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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): February 9, 2000
PopMail.com, inc.
(Exact name of registrant as specified in its charter)
Minnesota 0-23243 31-1487885
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4801 West 81st Street, Suite 112, Bloomington, MN 55437
(Address of principal executive offices)(Zip Code)
(Former Name or Former Address, if Changed Since Last Report)
Registrant's telephone number, including area code: (612) 837-9917
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to an Agreement and Plan of Reorganization dated as of January 21,
2000 (the "Agreement") by and among the Registrant, IZ Acquisition Corporation,
a Delaware corporation and a wholly-owned subsidiary of the Registrant
("Acquisition Sub"), IZ.com Incorporated, a Delaware corporation ("IZ.com"), and
Virtual Group LLC, a Nevada limited liability company, Acquisition Sub merged
with and into IZ.com, and IZ.com became a wholly-owned subsidiary of the
Registrant. The merger became effective February 9, 2000 (the "Effective Date").
Prior to the date of the Agreement, there was no relationship between IZ.com or
its stockholders and the Registrant or its affiliates, officers and directors or
any of their respective associates. IZ.com is a convergent media business that
uses spiral marketing to promote consumer e-commerce, involving the
cross-promotion of products and services through email, online and conventional
media, where consumers choose to receive an advertiser's communications.
Pursuant to the Agreement, as of the Effective Date, IZ.com's outstanding
shares of capital stock were converted into the right to receive shares of the
Registrant's Series F Convertible Preferred Stock (the "Preferred Shares"). As
an additional condition of the merger, the Registrant assumed all of the
outstanding options and warrants of IZ.com, which were converted, as of the
Effective Date, into options and warrants to purchase Preferred Shares. The
Preferred Shares are currently convertible into approximately 3.7 million shares
of Registrant's common stock, but upon approval of the Registrant's
shareholders, the Preferred Shares will be convertible into approximately 7.3
million shares of the Registrant's common stock.
In satisfaction of certain conditions to the closing of the merger, the
Registrant completed a $6.75 million private placement of its common stock at a
price of $2.25 per share. With each share of common stock sold in the private
placement, the Registrant issued a warrant to purchase a share of common stock
at an exercise price of $3.00.
In connection with the Agreement and pursuant to a Registration Rights
Agreement dated January 21, 2000, the Registrant agreed, upon the request of
holders of not less than 40 percent of the outstanding number of Preferred
Shares, to register the shares of common stock issuable upon conversion of the
Preferred Shares issued in the merger.
The foregoing is qualified in its entirety by reference to the Agreement,
which is filed as Exhibit 2.1 to this Form 8-K and is hereby incorporated by
reference herein. The Certificate of Designation of the Series F Convertible
Preferred Stock, the Registration Rights Agreement dated January 21, 2000, and
Registrant's Press Release Dated February 9, 2000, are each filed as Exhibits
3.1, 10.1 and 99.1, respectively, to this Form 8-K, and each are incorporated
herein by reference.
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Item 5. OTHER EVENTS
Upon the Effective Date, Jesse Berst was elected to the Registrant's Board
of Directors to fill the board seat formerly occupied by James L. Anderson. The
Registrant's Press Release dated February 9, 2000, which is filed as Exhibit
99.1 to this Form 8-K, is incorporated by reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of the Business Acquired. Pursuant to Item
7(a)(4), financial statements required by this item will be filed no later than
April 24, 2000.
(b) Pro Forma Financial Information. Pursuant to Item 7(b)(2), financial
statements required by this item will be filed no later than April 24, 2000.
(c) Exhibits.
2.1 Agreement and Plan of Reorganization dated as of January 21, 2000
among PopMail.com, inc., IZ.com Incorporated, IZ Acquisition
Corporation, and Virtual Group LLC.
3.1 Certificate of Designation of Series F Convertible Preferred
Stock.
10.1 Registration Rights Agreement, dated January 21, 2000 between the
Registrant and the stockholders of IZ.com, Incorporated.
99.1 Press Release dated February 9, 2000.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
POPMAIL.COM, INC.
Dated: February 23, 2000 By: /s/ Thomas W. Orr
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Thomas W. Orr
Chief Financial Officer
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EXHIBIT INDEX
2.1 Plan and Agreement of Reorganization dated as of January 21, 2000 among
PopMail.com, inc., IZ.com Incorporated, IZ Acquisition Corporation, and
Virtual Group LLC.
3.1 Certificate of Designation of Series F Convertible Preferred Stock
10.1 Registration Rights Agreement dated as of January 21, 2000, among
PopMail.com, inc. and the stockholders of IZ.com Incorporated.
99.1 Press Release dated February 9, 2000.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
POPMAIL.COM, INC.
