrictions relating thereto, including without limiting the
generality of the foregoing, the voting rights relating to shares of Preferred
Stock or any class or series (which may vary over time and which may be
applicable generally only upon the happening and continuance of stated facts or
events or ascertained outside these Articles of Incorporation), the rate of
dividend to which holders of Preferred Stock of any class or series may be
entitled (which may be cumulative or noncumulative), the rights of holders of
Preferred Stock of any class or series in the event of liquidation, dissolution,
or winding up of the affairs of the Corporation, the rights, if any, of holders
of Preferred Stock of any class or series to convert or exchange such shares of
Preferred Stock of such class or series for shares of any other class or series
of capital stock or for any other securities, property, or assets of the
Corporation or any subsidiary (including the determination of the price or
prices or the rate or rates applicable to such rights to convert or exchange and
the adjustment thereof, the time or times during which the right to convert or
exchange shall be applicable, and the time or times during which a particular
price or rate shall be applicable).
3
<PAGE>
(b) Certificate. Before the Corporation shall issue any shares
of Preferred Stock of any class or series, a certificate setting forth a copy of
the resolution or resolutions of the Board of Directors, fixing the voting
powers, designations, preferences, the relative, participating, optional, or
other rights, if any, and the qualifications, limitations, and restrictions, if
any, relating to the shares of Preferred Stock of such class or series, and the
number of shares of Preferred Stock of such class or series authorized by the
Board of Directors to be issued shall be made and signed by, acknowledged and
filed in the manner prescribed by the Nevada Revised Statutes. The Board of
Directors is further authorized to increase or decrease (but not below the
number of such shares of such class or series then outstanding) the number of
shares of any class or series subsequent to the issuance of shares of that class
or series.
ARTICLE IV
DIRECTORS AND OFFICERS
----------------------
Section 1. Number of Directors. The members of the governing board of
the Corporation are styled as directors. The authorized number of directors of
the Corporation shall be fixed from time to time (and increased or decreased) as
provided in the Bylaws of the Corporation.
4
<PAGE>
Section 2. Classified Board. The Directors shall be classified, with
respect to the time for which they severally hold office, into two classes, as
nearly equal in number as possible, as shall be provided in the manner specified
in the Bylaws, one class to hold office initially for a term expiring at the
1995 annual meeting of stockholders, and another class to hold office initially
for a term expiring at the 1996 annual meeting of stockholders, with the members
of each class to hold office until their successors have been duly elected and
qualified. At each annual meting of stockholders, the successors to the class of
directors whose term expires at that meeting shall be elected to hold office for
a term expiring at the annual meeting of stockholders held in the second year
following the year of their election and until their successors have been duly
elected and qualified.
Section 3. Newly Created Directorships and Vacancies. Newly created
directorships resulting from any increase in the authorized number of directors
and any vacancies on the Board of Directors resulting from death, assignability,
settlement, disqualification, removal from office or other cause shall be filled
by a majority vote of the directors then in office, and directors so chosen
shall hold office for a term expiring at the next Annual Meeting of
5
<PAGE>
Stockholders at which the term of the class to which they have been elected
expires. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent directors.
Section 4. Removal. Any director or directors may be removed from
office at any time by the affirmative vote of the holders of greater than fifty
percent (50%) of the voting power of the then outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class.
Section 5. Limitation of Personal Liability. No director or officer of
the Corporation shall be personally liable to the Corporation or its
stockholders for damages for breach of fiduciary duty as a director or officer;
provided, however, that the foregoing provision shall not eliminate or limit the
liability of a director or officer of the Corporation for:
(a) Acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law; or
(b) The payment of distributions in violation of Nevada
Revised Statutes Section 78.300.
Section 6. Payment of Expenses. In addition to any other rights of
indemnification permitted by the laws of the State of Nevada as may be provided
for by the Corporation in its Bylaws or by agreement, the expenses of officers
and directors incurred in defending a civil or criminal action, suit or
proceeding, involving alleged acts or omissions of such officer or director in
his or her capacity as an officer or director of the Corporation, must be paid,
by the Corporation or through insurance purchased and maintained by the
Corporation or through other financial arrangements made by the Corporation, as
they are incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of
6
<PAGE>
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he or she is not entitled to be indemnified
by the Corporation.
