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Skymall Inc – ‘DEFS14A’ for 3/10/00

On: Thursday, 2/3/00 · For: 3/10/00 · Accession #: 1076542-0-32 · File #: 0-21657

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/03/00  Skymall Inc                       DEFS14A     3/10/00    1:57K                                    Prescott Busines… LLC/FA

Definitive Proxy Solicitation Material — Special Meeting — Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEFS14A     Definitive Notice and Proxy Statement                 18     97K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Adjustment of Conversion Ratio Proposal Registration Rights
1	1st Page - Filing Submission
7	Proposal
12	Adjustment of Conversion Ratio
14	Registration Rights

DEFS14A 1st Page of 18 TOC ↑Top Previous Next ↓Bottom Just 1st
 
SCHEDULE 14A INFORMATION
 PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934

Filed by the Registrant [X]                                                     
Filed by a party other than the Registrant                                      

Check the appropriate box:                                                      

[ ]  Preliminary proxy statement        [ ] Confidential, for use of the        
[X]  Definitive proxy statement             Commission only (as permitted       
[ ]  Definitive additional materials        by Rule 14a-6(e)(2))                
[ ]  Soliciting material 14a-12                                                 

 SKYMALL, INC.
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):                              

[X]  No fee required                                                            

[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.   

(1)  Title of each class of securities to which transaction applies:  

(2)  Aggregate number of securities to which transactions applies:    

     (3)  Per unit  price  or other  underlying  value of  transaction  computed
          pursuant to Exchange  Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):  

(4)  Proposed maximum aggregate value of transaction:                 

(5)  Total fee paid:                                                  

[ ]  Fee paid previously with preliminary materials.                            

[ ]  Check box if any part of the fee is  offset as  provided  by  Exchange  Act
     Rule 0-11 (a)(2) and identify the filing for which the  offsetting  fee was
     paid  previously.  Identify the previous filing by  registration  statement
number, or the Form or Schedule and the date of its filing.           

(1)  Amount previously paid:                                          

(2)  Form, Schedule or Registration Statement No.:                    

(3)  Filing party:                                                    

(4)  Date filed:                                                      

DEFS14A 2nd Page of 18 TOC 1st Previous Next ↓Bottom Just 2nd
 SKYMALL, INC.
 1520 East Pima Street
Phoenix, Arizona 85034

================================================================================
 NOTICE AND PROXY STATEMENT FOR SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD MARCH 10, 2000
================================================================================

To the Shareholders of SkyMall, Inc.:                                           

     The Special Meeting of Shareholders of SkyMall,  Inc., a Nevada corporation
(the "Company"), will be held at the corporate offices of the Company located at
1520 East Pima Street, Phoenix,  Arizona 85034 on March 10, 2000, at 10:00 a.m.,
local time, for the following purposes:                                         

     1.   To approve the issuance of shares of the Company's  common stock,  par
          value  $.001 per share  (the  "Common  Stock"),  (i) to the  Company's
          Chairman and Chief Executive  Officer in connection with the Company's
          November 1999 private  placement of Common Stock (including  shares of
          Common Stock issuable upon exercise of related warrants) and (ii) upon
          conversion  of the  Company's  Series A Junior  Convertible  Preferred
          Stock, par value $.001 per share (the "Series A Preferred Stock"), and
          Series B Junior Convertible Preferred Stock, par value $.001 per share
          (the "Series B Preferred Stock"),  and exercise of related warrants to
          acquire  shares of Common Stock,  all on the terms and  conditions set
          forth in those certain Stock and Warrant Purchase Agreements, dated as
          of December 20, 1999 and  December  30, 1999,  between the Company and
          the  undersigned   investors  thereto   (collectively,   the  "Private
Placement Transactions").                                   

     2.   To  transact  such other  business  as may  properly  come  before the
     Special Meeting or any adjournment(s) or postponement(s) thereof.

         The foregoing  items of business are more fully  described in the Proxy
Statement  accompanying this Notice.  The Company is presently aware of no other
business to come before the Special Meeting.                                    

         Shareholders  of record at the close of  business  on January  24, 2000
(the  "Record  Date")  are  entitled  to  vote  at the  Special  Meeting  or any
adjournment or postponement thereof.  Shares may be voted at the Special Meeting
only if the holder is present or represented  by proxy.  A list of  shareholders
entitled to vote at the Special  Meeting will be available for inspection at the
Company's corporate  headquarters for any purpose germane to the Special Meeting
during ordinary business hours for ten (10) days prior to the Special Meeting.  

         Management  and the Board of Directors  cordially  invite you to attend
the Special Meeting.                                                            

                                             By Order of the Board of Directors,

                           Robert M. Worsley
                                           Chairman, Chief Executive Officer
                       and President
Phoenix, Arizona                                                                
February 1, 2000                                                                

SHAREHOLDERS  ARE  ENCOURAGED  TO SIGN,  DATE AND MAIL  THE  ENCLOSED  PROXY.  A
PRE-ADDRESSED  ENVELOPE  IS PROVIDED  FOR THEIR  CONVENIENCE.  SHAREHOLDERS  ARE
ENCOURAGED TO VOTE  REGARDLESS OF WHETHER OR NOT THEY ATTEND THE SPECIAL MEETING
OF SHAREHOLDERS.                                                                

DEFS14A 3rd Page of 18 TOC 1st Previous Next ↓Bottom Just 3rd
 SKYMALL, INC.
 1520 East Pima Street
Phoenix, Arizona 85034

================================================================================
 PROXY STATEMENT
 SPECIAL MEETING OF SHAREHOLDERS
MARCH 10, 2000
================================================================================

         This Proxy Statement is furnished by the Board of Directors of SkyMall,
Inc., a Nevada corporation (the "Company" or "SkyMall"),  in connection with the
solicitation  of  proxies  to be used for the  purpose  of  voting  at a Special
Meeting of  Shareholders  (the "Special  Meeting").  The Special Meeting will be
held on March 10, 2000, at 10:00 a.m.,  local time, at the corporate  offices of
the Company located at 1520 East Pima Street, Phoenix, Arizona 85034.           

         The  enclosed  proxy is  solicited  by the  Board of  Directors  of the
Company.  The proxy materials  relating to the Special Meeting were mailed on or
about  February 1, 2000, to  shareholders  of record at the close of business on
January 24, 2000 (the  "Record  Date").  Only holders  (the  "Shareholders")  of
record at the close of  business  on the Record Date will be entitled to vote at
the Special  Meeting,  or any  adjournment or  postponement  thereof,  either in
person or by valid  proxy.  As of  January  24,  2000,  there  were  outstanding
10,553,997  shares of common  stock,  $.001  par  value per share  (the  "Common
Stock").                                                                        

         Shareholders  are  entitled to one vote for each share of Common  Stock
held of record on each  matter  of  business  to be  considered  at the  Special
Meeting. Ballots cast at the Special Meeting will be counted by the Inspector of
Elections and  determinations of whether a quorum exists and whether the Private
Placement Transactions are approved will be announced at the Special Meeting.   