IZ ACQUISITION CORPORATION
IZ.COM INCORPORATED
AND
VIRTUAL GROUP LLC
JANUARY 21, 2000
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TABLE OF CONTENTS
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1. Certain Definitions..........................................................................................2
2. The Merger...................................................................................................5
2.1 Merger; Effective Time..............................................................................5
2.2 Closing.............................................................................................5
2.3 Effect of the Merger................................................................................5
3. Effect of Merger on the Capital Stock of the Constituent Corporations; Exchange of
Certificates; Additional Payments............................................................................6
3.1 Certain Definitions.................................................................................6
3.2 Exchange of Stock; Rights to Additional Payments....................................................6
3.3 Company Options and Warrants........................................................................6
3.4 Conversion of Sub Common Stock......................................................................7
3.5 Adjustments to Parent Common Stock..................................................................7
3.6 Fractional Shares...................................................................................7
3.7 Exchange of Certificates............................................................................7
3.8 Further Action......................................................................................9
3.9 Dissenters'Rights...................................................................................9
3.10 Dissenting Shares After Payment of Fair Value......................................................10
3.11 Tax Consequences...................................................................................10
4. Securities Act Compliance...................................................................................10
5. Representations and Warranties of the Company...............................................................10
5.1 Organization and Standing..........................................................................10
5.2 Authorization......................................................................................10
5.3 Subsidiaries.......................................................................................11
5.4 Capitalization.....................................................................................11
5.5 Title to Properties and Assets; Liens..............................................................11
5.6 Financial Statements...............................................................................11
5.7 Patents, Trademarks................................................................................12
5.8 Material Contracts and Commitments.................................................................12
5.9 Compliance with Other Instruments, Laws; No Instruments Burdensome.................................12
5.10 Litigation.........................................................................................13
5.11 Employees..........................................................................................13
5.12 Brokers or Finders.................................................................................13
5.13 Permits............................................................................................13
5.14 Employee Benefit Plans.............................................................................13
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TABLE OF CONTENTS
(CONTINUED)
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6. Representations and Warranties of Parent and Sub............................................................13
6.1 Organization and Standing..........................................................................13
6.2 Authorization......................................................................................13
6.3 Subsidiaries.......................................................................................14
6.4 Capitalization.....................................................................................14
6.5 SEC Filings........................................................................................15
6.6 Title to Properties and Assets; Liens..............................................................15
6.7 Patents, Trademarks................................................................................16
6.8 Material Contracts and Commitments.................................................................16
6.9 Compliance with Other Instruments, Laws; No Instruments Burdensome.................................16
6.10 Litigation.........................................................................................16
6.11 Employees..........................................................................................16
6.12 Brokers or Finders.................................................................................17
6.13 Permits............................................................................................17
6.14 Employee Benefit Plans.............................................................................17
7. Pre-Closing Covenants.......................................................................................17
7.1 General............................................................................................17
7.2 Notices and Consents...............................................................................17
7.3 Operation of Business..............................................................................17
7.4 Access to Information..............................................................................18
7.5 Notice of Developments.............................................................................18
7.6 Shareholder Approval...............................................................................18
7.7 Confidentiality....................................................................................18
7.8 FIRPTA Compliance..................................................................................19
7.9 Additional Documents and Further Assurances........................................................19
8. Post-Closing Covenants......................................................................................19
8.1 General............................................................................................19
8.2 Litigation Support.................................................................................20
8.3 Tax Free Reorganization............................................................................20
8.4 Employee Benefits..................................................................................20
8.5 Indemnification of Directors and Officers..........................................................21
9. Conditions to Obligations to Close..........................................................................22
9.1 Conditions to Parent's and Sub's Obligation to Close...............................................22
9.2 Conditions to the Company's Obligations............................................................23
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TABLE OF CONTENTS
(CONTINUED)
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10. Survival of Representations, Warranties and Covenants; Indemnity............................................25
10.1 Survival of Representations and Warranties.........................................................25
10.2 Indemnity..........................................................................................26
11. Termination.................................................................................................27
11.1 Termination of the Agreement.......................................................................27
11.2 Effect of Termination..............................................................................28
12. Miscellaneous...............................................................................................28
12.1 Press Releases and Public Announcements............................................................28
12.2 No Third-Party Beneficiaries.......................................................................28
12.3 Entire Agreement and Modification..................................................................28
12.4 Succession and Assignment..........................................................................29
12.5 Counterparts.......................................................................................29
12.6 Headings...........................................................................................29
12.7 Notices............................................................................................29
12.8 Governing Law......................................................................................30
12.10 Waivers............................................................................................30
12.11 Severability.......................................................................................31
12.12 Expenses...........................................................................................31
12.13 Construction.......................................................................................31
12.14 Disclosure Letters.................................................................................31
12.15 Attorneys'Fees.....................................................................................31
12.16 Further Assurances.................................................................................32
12.17 Time of Essence....................................................................................32
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EXHIBITS
Exhibit A Certificate of Merger
Exhibit B Form of Parent Voting Agreement
Exhibit C Form of Company Voting Agreement
Exhibit D Form of Employment Agreement
Exhibit E Opinion of Company Counsel
Exhibit F Opinion of Parent Counsel
Exhibit G Form of Registration Rights Agreement
Exhibit H Certificate of Designation of Series F Preferred Stock
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "AGREEMENT") is entered into
as of January 21, 2000, by and among Popmail.com, Inc., a Minnesota corporation
("PARENT"), IZ Acquisition Corporation, a Delaware corporation and wholly owned
subsidiary of Parent ("SUB"), and IZ.com Incorporated, a Delaware corporation
(the "COMPANY"), and, as to Sections 10.2 and12 only, Virtual Group LLC, a
Nevada limited liability company ("VG"). Parent, the Company, Sub and, where
applicable, VG, are sometimes referred to herein individually as a "PARTY" and
collectively as the "PARTIES."
RECITALS
A. Pursuant to the Certificate of Merger in the form attached hereto as
EXHIBIT A (the "CERTIFICATE OF MERGER") providing for the merger of Sub with and
into the Company (the "MERGER") pursuant to the Delaware General Corporation
Law, the shares of Company Capital Stock (as defined in SECTION 2.1 hereof)
issued and outstanding immediately prior to the Effective Time will be converted
into shares of Parent Preferred Stock (as defined in SECTION 2.1 hereof) and all
options and warrants to acquire capital stock of the Company will be converted
into rights to acquire Common Stock of Parent.
B. The Parties desire to enter into this Agreement for the purpose of
setting forth certain representations, warranties and covenants made as an
inducement to the execution and delivery of this Agreement, and to serve as
conditions precedent to the consummation of the Merger.
C. The respective Boards of Directors of Parent, Sub and the Company have
approved and adopted this Agreement, and this Agreement is intended to be a plan
of reorganization under the provisions of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "CODE").
D. Concurrent with the execution of this Agreement, as a material
inducement to Parent and Sub, certain shareholders of the Company are entering
into voting agreements in the form of EXHIBIT B hereto (the "COMPANY VOTING
AGREEMENTS"), and employment agreements in the form of EXHIBIT D hereto (the
"EMPLOYMENT AGREEMENTS") and as a material inducement to the Company, certain
shareholders of Parent are entering into voting agreements in the form of
EXHIBIT C hereto (the "PARENT VOTING AGREEMENTS").
NOW, THEREFORE, in consideration of these premises and of the mutual
agreements, representations, warranties and covenants herein contained, the
Parties do hereby agree as follows:
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AGREEMENT
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa). Certain other terms
are defined in the text of this Agreement.