Section 7. Repeal and Conflicts. Any repeal or modification of Sections
5 or 6 above approved by the stockholders of the Corporation shall be
prospective only. In the event of any conflict between Sections 5 or 6 of this
Article and any other Article of the Corporation's Articles of Incorporation,
the terms and provisions of Sections 5 or 6 of this Article shall control.
ARTICLE V
NON-ASSESSMENT OF STOCK
-----------------------
The capital stock of this Corporation, after the amount of the
subscription price has been paid in money, property or services, as the
directors shall determine, shall not be subject to assessment to pay the debts
of the Corporation, nor for any other purpose, and no stock issued as fully paid
shall ever be assessable or assessed, and the Articles of Incorporation shall
not be amended in this particular.
ARTICLE VI
DURATION
--------
The corporation shall have perpetual existence.
ARTICLE VII
AMENDMENTS
----------
These Articles of Incorporation may be amended only in compliance with
Chapter 78 of the Nevada Revised Statutes.
7
HOMESEEKERS.COM, INCORPORATED
Common Stock Warrant
Expiring _________, 2000
, 2000
No.
HOMESEEKERS.COM, INCORPORATED, a Nevada corporation (herein,
together with its successors and assigns, the "Company"), for value received,
hereby certifies that , or registered assigns, is entitled to purchase from the
Company, at any time or from time to time prior to 5:00 p.m., Eastern time, on ,
duly authorized, validly issued, fully paid and nonassessable shares of Common
Stock, par value $.001 per share, as constituted on , 2000 (the "Common Stock"),
of the Company at a purchase price of $ per share (the "Warrant Price"), all
subject to the terms, conditions and adjustments set forth below in this
Warrant.
1 Exercise of Warrant.
1.1 Manner of Exercise. This Warrant may be exercised by the
holder hereof, in whole or in part, during normal business hours on any Business
Day by surrender of this Warrant to the Company at the office of the Company
maintained pursuant to Section 7.2(a), accompanied by a subscription in
substantially the form annexed hereto duly executed by such holder and (i) by
payment in cash or by certified or official bank check payable to the order of
the Company or by wire transfer in the amount obtained by multiplying (a) the
number of shares of Common Stock (without giving effect to any adjustment
therein) designated in such subscription by (b) the then applicable Warrant
Price (as defined in Section 2.1(e)), (ii) by instructing the Company to
withhold and cancel a number of shares of Common Stock then issuable upon
exercise of this Warrant with respect to which the excess of the fair market
value of the shares of Common Stock (as determined by the Board of Directors of
the Company) over the Warrant Price for such canceled shares is at least equal
to the Warrant Price for the shares being purchased, or (iii) by any combination
of the foregoing, whereupon such holder shall be entitled to receive the number
of duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) determined as provided in Section 2.
1.2 When Exercise Effective. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the Business Day on which this Warrant shall have been surrendered to the
Company as provided in Section 1.1, and at such time the Person or Persons in
whose name or names any certificate or certificates for shares of Common Stock
(or Other Securities) shall be issuable upon such exercise as provided in
Section 1.3 shall be deemed to have become the holder or holders of record
thereof.
1.3 Delivery of Stock Certificates, etc. As soon as
practicable after the exercise of this Warrant, in whole or in part, and in any
event within five Business Days thereafter, the Company at its expense
<PAGE>
(including the payment by it of any applicable issuance taxes) will cause to be
issued in the name of and delivered to the holder hereof or, subject to Section
6, as such holder (upon payment by such holder of any applicable transfer taxes)
may direct,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash in an amount equal
to the same fraction of the Market Price per share on the Business Day
next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, calling in the aggregate on the face or faces
thereof for issuance of the number of shares of Common Stock equal
(without giving effect to any adjustment therein) to the number of such
shares called for on the face of this Warrant minus the number of such
shares so designated by such holder upon such exercise as provided in
Section 1.1.