         The Inspector of Elections will treat  abstentions and broker non-votes
received  as shares  that are  present  and  entitled  to vote for  purposes  of
determining a quorum, but as unvoted for purposes of determining the approval of
any  matter.  If a  broker  indicates  on  the  proxy  that  it  does  not  have
discretionary  authority as to certain  shares to vote on a  particular  matter,
those shares will not be considered as present and entitled to vote with respect
to that matter.                                                                 

         The  Company  will  bear  the  cost  of the  solicitation  of  proxies,
including the charges and expenses of brokerage  firms and others for forwarding
solicitation materials to the beneficial owners of the outstanding Common Stock.
In addition to soliciting proxies by mail,  proxies may be solicited  personally
or by telephone  by  directors,  officers or employees of the Company,  who will
receive  no  additional  compensation  of such  services.  A person  giving  the
enclosed  proxy has the power to revoke it at anytime before it is exercised by:
(i) attending the Special Meeting and voting in person;  (ii) duly executing and
delivering a proxy bearing a later date;  or (iii)  sending a written  notice of
revocation  to the  Secretary  of the  Company  at its  corporate  offices.  The
corporate offices of the Company are located at 1520 East Pima Street,  Phoenix,
Arizona 85034 and its telephone number at that address is (602) 254-9777.       

         The affirmative vote of holders of a majority of the outstanding shares
of  Common  Stock  entitled  to vote and  present  in  person or by proxy at the
Special Meeting are required for approval of the Private Placement  Transactions
proposed to be acted upon at the Special Meeting (the "Proposal").              

DEFS14A 4th Page of 18 TOC 1st Previous Next ↓Bottom Just 4th
 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

         The table below sets forth certain  information as of January 24, 2000,
concerning  the beneficial  ownership of the Company's  Common Stock by (i) each
beneficial  owner of more  than 5% of the  Company's  Common  Stock,  (ii)  each
executive officer of the Company,  including the Named Executive Officers, (iii)
each director of the Company,  and (iv) all directors and executive  officers of
the Company as a group.  To the  knowledge of the  Company,  each of the persons
listed below has sole voting and  investment  power with respect to such shares,
unless otherwise indicated.                                                     

                                                        [Enlarge/Download Table]

                                                         SHARES BENEFICIALLY OWNED (1)  
                                                      ----------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (2)                  NUMBER             PERCENT    
----------------------------------------                  ------             -------    
                                                                                        
Quintel Communications, Inc.(3)                         642,857 (4)           6.1%      
RS Emerging Growth Pacific Partners (Jaguar)(5)(6)      311,798 (7)           3.0% (5)  
RS Emerging Growth Partners LP (Wildcat)(5)(6)          145,698 (8)           1.4% (5)  
RS Premium Partners LP (Puma)(5)(6)                     185,361 (9)           1.8% (5)  
Special Situations Cayman Fund L.P.(10)(11)             101,265 (12)           *   (10) 
Special Situations Fund III L.P.(10)(11)                290,879 (13)          2.8% (10) 
Special Situations Private Equity Fund L.P.(10)(11)     277,186 (14)          2.6% (10) 
The Paisley Fund(5)(6)                                   75,000 (15)           *   (5)  
The Paisley Pacific Fund(5)(6)                          300,000 (16)          2.9% (5)  
Wand Equity Portfolio II L.P.(17)(18)                 1,620,515 (19)         15.4% (17) 
Wand Affiliates Fund L.P.(17)(18)                        93,771 (20)           *   (17) 
Wand Partners Inc.(17)(18)                            1,964,286 (21)         18.7% (17) 
Robert M. and Christi M. Worsley(2)                   4,798,530 (22)         45.6%      
Christine A. Aguilera(2)                                 79,150 (23)           *        
Curtis D. Brown(2)                                       50,000 (24)           *        
Scott R.  Dastrup(2)                                     25,999 (25)           *        
Thomas C. Edwards(2)                                     53,333 (26)           *        
Marisha K. Geraghty(2)                                        0                *        
Stephen R. Peterson(2)                                   16,666 (27)           *        
Lyle R. Knight(2)                                       148,586 (28)           *        
Thomas J. Litle(2)                                      278,786 (29)           *        
Randy Petersen(2)                                        50,144 (30)           *        
David J. Callard(2)                                      25,000 (31)           *        
All directors and executive officers as a group                                         
(11 persons)(22)(23)(24)(25)(26)(27)(28)(29)(30)(31)  5,525,694              52.5%      

-------------------                                                             

*    Less than 1%                                                               
(1)  A person is deemed to be the  beneficial  owner of  securities  that can be
     acquired  within 60 days from the date set forth above through the exercise
     of any option, warrant or right. Shares of Common Stock subject to options,
     warrants or rights that are currently  exercisable or exercisable within 60
     days are deemed  outstanding  for  computing  the  percentage of the person
     holding such options,  warrants or rights,  but are not deemed  outstanding
     for  computing  the  percentage  of  any  other  person.  The  amounts  and
     percentages are based upon 10,533,977 shares of Common Stock outstanding as
of January 24, 2000.                                                  
(2)  The business  address for all  directors and officers of the Company is c/o
the Company, 1520 E. Pima Street, Phoenix, Arizona 85034.             
(3)  The  business  address of Quintel  Communications  is One Blue Hill  Plaza,
Pearl River, New York 10965.                                          
(4)  Includes  214,286  shares of Common Stock issuable to Quintel upon exercise
  of the warrants issued in the Company's November 1999 private placement.

2 

DEFS14A 5th Page of 18 TOC 1st Previous Next ↓Bottom Just 5th
(5)  RS Growth Group LLC is the General  Partner of RS Emerging  Growth  Pacific
     Partners  (Jaguar),  RS Emerging Growth  Partners LP (Wildcat),  RS Premium
     Partners LP (Puma),  The Paisley Fund and The Paisley  Pacific  Fund.  As a
     group, these  shareholders  beneficially own a total of 1,017,857 shares of
Common Stock of the Company, or 9.7% as of January 24, 2000.          
(6)  The  business  address of this  shareholder  is 388 Market  Street,  Second
Floor, San Francisco, California 94111                                
(7)  Includes  207,865 shares of Common Stock issuable upon conversion of Series
     A Preferred Stock and 103,933 shares of Common Stock issuable upon exercise
     of warrants issued to RS Emerging Growth Pacific Partners (Jaguar) pursuant
     to the Stock and Warrant  Purchase  Agreement dated as of December 20, 1999
(the "Series A Agreement").                                           
(8)  Includes 97,132 shares of Common Stock issuable upon conversion of Series A
     Preferred Stock and 48,566 shares of Common Stock issuable upon exercise of
     warrants issued to RS Emerging Growth Partners LP (Wildcat) pursuant to the
Series A Agreement.                                                   
(9)  Includes  123,574 shares of Common Stock issuable upon conversion of Series
     A Preferred  Stock and 61,787 shares of Common Stock issuable upon exercise
     of warrants issued to RS Premium  Partners LP (Puma) pursuant to the Series
A Agreement.                                                          
(10) MGP Advisers Limited Partnership (MGP), a Delaware limited partnership,  is
     the general  partner of the Special  Situations  Fund III, L.P., a Delaware
     limited  partnership.  AWM  Investment  Company,  Inc.  (AWM),  a  Delaware
     corporation,  is the general  partner of MGP and the general partner of and
     investment  adviser to the Special Situations Cayman Fund, L.P. MG Advisers
     L.L.C. (MG), a New York limited liability  company,  is the general partner
     of the Special  Situations  Private Equity Fund,  L.P., a Delaware  limited
     partnership.  Austin W.  Marxe and David M.  Greenhouse  are the  principal
     owners  of MG,  MGP  and  AWM  and  are  principally  responsible  for  the
     selection,  acquisition and disposition of the portfolios securities by the
     investment   advisers  on  behalf  of  their  funds.  As  a  group,   these
     shareholders  beneficially own a total of 669,330 shares of Common Stock of
the Company, or 6.4% as of January 24, 2000.                          
(11) The business address of this  shareholder is 153 E. 53rd Street,  New York,
New York 10022-1200.                                                  
(12) Includes (i) 32,150 shares of Common Stock  issuable to Special  Situations
     Cayman Fund L.P. upon exercise of certain  warrants issued in the Company's
     November  1999  private  placement  and (ii) 32,143  shares of Common Stock
     issuable upon  conversion of Series A Preferred  Stock and 16,072 shares of
     Common Stock  issuable upon exercise of warrants  issued to pursuant to the
Series A Agreement.                                                   
(13) Includes (i) 96,450 shares of Common Stock  issuable to Special  Situations
     Fund III L.P.  upon  exercise of certain  warrants  issued in the Company's
     November  1999  private  placement  and (ii) 94,286  shares of Common Stock
     issuable upon  conversion of Series A Preferred  Stock and 47,143 shares of
     Common Stock  issuable  upon  exercise of warrants  issued  pursuant to the
Series A Agreement.                                                   
(14) Includes (i) 85,700 shares of Common Stock  issuable to Special  Situations
     Private  Equity Fund L.P. upon exercise of certain  warrants  issued in the
     Company's  November 1999 private placement and (ii) 87,857 shares of Common
     Stock  issuable  upon  conversion  of Series A  Preferred  Stock and 43,929
     shares of Common Stock issuable upon exercise of warrants  issued  pursuant
to the Series A Agreement.                                            
(15) Includes 50,000 shares of Common Stock issuable upon conversion of Series A
     Preferred Stock and 25,000 shares of Common Stock issuable upon exercise of
     the warrants issued to The Paisley Fund pursuant to the Series A Agreement.
(16) Includes  200,000 shares of Common Stock issuable upon conversion of Series
     A Preferred Stock and 100,000 shares of Common Stock issuable upon exercise
     of warrants  issued to The Paisley  Pacific  Fund  pursuant to the Series A
Agreement.                                                            
(17) These  shareholders are co-managed  under a management  agreement with Wand
     Partners Inc. As a group,  these  shareholders  beneficially own a total of
     1,964,286 shares of Common Stock of the Company, or 18.7% as of January 24,
2000.                                                                 
(18) The business address of this  shareholder is 630 Fifth Avenue,  Suite 2435,
New York, New York 10111.                                             
(19) Includes (i) 1,080,343  shares of Common Stock issuable upon  conversion of
     Series B Preferred  Stock and 540,172  shares of Common Stock issuable upon
     exercise of warrants  issued to Wand Equity  Portfolio II L.P.  pursuant to
     the Stock and Warrant Purchase Agreement dated as of December 30, 1999 (the
"Series B Agreement").                                                