"AFFILIATE" of a Person means any other Person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with such Person.
"AVERAGE SHARE PRICE" means the average closing sales prices
of the Parent Common Stock as reported by the Nasdaq Small Cap Market for the
five (5) business days ending two business days prior to the Closing.
"BEST EFFORTS" means the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to ensure that
such result is achieved as expeditiously as possible.
"BUSINESS" means (i) in the case of the Company, the business
of retail e-commerce sales and integrated television and e-mail-based
merchandising, and (ii) in the case of Parent, the business of providing
outsourced e-mail marketing services.
"COMPANY COMMON STOCK" means shares of Common Stock of the
Company, $.001 par value.
"COMPANY PREFERRED STOCK" means shares of Preferred Stock of
the Company, $.001 par value.
"BUSINESS CONDITION" means the current business, financial
condition, results of operations and assets of a corporate entity.
"COMPANY DISCLOSURE LETTER" means the Company Disclosure
Letter delivered by the Company to Parent concurrently with the execution and
delivery of this Agreement, which specifically references any exceptions to the
representations and warranties of the Company set forth in SECTION 5 hereof.
"COMPANY INTELLECTUAL PROPERTY" means any Technology and
Intellectual Property Rights including the Company Registered Intellectual
Property Rights (as defined below) that are owned (in whole or in part) by or
exclusively licensed to the Company.
"COMPANY STOCKHOLDERS" means the stockholders of record of the
Company immediately prior to the Effective Time (other than the holders of
Dissenting Shares, if any).
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"CONTEMPLATED TRANSACTIONS" means all of the transactions
contemplated by this Agreement, including:
(a) the merger of Sub with and into the Company, the issuance
by Parent of the Parent Common Stock and Parent's acquisition and ownership of
the Company and exercise of control over the Company;
(b) the execution, delivery, and performance of the Employment
Agreements, the Voting Agreements, and the Affiliate Agreements and the
Non-Competition Agreement;
(c) the performance by Parent, the Company and Sub of their
respective covenants and obligations under this Agreement.
"GOVERNMENTAL BODY" means any:
(a) nation, province, state, county, city, town, village,
district, or other jurisdiction of any nature;
(b) federal, provincial, state, local, municipal, foreign, or
other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature.
"KNOWLEDGE" --an individual will be deemed to have "KNOWLEDGE"
of a particular fact or other matter if:
(a) such individual is actually aware of such fact or other
matter; or
(b) a prudent officer or director would be expected to
discover or otherwise become aware of such fact or other matter in the course of
performing or complying with the responsibilities and obligations commonly
associated with such person's position.
(c) Parent will be deemed to have "KNOWLEDGE" of a particular
fact or other matter if an officer or director of Parent has Knowledge of such
fact or other matter. The Company will be deemed to have "KNOWLEDGE" of a
particular fact or other matter if an officer or director of the Company has
knowledge of such fact or other matter.
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"LEGAL REQUIREMENTS" means any federal, state, local,
municipal, foreign or other law, statute, constitution, principle, of common
law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body.
"MATERIAL ADVERSE EFFECT" shall mean as to the Company or
Parent, a material adverse effect on the current business, financial condition,
results of operations and assets of the Company or Parent, as the case may be
(other than as a result of (i) general economic or industry conditions or
conditions in the Company's or Parent's Business, as the case may be, or (ii)
performance by the Company or Parent, a the case may be, of its obligations
under, or the taking of any actions contemplated or permitted by, this
Agreement, (iii) changes in law or generally accepted accounting principles, or
(iv) the announcement or pendency of any of the Contemplated Transactions).
"MERGER CONSIDERATION" means a number of 425,000 shares of
Parent Preferred Stock; provided however that in the event that, prior to the
Closing, Parent acquires for cash 73,171 of the shares of Company Preferred
Stock held by Archery Venture Partners, L.P. in accordance with Section 8.8
hereof, then the Merger Consideration shall be reduced to 417,917 shares of
Parent Preferred Stock.
"ORDINARY COURSE OF BUSINESS": an action taken by either of
Parent or the Company will be deemed to have been taken in the "Ordinary Course
of Business" only if:
(a) such action is consistent with the past practices of such
Party and is taken in the ordinary course of the day-to-day operations of such
Party; and
(b) such action is not required to be authorized by the board
of directors of such Party or any committee or delegee thereof.
"PARENT DISCLOSURE LETTER" means the Parent Disclosure Letter
delivered by Parent to the Company concurrently with the execution and delivery
of this Agreement, which specifically references any exceptions to the
representations and warranties of Parent and Sub set forth in Section 6 hereof.
"PARENT PREFERRED STOCK" means shares of Series F Preferred
Stock of Parent, $.01 par value, with the rights, preferences and priviliges set
forth in the Certificate of Designation of Series F Preferred Stock of Parent
attached hereto as EXHIBIT H.
"PARENT SEC REPORTS" has the meaning set forth in SECTION 6.5.
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"PERSON" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Body.
"REPRESENTATIVES" means, with respect to a Person, that
Person's officers, directors, employees, accountants, counsel, investment
bankers, financial advisors, shareholders and other representatives.
"SEC" means the United States Securities and Exchange
Commission.
2. THE MERGER.
2.1 MERGER; EFFECTIVE TIME. Subject to the terms and
conditions of this Agreement and the applicable provisions of the Delaware
General Corporation Law ("DELAWARE LAW"), Sub will be merged with and into the
Company (the "MERGER"), the separate existence of Sub shall cease and the
Company shall continue as the surviving corporation and as a wholly owned
subsidiary of Parent. In accordance with the provisions of this Agreement, the
Certificate of Merger shall be filed with the Delaware Secretary of State in
accordance with Delaware Law and each issued and outstanding share of capital
stock of the Company ("COMPANY CAPITAL STOCK"), shall be converted into shares
of Parent Preferred Stock in the manner contemplated by SECTION 3. The Merger
shall become effective at the time of the acceptance of the Certificate of
Merger by the Delaware Secretary of State (the date of such acceptance being
hereinafter referred to as the "EFFECTIVE DATE" and the time of such acceptance
being hereinafter referred to as the "EFFECTIVE TIME").