2 Certain Adjustments to Warrant.
2.1 Adjustment for Dividends, Distributions, Subdivisions,
Combinations or Consolidation of Common Stock.
2.1.1. Stock Dividends, Distributions or Subdivisions. In the
event the Company shall issue additional shares of Common Stock in a stock
dividend, stock distribution or subdivision, the Warrant Price in effect
immediately prior to such stock dividend, stock distribution or subdivision
shall, concurrently with the effectiveness of such stock dividend, stock
distribution or subdivision, be proportionately decreased.
2.1.2. Combinations or Consolidations. In the event the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Warrant Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
2.2 Adjustment for Merger or Reorganization, etc. Subject to
the provisions of Section 13, in case of any consolidation or merger of the
Company with or into another Company or the conveyance of all, or substantially
all, of the assets of the Company to another corporation, this Warrant shall
thereafter be exercisable to purchase the number of shares of stock or other
securities or property to which a holder of the number of shares of Common Stock
of the Company deliverable upon exercise of this Warrant would have been
entitled upon such consolidation, merger or conveyance; and, in any such case,
appropriate adjustment (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
and interest thereafter of the holder of this Warrant to the end that the
provisions set forth in Section 2.1 and this Section 2.2 (including provisions
with respect to changes in and other adjustments of the Warrant Price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the exercise of
this Warrant.
2
<PAGE>
3 No Dilution or Impairment. The Company (a) will not permit
the par value of any shares of stock receivable upon the exercise of any Warrant
to exceed the amount payable therefor upon such exercise, (b) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of stock on the exercise
of the Warrants from time to time outstanding, and (c) will not take any action
that results in any adjustment of the Warrant Price if the total number of
shares of Common Stock (or Other Securities) issuable after such action, upon
the exercise of all of the Warrants, would exceed the total number of shares of
Common Stock (or Other Securities) then authorized by the Company's certificate
of incorporation and available for the purpose of issuance upon such exercise.
4 Report as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable upon
the exercise or conversion of any Warrant, the Company at its expense will
promptly compute such adjustment or readjustment in accordance with the terms of
this Warrant and prepare a report setting forth such adjustment or readjustment
and showing in detail the method of calculation thereof and the facts upon which
such adjustment or readjustment is based, including a statement of the Warrant
Price in effect immediately prior to such issuance or sale and as adjusted and
readjusted (if required by Section 2) on account thereof. The Company will
forthwith (and in any event not later than 20 days following the occurrence of
the event requiring such adjustment) furnish a copy of each such report to each
holder of a Warrant, and will, upon the written request at any time of any
holder of a Warrant, furnish to such holder a like report setting forth the
Warrant Price at the time in effect and showing how it was calculated. The
Company also will keep copies of all such reports at its principal office and at
the office or agency required to be maintained by it pursuant to Section 7.2(a),
and will cause the same to be available for inspection at each such office
during normal business hours by any holder of a Warrant or any prospective
purchaser of a Warrant designated by the holder thereof.