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DEFS14A 6th Page of 18 TOC 1st Previous Next ↓Bottom Just 6th
(20) Includes (i) 62,514  shares of Common Stock  issuable  upon  conversion  of
     Series B Preferred  Stock and 31,257  shares of Common Stock  issuable upon
     exercise of warrants issued to Wand  Affiliates  Fund L.P.  pursuant to the
Series B Agreement.                                                   
(21) Includes  250,000  shares of Common  Stock  issuable  upon  exercise of the
     advisory fee warrants issued to Wand Partners Inc. pursuant to the Series B
     Agreement.  In  addition,  Wand  Partners  Inc.  may  be  deemed  to be the
     beneficial  holder of the shares held by Wand Equity  Portfolio II L.P. and
Wand Affiliates Fund L.P.                                             
(22) Includes  71,429  shares of Common Stock  issuable upon exercise of certain
     warrants  issued to The Robert  Merrill  Worsley and Christi  Marie Worsley
     Family  Revocable  Trust dated July 28, 1998 of which Mr. and Mrs.  Worsley
     are the Trustees  (the  "Worsley  Trust") in the  Company's  November  1999
     private  placement and 1,660,908 shares of Common Stock held by the Worsley
Trust.                                                                
(23) Includes  75,000 shares  issuable upon exercise of stock options granted to
Ms. Aguilera pursuant to the Company's 1994 Stock Option Plan.        
(24) Includes  50,000 shares  issuable upon exercise of stock options granted to
Mr. Brown pursuant to the Company's 1994 Stock Option Plan.           
(25) Includes  24,999 shares  issuable upon exercise of stock options granted to
Mr. Dastrup pursuant to the Company's 1994 Stock Option Plan.         
(26) Includes  53,333 shares  issuable upon exercise of stock options granted to
Mr. Edwards pursuant to the Company's 1994 Stock Option Plan.         
(27) Includes  16,666 shares  issuable upon exercise of stock options granted to
Mr. Peterson pursuant to the Company's 1994 Stock Option Plan.        
(28) Mr. Knight serves as a director of the Company.  Includes (i) 14,571 shares
     of Common Stock  issuable upon  conversion of Series A Preferred  Stock and
     7,286 shares of Common Stock  issuable upon exercise of warrants  issued to
     Mr. and Mrs. Knight pursuant to the Series A Agreement,  (ii) 14,286 shares
     of Common Stock  issuable upon  conversion of Series A Preferred  Stock and
     7,143 shares of Common Stock  issuable upon exercise of warrants  issued to
     FISERV  Securities,  Inc.  FBO IRA R-0 for Lyle R.  Knight  pursuant to the
     Series A Agreement, and (iii) 38,500 shares of Common Stock issuable to Mr.
     Knight upon exercise of options to purchase  shares of Common Stock granted
pursuant to the Company's Non-Employee Director Stock Option Plan.    
(29) Mr. Litle serves as a director of the Company.  Includes (i) 142,857 shares
     of Common Stock  issuable upon  conversion of Series A Preferred  Stock and
     71,429 shares of Common Stock issuable upon exercise of warrants  issued to
     Mr.  Litle  pursuant to the Series A Agreement,  and (ii) 38,500  shares of
     Common  Stock  issuable to Mr.  Litle upon  exercise of options to purchase
     shares of Common  Stock  granted  pursuant  to the  Company's  Non-Employee
Director Stock Option Plan.                                           
(30) Mr. Petersen serves as a director of the Company. Includes (i) 3,571 shares
     of Common Stock  issuable upon  conversion of Series A Preferred  Stock and
     1,786 shares of Common Stock  issuable upon exercise of warrants  issued to
     Mr. Petersen pursuant to the Series A Agreement,  and (ii) 38,500 shares of
     Common Stock issuable to Mr.  Petersen upon exercise of options to purchase
     shares of Common  Stock  granted  pursuant  to the  Company's  Non-Employee
Director Stock Option Plan.                                           
(31) Mr. Callard serves as a director of the Company.  Includes 25,000 shares of
     Common Stock  issuable to Mr.  Callard upon exercise of options to purchase
     shares of Common  Stock  granted  pursuant  to the  Company's  Non-Employee
Director Stock Option Plan.                                           

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PROPOSAL

TO APPROVE THE ISSUANCE BY THE COMPANY OF SHARES OF COMMON STOCK
 TO THE COMPANY'S CHAIRMAN AND CEO AND UPON CONVERSION
OF SERIES A JUNIOR CONVERTIBLE PREFERRED STOCK AND
 SERIES B JUNIOR CONVERTIBLE PREFERRED STOCK AND
 UPON EXERCISE OF RELATED WARRANTS