2.2 CLOSING. The closing of the Merger (the "Closing") will
take place at the offices of Parent (i) on a date and at a time as mutually
agreed to by Parent and the Company as soon as practicable (and in any event
within two business days) after the date on which the last condition set forth
in Section 9 hereof shall have been satisfied or waived or (ii) at such other
time as Parent and the Company may mutually agree (the date on which the Closing
occurs being referred to as the "Closing Date").
2.3 EFFECT OF THE MERGER. At the Effective Time, (i) the
separate existence of Sub shall cease and Sub shall be merged with and into the
Company (Sub and the Company are sometimes referred to herein as the
"CONSTITUENT CORPORATIONS" and the Company after the Merger is sometimes
referred to herein as the "SURVIVING CORPORATION"), (ii) the Certificate of
Incorporation of Sub in effect immediately prior to the Effective Time shall be
the Certificate of Incorporation of the Surviving Corporation; provided,
however, that Article I of the Certificate of Incorporation of the Surviving
Corporation shall be amended to read as follows: "The name of the corporation is
IZ.com Incorporated", (iii) the Bylaws of Sub in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, (iv) the
directors of the Company shall be the directors of the Surviving Corporation
until their successors shall have been duly elected
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and qualified, (v) the officers of the Company shall be the initial officers of
the Surviving Corporation until their successors have been duly appointed and
qualified, (vi) each share of capital stock of Sub shall be converted into and
exchanged for one validly issued, fully paid and nonassessable share of Common
Stock of the Surviving Corporation, and (vii) the Merger shall, from and after
the Effective Time, have all the effects provided by applicable law.
3. EFFECT OF MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES; ADDITIONAL PAYMENTS.
3.1 Certain Definitions. For purposes of this SECTION 3, the
following terms shall be defined as set forth below:
"AGGREGATE COMMON NUMBER" means the sum of (A) the total
number of shares of Company Common Stock that are issued and outstanding
immediately prior to the Effective Time; (B) the total number of shares of
Company Common Stock that are issuable upon the conversion of any shares of
Company Preferred Stock issued and outstanding immediately prior to the
Effective Time; (C) the total number of shares of Company Common Stock that are
issuable upon the conversion of any shares of Company Preferred Stock that are
issuable upon the exercise in full of all warrants to acquire shares of Company
Preferred Stock that are outstanding immediately prior to the Effective Time;
and (D) the total number of shares of Company Capital Stock that are issuable
upon the conversion or exercise in full of all convertible securities or options
(vested and unvested), warrants or other rights to acquire Company Capital Stock
that are outstanding immediately prior to the Effective Time other than
convertible securities or warrants referred to in clauses "(B)" or "(C)" of this
sentence.
"EXCHANGE RATIO" means the quotient obtained by dividing (x)
the Merger Consideration by (y) the Aggregate Common Number.
3.2 EXCHANGE OF STOCK; RIGHTS TO ADDITIONAL PAYMENTS. As of
the Effective Time, each share of Company Capital Stock that is issued and
outstanding immediately prior to the Effective Time (other than Dissenting
Shares (as defined in SECTION 3.9 hereof) shall, by virtue of the Merger and
without any action on the part of the Company Stockholders, be converted into a
number of shares of Parent Preferred Stock equal to the Exchange Ratio.
3.3 COMPANY OPTIONS AND WARRANTS. At the Effective Time,
Parent shall assume the Company's 1999 Stock Plan (the "COMPANY PLAN"), and each
of the then outstanding options and warrants to purchase Company Capital Stock
whether vested or unvested (collectively, the "COMPANY OPTIONS") (including all
outstanding options granted under the Company Plan, and any individual non-plan
options and warrants) will by virtue of the Merger, and without any further
action on the part of any holder thereof, be assumed by Parent and converted
into an option or warrant, as the case may be, to purchase that whole number of
shares of Parent Preferred Stock determined by multiplying the number of shares
of Company Capital Stock subject to such Company
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Option at the Effective Time by the Exchange Ratio, at an exercise price per
share of Parent Preferred Stock equal to the exercise price per share of such
Company Option immediately prior to the Effective Time divided by the applicable
Exchange Ratio, rounded up the nearest cent. If the foregoing calculation
results in an assumed Company Option being exercisable for a fraction of a share
of Parent Preferred Stock, then the number of shares of Parent Preferred Stock
subject to such option will be rounded down to the nearest whole number of
shares. The term, exercisability, vesting schedule, vesting commencement date,
status as an "incentive stock option" under Section 422 of the Code, if
applicable, and all other terms and conditions of the Company Options will
otherwise be unchanged (it being understood that the vesting of certain Company
Options will be accelerated in connection with the Merger in accordance with the
terms of existing agreements between the Company and certain individuals as
described in the Company Disclosure Letter).
3.4 CONVERSION OF SUB COMMON STOCK. Each share of common stock
of Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, no par value, of the Surviving Corporation.
Each stock certificate of Sub evidencing ownership of any such shares shall
continue to evidence ownership of such shares of capital stock of the Surviving
Corporation.
3.5 ADJUSTMENTS TO PARENT COMMON STOCK. The number of shares
of Parent Common Stock issuable hereunder and all other applicable definitions
and calculations hereunder (including the definition of Average Share Price)
shall be adjusted to reflect fully the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Preferred Stock or Parent Common Stock or Company
Capital Stock), reorganization, recapitalization or other like change with
respect to Parent Preferred Stock or Parent Common Stock or Company Capital
Stock occurring or becoming effective after the date hereof but prior to the
Closing.
3.6 FRACTIONAL SHARES. No fractional shares of Parent
Preferred Stock shall be issued in the Merger. In lieu thereof, any fractional
share shall be rounded up to the nearest whole share of Parent Preferred Stock.
3.7 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Closing Date, Parent
shall appoint Maslon Edelman Borman & Brand, LLP, to act as the exchange agent
(the "EXCHANGE AGENT") in the Merger.
(b) PARENT TO PROVIDE PARENT PREFERRED STOCK. Promptly
after the Effective Date, Parent shall make available for exchange in accordance
with this SECTION 3, through such reasonable procedures as Parent may adopt, the
shares of Parent Preferred Stock issuable pursuant to SECTIONS 3.1 and 3.2
hereof in exchange for outstanding shares of Company Capital Stock.