5 Restrictions on Transfer.
5.1 Notice of Proposed Transfer; Opinions of Counsel. Prior to
any transfer of any Restricted Securities that are not registered under an
effective registration statement under the Securities Act (other than a transfer
pursuant to Rule 144, Rule 144A or any comparable rule under such Act), the
holder thereof will give written notice to the Company of such holder's
intention to effect such transfer and to comply in all other respects with this
Section 5.1. Each such notice shall (a) describe the manner and circumstances of
the proposed transfer in sufficient detail to enable counsel to render the
opinion referred to below, and (b) designate counsel for the holder giving such
notice, which counsel shall be reasonably satisfactory to the Company. The
holder giving such notice will submit a copy thereof to the counsel designated
in such notice. The following provisions shall then apply:
(1) if in the written opinion of such counsel for the
holder, obtained at the holder's sole cost and expense and a copy of
which shall be delivered to the Company and shall be reasonably
satisfactory in form, scope and substance to the Company, the proposed
transfer may be effected without registration of such Restricted
Securities under the Securities Act or applicable state securities
laws, such holder shall thereupon be entitled to transfer such
Restricted Securities in accordance with the terms of the notice
delivered by such holder to the Company. Each Restricted Security or
certificate, if any, issued upon or in connection with such transfer
3
<PAGE>
shall bear an appropriate restrictive legend unless, in the opinion of
such counsel, such legend is no longer required to insure compliance
with the Securities Act and applicable state securities laws; and
(2) if the opinion of such counsel rendered pursuant
to the foregoing subdivision (1) is not to the effect that the proposed
transfer may legally be effected without registration of such
Restricted Securities under the Securities Act or applicable state
securities laws (such opinion to state the basis of the legal
conclusions reached therein), such holder shall not be entitled to
transfer such Restricted Securities (other than a transfer pursuant to
Rule 144, Rule 144A or any comparable rule under the Securities Act)
until receipt by the Company of a further notice and a further opinion
of counsel for such holder to the effect stated in subdivision (1)
above or until registration of such Restricted Securities under the
Securities Act and applicable state securities laws has become
effective.
5.2 Termination of Restrictions. The restrictions imposed by
this Section 5 upon the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities when, in the opinion of
counsel for the Company, such restrictions are no longer required in order to
ensure compliance with the Securities Act. Whenever such restrictions shall
terminate as to any Restricted Securities, the holder thereof shall be entitled
to receive from the Company, without expense (other than transfer taxes, if
any), new securities of like tenor not bearing an applicable restrictive legend.
6 Reservation of Stock, etc. The Company will at all times
reserve and keep available, solely for issuance and delivery upon the exercise
of this Warrant, the number of shares of Common Stock (or Other Securities) from
time to time issuable upon the exercise of all Warrants at the time outstanding.
All such securities shall be duly authorized and, when issued upon such
exercise, shall be validly issued and, in the case of shares, fully paid and
nonassessable with no liability on the part of the holders thereof.
7 Ownership Transfer and Substitution of Warrants.
7.1 Ownership of Warrants. The Company may treat the Person in
whose name any Warrant is registered on the register kept at the principal
office of the Company as the owner and holder thereof for all purposes,
notwithstanding any notice to the contrary, except that, if and when any Warrant
is properly assigned in blank, the Company may (but shall not be obligated to)
treat the bearer thereof as the owner of such Warrant for all purposes,
notwithstanding any notice to the contrary. A Warrant, if properly assigned, may
be exercised by a new holder without first having a new Warrant issued.
7.2 Office; Transfer and Exchange of Warrants. (a) The Company
will maintain its principal office in Reno, Nevada or at such other location as
it designates in a written notice delivered to each registered holder of a
Warrant prior to any change of such location, and all notices, presentations and
demands in respect of this Warrant may be made upon it at such location. The
Company may designate from time to time by notice to the registered holder of
this Warrant an office or agency of the Company where such notices,
presentations and demands in respect of this Warrant may be made in lieu of the
Company's principal office.
4
<PAGE>
(b) Upon the surrender of any Warrant, properly endorsed, for
registration of transfer or for exchange at the principal office of the Company
or the office of the Company maintained pursuant to Section 7.2(a), the Company
at its expense will (subject to compliance with Section 5, if applicable)
execute and deliver to or upon the order of the holder thereof a new Warrant or
Warrants of like tenor, in the name of such holder or as such holder (upon
payment by such holder of any applicable transfer taxes) may direct, calling in
the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants so surrendered.
7.3 Replacement of Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant (which may be a written statement as to such loss,
theft, destruction or mutilation) and (a) in the case of such loss, theft or
destruction of any Warrant, upon delivery of indemnity reasonably satisfactory
to the Company in form and amount, or (b) in the case of any such mutilation,
upon surrender of such Warrant for cancellation at the office of the Company
maintained pursuant to Section 7.2(a) or the principal office of the Company,
the Company at its expense will execute and deliver, in lieu thereof, a new
Warrant of like tenor.
8 Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Business Day" shall mean any day other than a Saturday,
Sunday or any other day on which U.S. Federal Reserve member banks are not open
for business in New York, New York.