         In November  1999,  the Board of Directors of the Company (the "Board")
approved the  issuance of an  aggregate of 1,142,885  shares of Common Stock and
warrants  to  purchase  571,444  shares of Common  Stock in a private  placement
transaction  completed on November 4, 1999 (the "November  Private  Placement").
The  Company's  Chairman and CEO,  Robert M. Worsley,  was a participant  in the
November  Private  Placement,  acquiring  142,857  shares of Common  Stock  (the
"Worsley  Shares") and warrants to purchase  71,429  shares of Common Stock (the
"Worsley  Warrants").  In December 1999, the Board also approved the designation
of 150,000  shares of the Company's  10,000,000  authorized  shares of Preferred
Stock as Series A Junior Convertible  Preferred Stock, par value $.001 per share
(the "Series A Preferred  Stock"),  and 80,000 shares of such Preferred Stock as
Series B Junior  Convertible  Preferred  Stock,  par value  $.001 per share (the
"Series B Preferred Stock"). Shares of the Series A Preferred Stock and Series B
Preferred  Stock,  together  with  warrants to purchase  shares of Common  Stock
("Warrants"),   were  issued  to   investors  in  separate   private   placement
transactions as follows:                                                        

                                                                [Download Table]

                                                Date of                        
                          Number of  Date of     Board     Number of  Number of
Preferred Stock            Shares    Issuance   Approval   Warrants   Investors
---------------           ---------  --------   --------   --------   ---------
                                                                               
Series A Preferred Stock   91,320    12/22/99   12/09/99    652,289      19    
                                               & 12/20/99                      
Series B Preferred Stock   80,000    12/31/99   12/23/99    571,429       2    

         In addition to the Preferred  Stock and Warrants issued to investors in
the private  placements set forth above, the Company also issued an aggregate of
235,028 warrants to the placement agents who assisted the Company in the private
placements  (the  "Placement  Agent  Warrants"),  and as  part of the  Series  B
Preferred  Stock  private  placement  transaction,  the Company  issued  250,000
warrants  to its  financial  advisor in such  private  placement  (the  "Advisor
Warrants"). The Series A Preferred Stock and Warrants and the Series B Preferred
Stock and Warrants were issued  pursuant to the terms and conditions of separate
Stock  and  Warrant  Purchase  Agreements,  dated as of  December  20,  1999 and
December 30, 1999,  respectively (the "Purchase  Agreements"),  by and among the
Company and certain  investors  (collectively  the "Preferred  Issuances").  The
purchase  price of each share of the Series A  Preferred  and Series B Preferred
Stock and related Warrants was $100.00. The initial gross proceeds of the Series
A Preferred  Stock and Series B Preferred  Stock issuances were $9.1 million and
$8  million,  respectively,  before  deducting  expenses  relating to such share
issuances.  The  Company  intends  to use  the  net  proceeds  of the  Preferred
Issuances to fund the Company's ongoing e-commerce initiatives and to supplement
the Company's working capital.                                                  

         The Purchase  Agreements  each provide,  among other  things,  that the
Company will solicit its shareholders' approval of the Company's issuance of the
shares of Common Stock issuable upon  conversion of the Series A Preferred Stock
and Series B Preferred Stock and upon exercise of the Warrants. The deadline for
obtaining such approval is 180 days after the date of issuance of the respective

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DEFS14A 8th Page of 18 TOC 1st Previous Next ↓Bottom Just 8th
series of Preferred  Stock (June 19, 2000, in the case of the Series A Preferred
Stock and June 28, 2000,  in the case of the Series B Preferred  Stock).  If the
Company's  shareholders do not approve the issuance by the Company of all shares
of Common Stock issuable upon conversion of the Series A Preferred Stock and the
Series B Preferred  Stock,  the shares of Series A Preferred  Stock and Series B
Preferred  Stock shall  become  immediately  redeemable  and the Company will be
required to purchase each holder's  outstanding shares of Preferred Stock for an
amount per share equal to 110% multiplied by the  liquidation  preference of the
shares to be redeemed plus all amounts owed to such holder pursuant to the terms
of the  Registration  Rights  Agreements  entered into in  connection  with such
Preferred   Issuances  (such  Registration  Rights  Agreements  being  hereafter
referred to as the "Registration Rights Agreement").  The liquidation preference
of each  share of Series A  Preferred  Stock  and  Series B  Preferred  Stock is
$100.00 (the "Liquidation Preference").                                         

         Though the November Private  Placement and the Preferred  Issuances did
not require shareholder  approval under Nevada or any other applicable laws, the
corporate  governance rules of the Nasdaq National Market  ("Nasdaq"),  on which
the Company's Common Stock is listed and traded,  require  majority  shareholder
approval, in certain circumstances,  of the sale or issuance of Common Stock, or
securities  convertible into, or exercisable for, Common Stock,  equal to 20% or
more of the Common Stock or voting power outstanding  immediately preceding such
issuance  (the "Nasdaq  Shareholder  Approval  Rules").  The number of shares of
Common Stock issuable upon conversion of the Series A Preferred Stock and Series
B Preferred Stock is calculated pursuant to a fixed conversion formula, and such
issuance,  together  with the  issuance  of Common  Stock upon  exercise  of the
Warrants,  would  result in the  issuance of a number of shares of Common  Stock
that represents  more than 20% of the currently  outstanding  common shares.  In
addition,  the corporate governance rules of Nasdaq require shareholder approval
of a plan or arrangement  pursuant to which stock may be acquired by officers or
directors.  Therefore,  the Company seeks to obtain shareholder  approval of the
prior  issuance of the Worsley  Shares and the Worsley  Warrants in the November
Private  Placement and the issuance of shares of its Common Stock  issuable upon
conversion of the Series A Preferred Stock and Series B Preferred Stock and upon
exercise of the Warrants and  otherwise  comply with its  obligations  under the
Purchase Agreements and the Certificates of Designations, Preferences and Rights
of each of the  Series A  Preferred  Stock and  Series B  Preferred  Stock  (the
"Certificates of Designations").                                                

         The shares of Common Stock issued in the  November  Private  Placement,
including the Worsley Shares,  were issued at a per share price of $7.00,  which
represented  a 13.85%  discount to closing bid price of the Common  Stock on the
closing date of such  transaction.  The warrants issued in the November  Private
Placement,  including the Worsley  Warrants,  have a per share exercise price of
$8.00.                                                                          

         Each share of the Series A Preferred Stock and Series B Preferred Stock
is convertible  into the number of shares of Common Stock determined by dividing
the conversion amount by the conversion price. The conversion amount is equal to
the sum of the  Liquidation  Preference  plus any amounts owed to holders of the
Preferred  Stock  pursuant to the terms of the  applicable  Registration  Rights
Agreement.  The conversion  price for each series of Preferred Stock is equal to
$7.00. Pursuant to the Warrants,  the holders thereof may purchase upon exercise
up to an aggregate of 1,223,718  shares of Common Stock at a per share  exercise
price of $8.00.  In  addition,  holders  of the  Placement  Agent  Warrants  may
purchase upon  exercise up to an aggregate of 235,028  shares of Common Stock at
exercise  prices  ranging  from  $7.00 to $9.12 per share and the  holder of the
Advisor Warrants may purchase upon exercise up to an aggregate of 250,000 shares
of Common Stock at an exercise price of $8.00. The exercise price and the number
of shares  of Common  Stock  purchasable  upon  exercise  of the  Warrants,  the
Placement  Agent Warrants and the Advisor  Warrants are subject to adjustment to
prevent  dilution.  As of January 24, 2000, the number of shares of Common Stock

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issuable upon  conversion  of the Series A Preferred  Stock and upon exercise of
the related  Warrants  (including the Placement  Agent  Warrants  issued in such
transaction) was 2,157,602,  or 20.5% of the Common Stock outstanding as of such
date. As of January 24, 2000, the number of shares of Common Stock issuable upon
conversion  of the Series B  Preferred  Stock and upon  exercise  of the related
Warrants  (including the Placement Agent Warrants and the Advisor  Warrants) was
1,998,572, or 19.0% of the Common Stock outstanding as of such date. The Company
is obligated to seek listing approval for all shares issuable upon conversion of
the Series A Preferred  Stock and Series B Preferred  Stock and upon exercise of
the Warrants, the Placement Agent Warrants and the Advisor Warrants.            