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(c) EXCHANGE PROCEDURES. Within ten (10) days after the
Effective Date, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Capital Stock (the "CERTIFICATES")
whose shares are being converted into the Merger Consideration pursuant to
SECTIONS 3.1 and 3.2 hereof, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent (THE
"LETTER OF TRANSMITTAL") and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Parent, duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor the number
of shares of Parent Preferred Stock to which the holder of Company Capital Stock
is entitled pursuant to Sections 3.1 and 3.2 hereof. The Certificates so
surrendered shall forthwith be canceled. No interest will accrue or be paid to
the holder of any outstanding Company Capital Stock. From and after the
Effective Date, until surrendered as contemplated by this SECTION 3.7, each
Certificate shall be deemed for all corporate purposes to evidence the number of
shares of Parent Preferred Stock into which the shares of Company Capital Stock
represented by such Certificate have been converted.
(d) NO FURTHER OWNERSHIP RIGHTS IN CAPITAL STOCK OF THE
COMPANY. The Merger Consideration delivered upon the surrender for exchange of
shares of Company Capital Stock in accordance with the terms hereof shall be
deemed to have been delivered in full satisfaction of all rights pertaining to
such Company Capital Stock. There shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of Company Capital
Stock which were outstanding immediately prior to the Effective Date. If, after
the Effective Date, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this SECTION
3.7.
(e) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Preferred Stock with a record date after the Effective Time
will be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Preferred Stock represented thereby until the holder of record
of such Certificate shall surrender such Certificate. Subject to applicable law,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Preferred Stock
issued in exchange therefor, without interest, at the time of such surrender,
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Preferred Stock.
(f) TRANSFERS OF OWNERSHIP. If any certificate for shares of
Parent Preferred Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the Person
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requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Preferred Stock in any name other than that of the
registered holder of the Certificate surrendered, or established to the
satisfaction of Parent or any agent designated by it that such tax has been paid
or is not payable.
(g) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that
any Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, such shares of
Parent Common Stock as may be required pursuant to Sections 3.1 and 3.2 hereof.
(h) NO LIABILITY. Notwithstanding anything to the contrary in
this Section 3.7, none of the Exchange Agent, the Surviving Corporation or any
Party hereto shall be liable to a holder of shares of Parent Preferred Stock or
Company Capital Stock for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
3.8 FURTHER ACTION. Parent, Sub and the Company shall take all
such actions as may be necessary or appropriate in order to effect the Merger as
promptly as possible. If, at any time after the Effective Date, any further
action is necessary or desirable to carry out the purposes of this Agreement and
to vest the Surviving Corporation with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of the Company, the
officers and directors of such corporation are fully authorized in the name of
the corporation or otherwise to take, and shall take, all such action.
3.9 DISSENTERS' RIGHTS.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Company Capital Stock held by a holder who has exercised
and perfected dissenters' rights for such shares in accordance with Delaware Law
and who, as of the Effective Time, has not effectively withdrawn or lost such
dissenters' rights ("DISSENTING SHARES"), shall not be converted into or
represent a right to receive the Merger Consideration, but the holder thereof
shall only be entitled to such rights as are granted by Delaware Law.
(b) Notwithstanding the provisions of subsection (a), if any
holder of Dissenting Shares shall effectively withdraw or lose (through failure
to perfect or otherwise) his or her dissenters' rights, then, as of the later of
the Effective Time and the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration, without interest thereon, upon surrender of the
Certificate representing such shares.
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<PAGE> 15
(c) The Company shall give Parent (i) prompt notice of any
written demand for appraisal received by the Company pursuant to the applicable
provisions of Delaware Law and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands.
3.10 DISSENTING SHARES AFTER PAYMENT OF FAIR VALUE. Dissenting
Shares, if any, after payments of fair value in respect thereto have been made
to dissenting shareholders of the Company pursuant to Delaware Law, shall be
canceled.
3.11 TAX CONSEQUENCES. It is intended by the Parties hereto that
the Merger shall constitute a reorganization within the meaning of Section 368
of the Code. Each Party has consulted with its own tax advisors and accountants
with respect to the tax consequences, respectively, of the Merger.
4. SECURITIES ACT COMPLIANCE. The shares of Parent Common Stock
issued in connection with the Merger will be issued in a transaction exempt from
registration under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), by reason of Section 4.2 thereof and/or Regulation D promulgated
thereunder. All shares of Parent Common Stock issuable upon conversion of the
Parent Preferred Stock shall be entitled to be registered subsequent to the
Closing pursuant to the Registration Rights Agreement in the form attached
hereto as EXHIBIT G to be entered into by the Company and the Company
Stockholders prior to the Closing. All shares of Parent Common Stock issuable
pursuant to Company Options issued pursuant to the Company Plan shall be
registered pursuant to a Registration Statement on Form S-8 in accordance with
Section 8.6 hereof.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Parent, except as disclosed in the Company Disclosure
Letter, as follows:
5.1 ORGANIZATION AND STANDING. The Company is a corporation duly
organized and existing under, and by virtue of, the laws of the State of
Delaware and is in good standing under such laws. The Company has all requisite
corporate power to own and operate its properties and assets, and to carry on
its business as presently conducted. The Company is duly qualified to do
business and is in good standing in each jurisdiction in which the character of
the business conducted by it or the location of the properties owned or leased
by it make such qualification necessary, except for jurisdictions in which the
failure to so qualify would not have a material adverse effect on the financial
condition of the Company as a whole.
5.2 AUTHORIZATION. The Company has full power and authority to
execute and deliver this Agreement and all agreements and instruments delivered
pursuant hereto (the "ANCILLARY AGREEMENTS") to which it is a party, and,
subject to receipt of the requisite approval of its stockholders, to consummate
the transactions contemplated hereunder and to perform its obligations hereunder
and no other proceedings on the part of the Company are necessary to authorize
the
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<PAGE> 16
execution, delivery and performance of this Agreement and the Ancillary
Agreements to which the Company is a party. This Agreement and the Ancillary
Agreements to which the Company is a party and the Contemplated Transactions
have been approved by the Company's Board of Directors. This Agreement and the
Ancillary Agreements to which the Company is a party constitute the valid and
legally binding obligations of the Company, enforceable against the Company in
accordance with their respective terms and conditions. Other than (i) such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws, and (ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, the Company need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any Governmental Body in order to consummate the transactions
contemplated by this Agreement.