"Commission" shall mean the Securities and Exchange Commission
or any other Federal agency at the time administering the Securities Act.
"Company" shall have the meaning specified in the opening
paragraphs of this Warrant, including any corporation that shall succeed to or
assume the obligations of the Company hereunder in compliance with Section 2.2.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
or any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Market Price" shall mean, per share of Common Stock that the
holders of this Warrant shall be entitled to receive upon exercise thereof, on
any date specified herein, (a) the last sale price on such date of such Common
Stock or, if no such sale takes place on such date, the average of the closing
bid and asked prices thereof on such date, in each case as officially reported
on the principal national securities exchange on which such Common Stock is then
listed or admitted to trading, or (b) if such Common Stock is not then listed or
admitted to trading on any national securities exchange but is designated as a
national market system security by the National Association of Securities
Dealers, Inc., the last trading price of such Common Stock on such date, or (c)
if there shall have been no trading on such date or if such Common Stock is not
so designated, the average of the reported closing bid and asked prices of such
Common Stock on such date as shown by The Nasdaq Stock Market, Inc. and reported
by any member firm of the New York Stock Exchange selected by the Company, or
(d) if none of (a), (b) or (c) is applicable, a price per share thereof equal to
the fair value thereof determined in good faith by a resolution of the Board of
Directors of the Company as of a date that is within 15 days of the date as of
which the determination is to be made.
5
<PAGE>
"Other Securities" shall mean any stock (other than Common
Stock) and other securities of the Company or any other Person (corporate or
otherwise) that the holder of this Warrant at any time shall be entitled to
receive, or shall have received, upon the exercise of this Warrant, in lieu of
or in addition to Common Stock, or that at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 2 or otherwise.
"Person" shall mean a corporation, an association, a
partnership, an organization or business, an individual, a government or
political subdivision thereof or a governmental agency.
"Restricted Securities" shall mean any Other Securities issued
subsequent to any exercise of this Warrant as a dividend or other distribution
with respect to, or resulting from a subdivision of the outstanding Other
Securities into a greater number of shares by reclassification, stock splits or
otherwise, or in exchange for or in replacement of Other Securities issued upon
such exercise, which are evidenced by a certificate or certificates bearing an
applicable restrictive legend.
"Securities Act" shall mean the Securities Act of 1933, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Warrant" shall have the meaning specified in the opening
paragraphs of this Warrant.
"Warrant Price" shall have the meaning specified in the
opening paragraphs of this Warrant.
9 Remedies. The Company stipulates that the remedies at law of the holder of
this Warrant in the event of any default or threatened default by the Company in
the performance of or compliance with any of the terms of this Warrant are not
and will not be adequate, and that, to the extent permitted by applicable law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
10 No Rights or Liabilities as Stockholder. Nothing contained
in this Warrant shall be construed as conferring upon any holder hereof any
rights as a stockholder of the Company or as imposing any obligation on such
holder to purchase any securities or as imposing any liabilities on such holder
as a stockholder of the Company, whether such obligation or liabilities are
asserted by the Company or by creditors of the Company.
11 Notices. All notices and other communications provided for
herein shall be delivered or mailed by first class mail, postage prepaid,
addressed (a) if to any holder of this Warrant, at the registered address of
such holder as set forth in the register kept by the Company, or (b) if to the
Company, at its principal office, 6490 South McCarran Boulevard, Suite 28, Reno,
6
<PAGE>
Nevada 89509, or at the address of such other principal office of the Company as
the Company shall have furnished to each holder of this Warrant in writing, with
a copy to Jones, Day, Reavis & Pogue, 77 West Wacker Drive, Chicago, Illinois
60601, Attn: Timothy J. Melton; provided, however, that the exercise of any
Warrant shall be effective in the manner provided in Section 1.
12 Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. Any provision of this Warrant that shall be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the Company
waives any provision of law that shall render any provision hereof prohibited or
unenforceable in any respect. This Warrant shall be governed by the substantive
laws of the State of Nevada without reference to the choice of law rules
thereof. The headings of this Warrant are inserted for convenience only and
shall not be deemed to constitute a part hereof.