         The  Company  has  granted  registration  rights to the  holders of the
Series A Preferred  Stock and Series B  Preferred  Stock and the  Warrants,  the
Placement  Agent  Warrants and the Advisor  Warrants  with respect to all of the
shares of Common Stock issuable upon their  conversion or exercise,  as the case
may be.  By  exercising  their  registration  rights,  converting  the  Series A
Preferred  Stock and Series B Preferred  Stock into Common Stock and  purchasing
Common Stock upon exercise of the Warrants, the Placement Agent Warrants and the
Advisor  Warrants,  the holders of such  securities  can cause a large number of
shares  of  Common  Stock  to  be  registered  and  freely   tradeable   without
restrictions  under the  Securities  Act of 1933, as amended.  To the extent any
such sales  occurred,  it may have an adverse  effect on the market price of the
Common Stock and could impair the Company's ability to raise additional capital.

         The material  terms of the November  Private  Placement  are  discussed
above. The following  discussion  summarizes the material terms of the Preferred
Issuances,  but does not purport to be an  exhaustive  discussion  of all of the
terms of thereof.  The discussion contained in this Proxy Statement is qualified
in its entirety by reference to (i) the applicable Purchase Agreements; (ii) the
applicable Certificate of Designations; (iii) the applicable Registration Rights
Agreements,  and  (iv)  the  applicable  Form  of  Warrant  (collectively,   the
"Documents")  for the  Series A  Preferred  Stock and Series B  Preferred  Stock
private placement transactions.  Copies of the Documents can be obtained free of
charge by  contacting  the  Secretary  of the  Company at (602)  254-9777  or by
reference  to the exhibits to the  Company's  Form S-3  Registration  Statements
(File Nos.  333-94099 and  333-94731)  previously  filed with the Securities and
Exchange Commission (the "SEC"). Copies of these Registration  Statements can be
obtained free of charge at the SEC's web site at HTTP://WWW.SEC.GOV.            

PRINCIPAL REASONS FOR THE TRANSACTIONS                                          

         The Board of Directors  believes that the transactions  contemplated by
the Documents,  including the Preferred Issuances,  are fair to, and in the best
interests  of,  the  Company  and its  shareholders.  Accordingly,  the Board of
Directors  has approved  such  transactions  and  recommends  that the Company's
shareholders  vote for  approval of the  issuance  of its Common  Stock upon the
conversion of the Series A Preferred Stock and the Series B Preferred  Stock. In
reaching its determination,  the Board consulted with the Company's  management,
legal counsel and consultants and considered a variety of factors, including the
following:                                                                      

         1.  The Board investigated and considered other alternative  sources of
financing and determined  that the  transactions  contemplated  by the Documents
offered the most  favorable  terms of any  available  means of financing for the
Company.                                                                        

         2.  The Board considered that, as a result of the Preferred  Issuances,
the Company would have the  additional  resources  necessary to  facilitate  the
implementation of its business plan.                                            

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POTENTIAL RISKS ASSOCIATED WITH THE TRANSACTIONS                                

         The Board of Directors  considered  potentially  negative  factors that
could arise from the transactions  contemplated by the Documents,  including the
following:                                                                      

         1.  The Board  considered that the remedies  available to the Investors
if the Company fails to comply with the  Documents for any reason,  particularly
the  Investors'   redemption   rights  and  other   penalties   associated  with
non-compliance,  could have a material adverse effect on the Company's financial
condition.                                                                      

         2.  The Board  considered that the aggregate number of shares of Common
Stock  issuable  upon  conversion  of the Series A Preferred  Stock and Series B
Preferred  Stock and upon  exercise  of the  Warrants  will  increase in certain
circumstances, and could result in significant dilution of current shareholders'
percentage  ownership interest and effective voting power in the Company,  which
could affect the market price for the Common Stock.                             

         The Board did not believe  that the negative  factors were  sufficient,
either  individually  or  collectively,   to  outweigh  the  advantages  of  the
transactions.                                                                   

THE PURCHASE AGREEMENTS                                                         

ISSUANCE  OF SERIES A  PREFERRED  STOCK,  SERIES B  PREFERRED  STOCK AND RELATED
WARRANTS                                                                        

         On  December  20,  1999,  the Company and the  Investors  executed  the
Purchase Agreement, pursuant to which the Company agreed to issue and sell up to
150,000  shares  of the  Series A  Preferred  Stock  and  related  Warrants,  as
described below. Pursuant to the terms of the Purchase Agreement,  91,320 shares
of Series A Preferred  Stock and  Warrants to purchase an  aggregate  of 652,289
shares of Common  Stock were  issued to the  Investors  on  December  22,  1999.
Warrants to purchase an  aggregate  of 200,742  shares of Common Stock also were
issued to the  placement  agents who  assisted  the Company in  completing  this
transaction.                                                                    

         On  December  30,  1999,  the Company and the  Investors  executed  the
Purchase Agreement, pursuant to which the Company agreed to issue and sell up to
80,000 shares of the Series B Preferred Stock and related  Warrants as described
below. Pursuant to the terms of the Purchase Agreement,  80,000 shares of Series
B Preferred  Stock and Warrants to purchase an  aggregate  of 571,429  shares of
Common Stock were issued to the  Investors  on December  30,  1999.  Warrants to
purchase an aggregate  of 34,286  shares of Common Stock also were issued to the
placement  agent who assisted the Company in  completing  this  transaction  and
warrants to purchase an aggregate of 250,000  shares of Common Stock were issued
to the Company's financial advisor in this transaction.                         

REPRESENTATIONS AND WARRANTIES                                                  

         The  Purchase   Agreements   contain  customary   representations   and
warranties relating to the parties thereto and pertaining to the Preferred Stock
and the Warrants. These representations  include, among others,  representations
with  respect  to: (i) the  organization,  formation,  corporate  structure  and
ownership   of  the  Company  and  other   corporate   matters;   (ii)  the  due
authorization,  execution,  delivery,  performance  and  enforceability  of  the
Documents;  (ii) the absence of conflicts in  connection  with the  transactions
contemplated  by the  Documents;  (iv) the absence of certain  material  adverse
events,  changes or effects; (v) the absence of litigation threatened against or

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affecting  the  Company;  (vi)  taxes,  employment  relations  and  intellectual
property rights;  and (vii) financial  statements and financial  information and
reports and other documents filed with the SEC and other regulatory agencies.   

COVENANTS                                                                       

         The Purchase  Agreements  contain covenants by the Company,  including,
among  others,  covenants  relating to the timely filing of required SEC reports
and the provision of financial information to the Investors.                    