5.3 SUBSIDIARIES. The Company has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
other corporation, association or business entity.
5.4 CAPITALIZATION. The authorized capital stock of the Company
consists of 30,000,000 shares of Common Stock, of which 3,121,700 shares are
issued and outstanding as of the date hereof and 10,000,000 shares of Preferred
Stock of which 670,000 shares have been designated Series A Preferred Stock, of
which 619,500 are issued and outstanding as of the date hereof, 80,000 shares
have been designated Series A-1 Preferred Stock, all of which are issued and
outstanding as of the date hereof, and 600,000 shares of Series B Preferred
Stock of which 493,904 shares are issued and outstanding as of the date hereof.
The Company has reserved (a) sufficient shares of Common Stock for issuance upon
conversion of the Series A Preferred, Series A-1 Preferred, and Series B
Preferred, (b) 2,500,000 shares of Common Stock for issuance pursuant to the
Company Plan, of which 2,154,500 are subject to outstanding options as of the
date hereof, and (c) 502,748 shares of Common Stock for issuance upon exercise
of outstanding warrants as of the date hereof. Other than as set forth above,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal, or similar rights) or agreements,
orally or in writing, for the purchase or acquisition from the Company of any
shares of its capital stock.
5.5 TITLE TO PROPERTIES AND ASSETS; LIENS. The Company has good
and marketable title to its properties and assets, and has good title to all its
respective leasehold interests, in each case subject to no mortgage, pledge,
lien, lease, encumbrance or charge, other than (i) liens for current taxes not
yet due and payable, and (ii) possible minor liens and encumbrances which do not
in any case materially detract from the value of the property subject thereto or
materially impair the operations of the Company, and which have not arisen
otherwise than in the ordinary course of business.
5.6 FINANCIAL STATEMENTS. The Company has delivered to the
Purchaser its audited balance sheet and statement of operations as of and for
the period from inception through
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December 31, 1999 (the "Financial Statements"). The Financial Statements are
complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles, except that the
Financial Statements are subject to year-end adjustments of a recurring and
routine nature, not material in amount. To its Knowledge, the Company does not
have any indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type in excess of $10,000 whether accrued, absolute, matured
or otherwise, which (i) has not been reflected in the Financial Statements, or
(ii) has not arisen since December 31, 1999 in the ordinary course of the
Company's business.
5.7 PATENTS, TRADEMARKS. The Company owns or has the right to use,
free and clear of all liens, charges, claims and restrictions, all trade
secrets, trademarks, service marks, trade names, copyrights, licenses, and
rights necessary to their business as now conducted and is not infringing upon
or otherwise acting adversely to the right or claimed right of, to the Company's
knowledge, any person under or with respect to any of the foregoing. The Company
has not received any written communications alleging that the Company has
violated any patent, trademark, service mark, trade name, copyright or trade
secret or other proprietary right of any other person or entity. The Company has
no knowledge of any infringement or improper use by any third party of any
trademark or copyright held by it, nor has the Company instituted any action,
suit or proceeding in which an act constituting an infringement of any such
trademark or copyright was alleged to have been committed by a third party.
5.8 MATERIAL CONTRACTS AND COMMITMENTS. The Company, nor, to the
Company's knowledge, any third party is in default under any material contract
or agreement (contracts or agreements with annual payment obligations of $20,000
or more) to which the Company is a party. All such contracts, agreements and
instruments are valid, binding and enforceable except as such enforceability may
be limited by equitable considerations, public policy or the laws governing
bankruptcy or insolvency, and in full force in effect and the consummation of
the transactions contemplated hereby does not require the consent of any party
to any such contract, agreement or instrument.
5.9 COMPLIANCE WITH OTHER INSTRUMENTS, LAWS; NO INSTRUMENTS
BURDENSOME. The Company is not in violation of any term of its Certificate of
Incorporation, or in any material respect of any term or provision of any
material mortgage, indenture, contract, indebtedness, lease, agreement,
instrument, judgment or decree, and is not in violation of any order, statute,
rule or regulation applicable to the Company. The execution, delivery and
performance of and compliance with this Agreement and the consummation of the
transactions contemplated hereby shall not result in any violation of, or
conflict with, or constitute a default under the Certificate of Incorporation or
any of the foregoing agreements, instruments, judgments or decrees, or result in
the creation of, any material mortgage, pledge, lien, encumbrance or charge upon
any of the properties or assets of the Company.
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<PAGE> 18
5.10 LITIGATION. There are no actions, suits, proceedings or
investigations pending or threatened in writing against the Company or its
properties before any court or governmental agency. The Company is not a party
or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
5.11 EMPLOYEES. To the Company's knowledge, no employee of the
Company is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement relating to the
relationship of any such employee with the Company or any other party because of
the nature of the business conducted by the Company. The Company does not have
any collective bargaining agreements covering any of its employees.
5.12 BROKERS OR FINDERS. The Company has not incurred, and shall
not incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
5.13 PERMITS. The Company has all franchises, permits, licenses,
and any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company, taken as
a whole. The Company is not in default, in any material respect, under any of
such franchises, permits, licenses, or other similar authority.
5.14 EMPLOYEE BENEFIT PLANS. The Company does not have any
Employee Benefit Plan as defined in the Employee Retirement Security Act of
1974.
6. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Parent and Sub
represent and warrant to the Company, except as disclosed in the Parent
Disclosure Letter, as follows:
6.1 ORGANIZATION AND STANDING. Parent and Sub are corporations
duly organized and existing under, and by virtue of, the laws of the State of
Minnesota and the State of Delaware, respectively, and are in good standing
under such laws. Parent has all requisite corporate power to own and operate its
properties and assets, and to carry on its business as presently conducted. Sub
was formed for the purpose of effecting the Merger and has concluded no other
business. Parent qualified to do business and is in good standing in each
jurisdiction in which the character of the business conducted by it or the
location of the properties owned or leased by it make such qualification
necessary, except for jurisdictions in which the failure to so qualify would not
have a Material Adverse Effect on Parent.