[The remainder of this page is intentionally left blank.]
7
<PAGE>
Expiration. Subject to the provisions in Section 1.1 hereof,
the right to exercise this Warrant shall expire at 5:00 p.m., Eastern time, on
the date set forth on the first page hereof.
HOMESEEKERS.COM INCORPORATED
By:________________________________
Name:______________________________
Title:_____________________________
8
<PAGE>
FORM OF SUBSCRIPTION
--------------------
THE EXERCISE OF THIS WARRANT IS SUBJECT TO, AND SHALL ONLY BE EFFECTIVE UPON,
SATISFACTION OF ANY APPLICABLE REGULATORY FILING REQUIREMENTS SUCH AS THE
PREMERGER NOTIFICATION AND REPORT FORM FILING REQUIREMENTS OF THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 AND REGULATIONS
PROMULGATED PURSUANT THERETO.
[To be executed only upon exercise of Warrant]
To HOMESEEKERS.COM INCORPORATED
The undersigned registered holder of the attached Warrant
hereby irrevocably exercises such Warrant for, and purchases thereunder, 1
shares of Common Stock of HOMESEEKERS.COM INCORPORATED, and herewith makes
payment as follows (check as applicable): |_| certified or official bank check
in the amount of $_________; |_| wire transfer in the amount of $_________;
and/or |_| cancellation of _______ shares of Common Stock otherwise issuable
under the Warrant. The undersigned requests that the certificates for such
shares be issued in the name of, and delivered to ____________________________,
whose address is ____________________________________________________________.
Dated:____________
__________________________________________________
(Signature must conform in all respects to name of
holder as specified on the face of Warrant)
__________________________________________________
(Street Address)
__________________________________________________
(City) (State) (Zip Code)
_________________
1 Insert here the number of shares called for on the face of this Warrant
(or in the case of a partial exercise, the portion thereof as to which
this Warrant is being exercised), in either case without making any
adjustment for additional Common Stock or any other stock or other
securities or property or cash that, pursuant to the adjustment
provisions of this Warrant, may be delivered upon exercise. In the case
of a partial exercise, a new Warrant or Warrants will be issued and
delivered, representing the unexercised portion of the Warrant, to the
holder surrendering the Warrant.
9
March 14, 2000
VIA HAND DELIVERY
HomeSeekers.com, Incorporated
2241 Park Place, Suite E
Minden, NV 89423
Re: Opinion and Consent of Jenkins & Carter
Up to $75,000,000 of Common Stock and/or Warrants to Purchase
Common Stock of HomeSeekers.com, Incorporated
Gentlemen:
We are acting as Nevada counsel to HomeSeekers.com, Incorporated, a
Nevada corporation (the "Company"), in connection with the registration of up to
$75,000,000 of common stock, par value of $.001 per share, of the Company
("Common Stock"), and warrants to purchase Common Stock ("Warrants"), as
contemplated by the Company's Registration Statement on Form S-3, as may be
amended from time to time (the "Registration Statement").
In connection therewith, we have examined and relied upon original,
certified, conformed, photostat or other copies of (i) the Articles of
Incorporation, as amended, and Bylaws of the Company; and (ii) the Registration
Statement and the exhibits thereto.
Based on such examination and on the assumptions set forth below, we
are of the opinion that (i) the Common Stock being registered pursuant to the
Registration Statement (including shares of Common Stock issuable upon the
exercise of Warrants being registered pursuant to the Registration Statement),
when issued and delivered as contemplated by the Registration Statement and upon
receipt by the Company of such lawful consideration therefor having a value not
less than the par value thereof as the Company's Board of Directors (or duly
authorized committee thereof) may determine (and, if applicable, in accordance
with the terms of the Warrant related thereto), will be validly issued, fully
paid, and nonassessable, and (ii) the Warrants being registered pursuant to the
Registration Statement, when issued and delivered as contemplated by the
Registration Statement and upon receipt by the Company of such lawful
consideration therefor as the Company's Board of Directors (or duly authorized
committee thereof) may determine, will be duly and validly authorized and issued
and will be valid and binding obligations of the Company.