         Pursuant  to the terms of the  Purchase  Agreements,  the  Company  has
agreed to seek the  approval of its  shareholders  of the issuance of its Common
Stock upon  conversion  of the Series A  Preferred  Stock and Series B Preferred
Stock pursuant to this Proxy  Statement.  In the event that the Company fails to
receive the requisite  majority approval of its shareholders for the issuance of
its Common  Stock upon  conversion  of the Series A Preferred  Stock or Series B
Preferred  Stock within 180 days following the issuance,  each share of Series A
Preferred  Stock and Series B  Preferred  Stock shall be redeemed at a price per
share  equal to 110% of the  Liquidation  Preference  plus any  amounts  payable
pursuant to the Registration Rights Agreement. The Company has agreed to provide
registration  rights  with  respect  to  the  Common  Stock  issuable  upon  the
conversion of the Series A Preferred Stock and Series B Preferred Stock and upon
exercise  of  the  related   Warrants  as  described  below  under  the  caption
"Registration Rights."                                                          

INDEMNIFICATION                                                                 

         The Purchase  Agreements contain customary  indemnification  provisions
whereby the Company has agreed to indemnify the  Investors  and certain  related
parties from losses relating to the breach by the Company of its representations
or  warranties or any of its  obligations  under the Documents or arising out of
the Investors' execution, delivery, performance or enforcement of the Documents.

THE SERIES A AND SERIES B PREFERRED STOCK                                       

         The following is a summary of the  Certificate of  Designations  and of
the  rights  and  preferences  of the  Series A  Preferred  Stock  and  Series B
Preferred Stock.                                                                

DESIGNATION AND AMOUNT                                                          

         The Series A Preferred  Stock has a par value per share equal to $.001,
and the number of shares issuable is 150,000.  The Series B Preferred Stock also
has a par value per share equal to $.001,  and the number of shares  issuable is
80,000.                                                                         

DIVIDENDS                                                                       

         Neither the Series A Preferred  Stock nor the Series B Preferred  Stock
has any dividend rights.                                                        

VOTING RIGHTS                                                                   

         Holders of the Series A Preferred  Stock and Series B  Preferred  Stock
are not entitled as such to voting  rights on any matter  submitted to a vote of
the  shareholders  of the  Company,  except as  required  by law. So long as the
Series  B  Convertible  Preferred  Stock is  outstanding,  the  holders  of such
preferred stock shall have the exclusive right, voting separately as a class, to
elect one director to the Board of Directors of the Company.                    

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RANK                                                                            

         The Series A Preferred  Stock and Series B Preferred  Stock rank senior
to the Common Stock and PARI PASSU with each such series of Preferred Stock. The
Company may not issue any additional or other capital stock that is senior to or
PARI PASSU with the Series A Preferred Stock or Series B Preferred Stock without
the prior written  consent of the holders of at least a majority of the Series A
Preferred Stock and Series B Preferred Stock, voting separately.                

CONVERSION BY HOLDERS                                                           

         Subject to the limitations  discussed below, each share of the Series A
Preferred  Stock and Series B  Preferred  Stock is  convertible  into  shares of
Common  Stock  at a  conversion  ratio  (the  "Conversion  Ratio")  equal to the
Conversion  Amount divided by the applicable  Conversion  Price. The "Conversion
Price" is $7.00.  The Conversion  Ratio is subject to  adjustment,  as described
further under  "Adjustment  of  Conversion  Ratio." The  "Conversion  Amount" is
defined as $100, plus any payments due under the applicable  Registration Rights
Agreements.  For  purposes  of an  example  only,  one share of either  Series A
Preferred Stock or Series B Preferred Stock is convertible into approximately 14
shares of Common  Stock ($100  divided by $7.00 = 14.286),  with any  fractional
share amounts being payable in cash.                                            

ADJUSTMENT OF CONVERSION RATIO                                                  

         The  Conversion  Ratio of the  Series A  Preferred  Stock and  Series B
Preferred  Stock is subject to adjustment  in the event that the Company  issues
Common Stock, options or other convertible securities, at a per share price less
than the  current  market  price  per  share of  Common  Stock or less  than the
Conversion Price then in effect, or subdivides or combines outstanding shares of
its Common Stock or recapitalizes  or undertakes any other similar event.  There
are no market reset provisions with respect to either series of Preferred Stock.
No adjustment  will be made unless the  adjustment  would result in a cumulative
increase or decrease of at least 1% in the Conversion Price.                    

MANDATORY CONVERSION                                                            

         The shares of Series A  Preferred  Stock and Series B  Preferred  Stock
automatically  convert  into  shares  of  Common  Stock  upon  approval  of  the
shareholders  of the Company of the issuance of Common Stock upon  conversion of
the Series A Preferred Stock and Series B Preferred Stock, respectively.        

MANDATORY REDEMPTION                                                            

         If the Company fails to obtain the approval of its shareholders  within
180 days of the issuance of the respective  series of Preferred  Stock, the then
outstanding  shares of Series A Preferred Stock and Series B Preferred Stock, as
applicable,  shall become immediately redeemable by the Company at a price equal
to 110% of the Liquidation  Preference plus any amounts due under the applicable
Registration Rights Agreement.                                                  

RESERVATION OF SHARES                                                           

         To ensure that the Series A Preferred  Stock,  Series B Preferred Stock
and the related Warrants can at all times be properly converted or exercised, as
the case may be, the Company  must reserve at least 100% of the number of shares
of Common Stock for which the Series A Preferred Stock, Series B Preferred Stock
and Warrants may be converted or exercised, as the case may be.                 

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LIQUIDATION, DISSOLUTION OR WINDING UP                                          

         In the  event of any  liquidation,  dissolution  or  winding  up of the
Company, whether voluntary or involuntary,  the holders of outstanding shares of
Series A Preferred  Stock and Series B Preferred  Stock are  entitled to receive
out of the assets of the Company available for distribution to its stockholders,
an amount per share equal to $100.00 plus any and all accrued interest thereon. 

AMENDMENT                                                                       

         No  change is to be made to the  Certificate  of  Designations  of such
Preferred  Stock  without  the  affirmative  vote of at least a majority  of the
holders of the outstanding shares of such series of Preferred Stock.            

THE WARRANTS                                                                    

GENERAL                                                                         

         Pursuant to the Purchase Agreements, the Company issued Warrants to the
Investors in each private placement transaction.  The Warrants expire five years
after  issuance.  The Company also issued the Placement  Agent  Warrants and the
Advisor Warrants which expire five years after issuance.                        

EXERCISE                                                                        

         The terms of the Warrants  entitle each holder to purchase  that number
shares  of Common  Stock  equal to 50% of the  number of shares of Common  Stock
initially  issuable upon conversion of such holder's Series A Preferred Stock or
Series B Preferred Stock, as the case may be. The exercise price of each Warrant
is $8.00. The exercise price of the Placement Agent Warrants range from $7.00 to
$9.12 per share and the  exercise  price of the  Advisor  Warrants  is $8.00 per
share.  The  exercise of the  Warrants,  the  Placement  Agent  Warrants and the
Advisor  Warrants is subject to customary  anti-dilution  adjustments  upon such
events as a dividend or other distribution, stock split, reorganization, merger,
and other similar events. The Warrants do not contain market reset provisions.  

CASHLESS EXERCISE OPTION                                                        

         WARRANTS.  Generally,  if the Common Stock to be issued in exchange for
the Warrants is not  registered  for resale in  accordance  with the  applicable
Registration  Rights Agreement,  the Warrant holders are entitled to a "cashless
exercise"  option.  This option entitles the Warrant holders to elect to receive
fewer shares of Common Stock (the number of shares to be determined by a formula
based on the total number of shares to which the Warrant holder is entitled, the
last reported sale price of the Common Stock and the  applicable  exercise price
of the Warrants)  without paying the cash exercise price. As of the date of this
Proxy  Statement,  the Company has filed and obtained the  effectiveness  of two
separate Form S-3 Registration Statements relating to the shares of Common Stock
issuable upon conversion or exercise of the Series A Preferred Stock, the Series
B Preferred  Stock,  the Warrants,  the Placement Agent Warrants and the Advisor
Warrants.                                                                       

         PLACEMENT AGENT WARRANTS  AND  ADVISOR WARRANTS.  The  warrants  issued
to the  placement  agents and to Wand Partners Inc.  contain  cashless  exercise
options that are exercisable at any time by the holder thereof.                 