6.2 AUTHORIZATION. Parent and Sub have full power and authority to
execute and deliver this Agreement and the Ancillary Agreements to which they
are parties, and to consummate the Contemplated Transactions and to perform
their obligations hereunder and thereunder, and no
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<PAGE> 19
other proceedings on the part of Parent or Sub are necessary to authorize the
execution, delivery and performance of this Agreement and the Ancillary
Agreements to which they are parties. This Agreement and the Ancillary
Agreements to which they are parties and the Contemplated Transactions have been
approved by Parent's and Sub's Board of Directors. The consummation of the
Merger does not require the approval or consent of the shareholders of Parent.
This Agreement and the Ancillary Agreements to which they are parties constitute
the valid and legally binding obligations of Parent and/or Sub, enforceable
against Parent and/or Sub in accordance with their respective terms and
conditions. Other than (i) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws, and (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware,
neither Parent nor Sub need give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any Governmental Body in order to
consummate the Contemplated Transactions.
6.3 SUBSIDIARIES. Parent has no subsidiaries or affiliated
companies other than the Subsidiary and does not otherwise own or control,
directly or indirectly, any other corporation, association or business entity.
6.4 CAPITALIZATION. The authorized capital stock of Parent
consists of 100,000,000 shares of Common Stock, of which 24,741,257 shares are
issued and outstanding as of the date hereof, and 761,500 shares of Preferred
Stock, of which 2,000 shares have been designated Series A 8% Preferred Stock,
none of which are issued and outstanding, 5,000 shares have been designated
Series B Preferred Stock, none of which are issued and outstanding, 2,000 shares
of Series C Preferred Stock none of which are issued and outstanding, 2,500
shares of Series D Preferred Stock, 1,000 of which are issued and outstanding,
and 750,000 of which have been designated Series E Preferred Stock, 350,000 of
which are issued and outstanding. The maximum aggregate number of shares of
Parent Common Stock issuable upon conversion of all issued and outstanding
shares of Preferred Stock of Parent is 1,335,986. The rights preferences and
privileges of the Series D Preferred Stock and Series E Preferred Stock of
Parent are as set forth in the Certificate of Designation of Series D Preferred
Stock and Certificate of Designation of Series E Preferred of Parent,
respectively, copies of which have been provided to the Company's counsel.
Parent has reserved (a) sufficient shares of Common Stock for issuance upon
conversion of the Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred and Series E Preferred, (b) 1,250,000 shares of Common Stock
for issuance pursuant to Parent's 1997 Stock Option and Compensation Plan, of
which 1,422,999 are currently subject to outstanding options, and 172,999 of
which remain subject to shareholder approval, (c) 250,000 shares of Common Stock
for issuance pursuant to Parent's 1998 Director Stock Option Plan, of which
198,333 shares are currently subject to outstanding options, and 48,333 of which
shares remain subject to shareholder approval, (d) a total of 2,039,601 shares
of Common Stock for issuance upon conversion of 4% Subordinated Convertible
Debentures of Parent and certain other convertible debt of Parent, (e) 8,109,223
shares of Common Stock for issuance upon exercise of outstanding warrants, (f)
2,600,000 shares of
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Common Stock issuable upon the exercise of the Class A Warrants issued as part
of the Parent's initial public offering and the partial exercise of the
underwriter's over-allotment, (g) 58,334 shares of Common Stock issuable upon
the exercise of certain directors' options and (h) as of the Closing will have
reserved sufficient shares of Parent Common Stock for issuance upon conversion
of the Parent Preferred Stock and exercise of the Company Options. Other than as
set forth above, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal or similar rights)
or agreements, orally or in writing, for the purchase or acquisition from Parent
of any shares of its capital stock.
6.5 SEC FILINGS. Parent has filed all forms, reports and documents
required to be filed with the SEC since December 31, 1997, and has heretofore
made available to the Company, in the form filed with the SEC, (i) its Annual
Report on Form 10-K for the fiscal year ended January 3, 1999, (ii) its
Quarterly Report on Form 10-Q for the periods ended March 31, 1999, June 30,
1999 and September 30, 1999, (iii) the proxy statements relating to all meetings
of stockholders held since December 31, 1997, (iv) its Current Reports on Form
8-K dated June 22, 1999, September 1, 1999 (as amended September 16, 1999),
September 30, 1999 and December 3, 1999, (v) its Registration Statements on Form
S-3 dated August 13, 1999, as amended, and December 21, 1999, and the
prospectuses filed pursuant to Rule 424(b) relating thereto, and (vi) any other
report or registration statements filed by it with the SEC since December 31,
1997 (collectively, the "Parent SEC Reports"). The Parent SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act, and the
Securities Exchange Act of 1934, as amended, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial
statements of Parent, including the notes thereto, included in the SEC Documents
(the "Parent Financial Statements") have been prepared in accordance with the
published rules and regulations of the SEC applicable thereto, have been
prepared in accordance with GAAP consistently applied (except as may be
indicated in the notes thereto) and present fairly the consolidated financial
position of Parent at the dates thereof and of its operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to the
absence of footnotes and to normal audit adjustments which will not be material
in amount). To its knowledge, Parent does not have any indebtedness, obligation,
expense, claim, deficiency, guaranty or endorsement of any type in excess of
$10,000 whether accrued, absolute, matured or otherwise, which (i) has not been
reflected in the Parent Financial Statements, or (ii) has not arisen since
December 31, 1999 in the ordinary course of Parent's business.
6.6 TITLE TO PROPERTIES AND ASSETS; LIENS. Parent has good and
marketable title to its properties and assets, and has good title to all its
respective leasehold interests, in each case subject to no mortgage, pledge,
lien, lease, encumbrance or charge, other than (i) liens for current taxes not
yet due and payable, and (ii) possible minor liens and encumbrances which do not
in any
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<PAGE> 21
case materially detract from the value of the property subject thereto or
materially impair the operations of Parent, and which have not arisen otherwise
than in the ordinary course of business.