<PAGE>
HomeSeekers.com, Incorporated
March 14, 2000
Page -2-
In rendering the foregoing opinion, we have assumed that (i) the
Registration Statement, and any amendments thereto, will have become effective;
(ii) a Prospectus Supplement describing the Common Stock and/or Warrants offered
pursuant to the Registration Statement (the "Offered Securities") will have been
filed with the Securities and Exchange Commission (the "Commission"); (iii) the
definitive terms of any Offered Securities will have been established in
accordance with the authorizing resolutions of the Company's Board of Directors,
the Company's Certificate of Incorporation, the Company's Articles of
Incorporation, the Company's Bylaws, and applicable law; (iv) any Common Stock
(including shares of Common Stock issuable upon the exercise of Warrants being
registered pursuant to the Registration Statement) will have been duly
authorized and reserved for issuance, in each case within the limits of such
Common Stock then remaining authorized but unissued; (v) resolutions authorizing
the Company to issue, offer and sell the Offered Securities will have been
validly adopted by the Company's Board of Directors and will be in full force
and effect at all times at which the Offered Securities are offered or sold by
the Company; (vi) any subscription agreement or other agreement upon which
approval of the Company's Board of Directors for issuance of Common Stock is
predicated will have been duly authorized, executed and delivered by the
prospective purchaser of such Common Stock; (vii) each Warrant will have been
duly authorized, executed and delivered by the holder thereof; and (viii) all
Offered Securities will be issued in compliance with applicable federal and
state securities laws.
The opinions set forth above are subject to the following
qualifications:
(a) We have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals,
the conformity to the originals of all documents submitted to
us as copies and the authenticity of the originals of all such
latter documents. We have also assumed the accuracy of the
factual matters contained in the documents we have examined.
(b) Where documents delivered to us by the Company and its
representatives state that the officers and directors of the
Company have taken actions with respect to the Offered
Securities, we have assumed that such actions have been taken.
(c) We have relied as to certain factual matters upon certificates
of officers of the Company, and we have not independently
checked or verified the accuracy of the statements contained
therein.
(d) We are qualified to practice law in the State of Nevada and
have not made a special examination of any law other than the
law of the State of Nevada. Accordingly, in connection with
the rendering of this opinion, we express no opinion as to the
laws of any state, or as to any matter subject to such laws,
other than the current laws of the State of Nevada.
(e) Our opinion is subject to and limited by (i) all applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws affecting the enforcement of
creditors' rights generally; (ii) all rights which may inhere
in the Internal Revenue Service or any state or local taxing
authorities under the tax laws
<PAGE>
HomeSeekers.com, Incorporated
March 14, 2000
Page -3-
of the United States of America and the several states; and
(iii) general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in
equity.
(f) Our opinion is limited to matters expressly set forth herein
and no opinion is to be implied or inferred beyond the matters
expressly so stated.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to use our name under the caption "Legal Matters" in
the prospectus comprising part of the Registration Statement. However, this
opinion is furnished only for your benefit and may not be relied upon by any
other person or entity without our express prior written consent. This opinion
speaks only as of the date hereof and is limited to present statutes, laws and
regulations and to the facts as they currently exist, and we have assumed no
obligation to update or supplement this opinion.
Sincerely yours,
/s/ Jerry Carter
Jerry C. Carter
INDEPENDENT AUDITORS' CONSENT
We consent to the use in the Registration Statement of HomeSeekers.com,
Incorporated on Form S-3 of our report dated July 22, 1999 and August 4, 1999 on
the consolidated balance sheets of HomeSeekers.com, Incorporated as of June 30,
1999 and 1998, and the related statements of operations, stockholders' deficit
and cash flows for the years then ended.
We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
/s/ Albright, Persing Associates, Ltd.
- ----------------------------------------
ALBRIGHT, PERSING ASSOCIATES, LTD.
Reno, Nevada
March 15, 2000