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REDEMPTION AT COMPANY'S ELECTION                                                

         The Company may redeem all or part of the  Warrants  upon 30 days prior
written  notice at a price equal to $.01 per share of Common  Stock  exercisable
under such  Warrant if the  following  conditions  are met:  (i) the closing bid
price for its Common Stock is at least 150% of the exercise price of the Warrant
($12.00 as of January 24, 2000), as adjusted if required, for a period of twenty
consecutive  trading days; (ii) the registration  statement required to be filed
pursuant to the Registration Rights Agreement is effective; and (iii) the Common
Stock is listed on Nasdaq National Market, AMEX or the NYSE.                    

COVENANTS                                                                       

         The  Company  made  certain  customary  covenants  with  respect to the
Warrants,  including, among others: (i) the Warrants, and any Common Stock to be
issued  upon  exercise  of the  Warrants,  are and will be duly  authorized  and
validly  issued;  (ii) the Company  shall reserve at least 100% of the number of
shares of Common Stock issuable upon exercise of the Warrants;  (iii) the Common
Stock  issuable upon  exercise of the Warrants  shall be listed on each national
securities  exchange or  automated  quotation  system  upon which the  Company's
Common  Stock is then  issued;  and (iv) the  Company  will act in good faith in
carrying out the provisions of the Warrants.                                    

AMENDMENT                                                                       

         The  provisions  of the  Warrants may be amended only after the Company
has obtained the written consent of Warrant holders  representing at least 66.7%
of the shares of Common  Stock  issuable  upon  exercise  of the  Warrants  then
outstanding.  However,  the Company may not increase  the exercise  price of the
Warrants,  decrease  the term of the  Warrants or decrease  the amount of Common
Stock issuable upon exercise of any Warrant  without the written  consent of the
holder of such Warrant.                                                         

REGISTRATION RIGHTS                                                             

         The Registration  Rights Agreements provide for mandatory  registration
covering  the resale of all shares  issued or issuable  upon  conversion  of the
Series A Preferred  Stock and the Series B Preferred  Stock, as the case may be,
and the maximum number of share  issuable upon exercise of the related  Warrants
(as  issued or  issuable,  the  "Registrable  Securities")  and  grants  certain
piggyback  registration rights with respect to the Registrable  Securities.  The
Registration Rights Agreement contains customary covenants and agreements of the
respective  parties  concerning  the  registration  of the Common  Stock and the
incurrence of certain costs and expenses in connection  with the  obligations of
the  parties  thereunder,  as well as the  agreement  of the  parties to provide
customary indemnification from material misstatements or omissions in connection
with any  registration of the Common Stock as required.  The Company must have a
registration  statement covering the Registrable  Securities  declared effective
within 90 days after the issuance of the  applicable  Series A Preferred  Stock,
Series B Preferred Stock and related Warrants.                                  

         If the Company  (1) fails to file a  registration  statement  within 15
days of the issuance; (2) fails to file a request for acceleration within 5 days
of receipt of notice from the SEC that the registration statement is not subject
to any  further  review;  (3) has its  registration  statement  cease to  become
effective; (4) has its Common Stock delisted; (5) has its Common Stock suspended
for any reason for more than 5 days;  (6) has to suspend the exercise  rights of
the holders of the Warrants for any reason;  (7) materially  breaches any of the
Documents  and fails to cure such  breach  within  30 days  after  notice of the

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breach;  or (8) postpones or suspends filing or  effectiveness of a registration
statement pursuant to Section 3(n) of the Registration Rights Agreement for more
than 45 days in any 12 month period (each  individually  being referred to as an
"Event"),  the Company must pay each holder of the Series A Preferred  Stock and
Series B Preferred Stock, as the case may be, a liquidated  damages amount equal
to 2% of such  holder's  purchase  price of their  Series A  Preferred  Stock or
Series B Preferred  Stock,  as the case may be, for each 30 day period until any
such Event is cured.                                                            

VOTING REQUIREMENTS                                                             

         Each holder of Common Stock is entitled to one vote per share held. The
affirmative  vote of holders of a majority of the  outstanding  shares of Common
Stock of the  Company  entitled to vote and present in person or by proxy at the
Special  Meeting is required for approval of this  Proposal,  provided  that the
number of shares  present  in person or by proxy  constitutes  a quorum.  In the
event that a quorum is not present or  represented at the Special  Meeting,  the
shareholders entitled to vote at the meeting present in person or by proxy shall
have the  power to  adjourn  the  meeting  until a quorum  shall be  present  or
represented.  Proxies  solicited  by the  Board of  Directors  will be voted for
approval of this Proposal.                                                      

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE ISSUANCE OF THE
SHARES OF COMMON STOCK TO THE COMPANY'S  CHAIRMAN AND CEO AND UPON CONVERSION OF
THE SERIES A PREFERRED  STOCK AND SERIES B PREFERRED  STOCK AND UPON EXERCISE OF
THE WARRANTS.                                                                   

 SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires the Company's  directors,  executive  officers and beneficial owners of
more than 10% of the Common  Stock to file with the SEC  initial  statements  of
beneficial  ownership and  statements of changes in beneficial  ownership of the
Common Stock and other equity  securities  of the Company held by such  persons.
Except as noted below, the Company  believes,  based solely upon a review of the
copies of such beneficial  ownership statements furnished to it, that during the
year ended December 31, 1999, all Section 16(a) filing  requirements  applicable
to the  Company's  officers,  directors  and  owners  of  more  than  10% of the
Company's Common Stock were complied with.                                      

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On  April  19,  1996,  the  Company  entered  into  an  agreement  with
OrderTrust  LLC (formerly  LitleNet  LLC), a company in which Thomas J. Litle, a
director of the Company, has a controlling ownership interest, pursuant to which
OrderTrust LLC provides the Company with order processing  management  services.
On December 4, 1998, the Company  entered into a new agreement  with  OrderTrust
LLC to continue to provide such services.  In fiscal 1999, the Company  incurred
processing fees of approximately $450,000 pursuant to such agreements.          

         On May 12,  1999,  skymall.com,  inc.,  a  wholly-owned  subsidiary  of
SkyMall,  Inc.  entered into an agreement with Ran  Decisions,  Inc., a Colorado
corporation  doing business as Frequent Flyer Services.  The agreement  provides
that  skymall.com,  inc.  acquires the right to utilize Frequent Flyer Services'
Mileage  Manager  Service,   which  is  currently  being  offered  on  SkyMall's
skymalltravel.com  Web site.  Randy  Petersen,  a director  of the  Company,  is
President of Frequent Flyer Services.                                           

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         As  of  the  Record  Date,  Quintel  Communications,  Inc.  ("Quintel")
beneficially owns 6.1% of the Common Stock of the Company.  On November 5, 1999,
Quintel and the Company  entered into a strategic  marketing  agreement  whereby
Quintel will offer the Company's  products through Quintel's new  MultiBuyer.com
website,  as well as through  Quintel's  other online  assets.  The parties also
agreed to other cross-selling and promotional opportunities.                    

         Mr. David J. Callard  joined the Company's Board of Directors effective
January  19,  2000.  Mr.  Callard is the  President  of Wand  Partners  Inc.  In
connection with the Series B Preferred Stock private placement transaction, Wand
Partners Inc.  received a warrant to purchase an aggregate of 250,000  shares of
Common Stock of the Company in  consideration  for financial  advisory  services
provided to the Company relating to such transaction.                           

 SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING

         Any  stockholder  who wishes to present any  proposal  for  stockholder
action at the next Annual Meeting of  Stockholders to be held in 2000, must have
been received by the Company's  Secretary,  at the Company's offices,  not later
than January 7, 2000, in order to be included in the Company's  proxy  statement
and form of proxy for that meeting.  Such  proposals  should be addressed to the
Corporate  Secretary,  SkyMall,  Inc., 1520 East Pima Street,  Phoenix,  Arizona
85034.  If a shareholder  proposal is  introduced at the 2000 Annual  Meeting of
Stockholders  without any  discussion  of the  proposal in the  Company's  proxy
statement,  and the  stockholder  does not notify the Company on or before March
22,  2000,  as required by SEC Rule  14(a)-4(c)(1),  of the intent to raise such
proposal at the Annual  Meeting of  Stockholders,  then proxies  received by the
Company for the 2000 Annual  Meeting will be voted by the persons  named as such
proxies  in their  discretion  with  respect to such  proposals.  Notice of such
proposal is to be sent to the above address.                                    

OTHER BUSINESS

         The  Board of  Directors  is not  aware  of any  other  business  to be
considered  or acted upon at the  Special  Meeting  other  than those  described
above.                                                                          

                                             By Order of the Board of Directors,

                           Robert M. Worsley
                                           Chairman, Chief Executive Officer
                       and President
Phoenix, Arizona                                                                
February 1, 2000                                                                

14

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[FRONT OF PROXY CARD]                                                           
--------------------------------------------------------------------------------
 PROXY

 SKYMALL, INC.
 1520 EAST PIMA STREET
PHOENIX, ARIZONA 85034

THIS PROXY IS SOLICITED ON BEHALF OF THE
 BOARD OF DIRECTORS OF SKYMALL, INC.
 FOR THE SPECIAL MEETING OF SHAREHOLDERS

     The undersigned  shareholder of SkyMall,  Inc., a Nevada  corporation  (the
"Company"),  hereby  acknowledges  receipt of the  Notice of Special  Meeting of
Shareholders,  dated  February 1, 2000, and hereby  appoints  Robert M. Worsley,
Christine A.  Aguilera and Stephen R.  Peterson,  and each of them,  proxies and
attorneys-in-fact, with full power of substitution, on behalf and in the name of
the  undersigned,  to  represent  the  undersigned  at the  Special  Meeting  of
Shareholders of SKYMALL, INC. to be held at the corporate offices of the Company
located at 1520 East Pima Street,  Phoenix,  Arizona 85034 on March 10, 2000, at
10:00 a.m., local time, and at any  adjournment(s) or  postponement(s)  thereof,
and to vote all shares of Common Stock that the undersigned would be entitled to
vote if then and  there  personally  present,  on the  matter  set  forth on the
reverse side.                                                                   

CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
--------------------------------------------------------------------------------

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[PROXY CARD INSTRUCTION SHEET AND REVERSE OF PROXY CARD]                        

SKYMALL, INC.           VOTE BY PHONE - 1-800-690-6903                          
                        Use any  touch-tone  telephone to  transmit your  voting
PROXY SERVICES          instructions.  Have  your  proxy  card in  hand when you
P. O. BOX 9079          call.  You  will  be  prompted to  enter  your  12-digit
FARMINGDALE, NY 11735   Control  Number  which is  located below and then follow
                    the simple instructions the Vote Voice provides you.

    VOTE BY INTERNET - WWW.PROXYVOTE.COM
                        Use the  Internet  to transmit your  voting instructions
                        and  for  electronic delivery of information.  Have your
                        proxy  card  in hand when you access the web site.   You
                        will be  prompted to enter your  12-digit Control Number
                        which is located below to obtain your records and create
      an electronic voting instruction form.

VOTE BY MAIL                    
                        Mark, sign and date your proxy card and return it in the
                        postage-paid   envelope  we've  provided  or  return  to
                        SkyMall, Inc.,  c/o  ADP,  51  Mercedes  Way,  Edgewood,
NY 11717                        

Please  sign  exactly  as name  appears above.  When  shares  are  held by      
joint tenants, both should sign.  When signing as an  attorney,  executor,      
administrator, trustee or guardian,  please give full title as such.  If a      
corporation,  please sign in full  corporate  name by president  or  other      
authorized  officer.  If a partnership, please sign in partnership name by      
authorized person.                                                              

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:                     

                             SKYMALL          KEEP THIS PORTION FOR YOUR RECORDS
================================================================================
[REVERSE SIDE OF PROXY CARD]                 DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED 
--------------------------------------------------------------------------------
SKYMALL, INC.                                                                   

I will attend the Special Meeting  [ ]                                

THIS PROXY,  WHEN  PROPERLY  EXECUTED,  WILL BE  VOTED IN THE                   
MANNER  DIRECTED  BY THE  UNDERSIGNED  SHAREHOLDER(S).  IF NO                   
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL.                   

Vote On Proposal                                                                
                                                           FOR  AGAINST  ABSTAIN
1. To approve the  issuance of  shares  of the  Company's  [ ]    [ ]      [ ]  
common stock,  par value $.001 per share (the  "Common                    
Stock"), (i)  to  the  Company's  Chairman  and  Chief                    
Executive Officer  in connection  with  the  Company's                    
November 1999  private   placement  of   Common  Stock                    
(including  shares  of  Common  Stock   issuable  upon                    
exercise of related warrants) and (ii) upon conversion                    
of the Company's Series A Junior Convertible Preferred                    
Stock, par value $.001 per share,  and Series B Junior                    
Convertible  Preferred  Stock,  par  value  $.001  per                    
share,  and  exercise of  related  warrants to acquire                    
shares   of   Common  Stock,  all  on  the  terms  and                    
conditions  set  forth  in  those  certain  Stock  and                    
Warrant Purchase Agreements,  dated as of December 20,                    
1999 and December 30, 1999.                                               

PLEASE MARK,  SIGN,  DATE AND RETURN THE PROXY CARD PROMPTLY  USING THE ENCLOSED
POSTAGE-PAID ENVELOPE                                                           

 ---------------------------------     ---------------------------------
 |                        |      |     |                        |      |
 |                        |      |     |                        |      |
 ---------------------------------     ---------------------------------
Signature                 Date        Signature (Joint Owners)  Date  
[PLEASE SIGN WITHIN BOX]                                              
--------------------------------------------------------------------------------

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘DEFS14A’ Filing	Date	First	Last	Other Filings

	6/28/00	8
	6/19/00	8
	3/22/00	16
For Period End:	3/10/00	2	17	PRES14A
Filed on:	2/3/00
	2/1/00	2	17
	1/24/00	2	14
	1/19/00	16		3
	1/7/00	16
	12/31/99	15		10-K, 4, 8-K
	12/30/99	2	18
	12/22/99	10		8-K
	12/20/99	2	18
	11/5/99	16
	11/4/99	7
	5/12/99	15
	12/4/98	15
	7/28/98	6
	4/19/96	15
				List all Filings

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Filing Submission 0001076542-00-000032 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Skymall Inc – ‘DEFS14A’ for 3/10/00

On: Thursday, 2/3/00 · For: 3/10/00 · Accession #: 1076542-0-32 · File #: 0-21657

Definitive Proxy Solicitation Material — Special Meeting — Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Definitive Proxy Solicitation Material — Special Meeting — Schedule 14A
Filing Table of Contents