6.7 PATENTS, TRADEMARKS. Parent owns or has the right to use,
free and clear of all liens, charges, claims and restrictions, all trade
secrets, trademarks, service marks, trade names, copyrights, licenses, and
rights necessary to its business as now conducted and is not infringing upon or
otherwise acting adversely to the right or claimed right of, to Parent's
knowledge, any person under or with respect to any of the foregoing. Parent has
not received any written communications alleging that Parent has violated any
patent, trademark, service mark, trade name, copyright or trade secret or other
proprietary right of any other person or entity. Parent has no knowledge of any
infringement or improper use by any third party of any trademark or copyright
held by it, nor has Parent instituted any action, suit or proceeding in which an
act constituting an infringement of any such trademark or copyright was alleged
to have been committed by a third party.
6.8 MATERIAL CONTRACTS AND COMMITMENTS. Neither Parent, nor, to
Parent's knowledge, any third party is in default under any material contract or
agreement (contracts or agreements with annual payment obligations of $20,000 or
more) to which Parent is a party. All such contracts, agreements and instruments
are valid, binding and enforceable except as such enforceability may be limited
by equitable considerations, public policy or the laws governing bankruptcy or
insolvency, and in full force in effect and the consummation of the transactions
contemplated hereby does not require the consent of any party to any such
contract, agreement or instrument.
6.9 COMPLIANCE WITH OTHER INSTRUMENTS, LAWS; NO INSTRUMENTS
BURDENSOME. Parent is not in violation of any term of its Articles of
Incorporation, or in any material respect of any term or provision of any
material mortgage, indenture, contract, indebtedness, lease, agreement,
instrument, judgment or decree, and is not in violation of any order, statute,
rule or regulation applicable to Parent. The execution, delivery and performance
of and compliance with this Agreement and the consummation of the Contemplated
Transactions shall not result in any violation of, or conflict with, or
constitute a default under the Articles of Incorporation or any of the foregoing
agreements, instruments, judgments or decrees, or result in the creation of, any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of Parent.
6.10 LITIGATION. There are no actions, suits, proceedings or
investigations pending or threatened in writing against Parent or its properties
before any court or governmental agency. Parent is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. There is no action, suit, proceeding or
investigation by Parent currently pending or which Parent intends to initiate.
6.11 EMPLOYEES. To Parent's knowledge, no employee of Parent is in
violation of any term of any employment contract, patent disclosure agreement or
any other contract or agreement relating to the relationship of any such
employee with Parent or any other party because
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of the nature of the business conducted by Parent. Parent does not have any
collective bargaining agreements covering any of its employees.
6.12 BROKERS OR FINDERS. Parent has not incurred, and shall not
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
6.13 PERMITS. Parent has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of Parent, taken as a
whole. Parent is not in default, in any material respect, under any of such
franchises, permits, licenses, or other similar authority.
6.14 EMPLOYEE BENEFIT PLANS. Parent does not have any Employee
Benefit Plan as defined in the Employee Retirement Security Act of 1974.
6.15 NO TAXABLE INCOME. Parent has never had any taxable income
and does not expect any taxable income during its current taxable year, which
year is expected to include the date on which the shareholders of Parent approve
the Merger.
7. PRE-CLOSING COVENANTS. With respect to the period between the
execution of this Agreement and the earlier of the termination of this Agreement
and the Effective Time:
7.1 GENERAL. Each of the Parties will use reasonable efforts to
take all actions and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
as soon as reasonably practicable (including satisfaction, but not waiver, of
the closing conditions set forth in SECTION 9 below).
7.2 NOTICES AND CONSENTS. Each of the Parties will give any
notices to third parties and will use reasonable efforts to obtain any material
third party consents that are required in connection with the Merger. Each of
the Parties will give any notices to, make any filings with, and use its
reasonable efforts to obtain any authorizations, consents, and approvals of
Governmental Bodies required in connection with the Merger.
7.3 OPERATION OF BUSINESS. Each of the Parties will (a) conduct
its business only in the Ordinary Course of Business, (b) use reasonable efforts
to (i) preserve intact its current business organization, (ii) keep available
the services of the current officers, and employees of the Company, and (iii)
maintain the relations and good will with suppliers, customers, landlords,
creditors, agents, and others having business relationships with such Party, and
(c) confer with each other concerning operational matters of a material nature.
Prior to the earlier of the Effective Time or the termination of this Agreement,
without the prior written consent of Parent, the Company will not (i) issue more
than 200,000 shares of Company Common Stock or Company Preferred Stock or
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options or warrants to purchase more than than such number of shares of Common
Stock or Preferred Stock (other than shares issued upon exercise of outstanding
options or warrants), (ii) issue any stock options with an exercise price per
share which is less than the then-current market price of the Parent Common
Stock, after giving effect to the Exchange Ratio and the conversion ratio of the
Parent Preferred Stock into Parent Common Stock (assuming approval of the Merger
and related matters by the shareholders of Parent), (iii) obtain additional debt
financing with a principal amount in excess of $500,000 in the aggregate, (iv)
make or declare any dividend or distribution with respect to shares of Company
Common Stock or Company Preferred Stock, or (v) pay any bonus to, or increase
the base salary of, any officer of the Company, other than merit increases and
performance bonuses each in the ordinary course of business.
7.4 ACCESS TO INFORMATION. Each of the Company and Parent will
permit the other Party and its Representatives to have access at all reasonable
times, and in a manner so as not to interfere with its normal business
operations, to its business and operations (subject, in the case of Parent, to
compliance with applicable securities laws). Neither such access, nor any
investigation by any Party and its Representatives, shall in any way diminish or
otherwise affect such Party's right to rely on any representation or warranty
made by the other Parties hereunder.
7.5 NOTICE OF DEVELOPMENTS. Each of the Company and Parent will
use reasonable efforts to give prompt written notice to the other Party of any
material development causing a breach of any of its own representations and
warranties in SECTION 5 or SECTION 6 above, as the case may be. No disclosure
pursuant to this SECTION 7.5, however, shall be deemed to amend or supplement
the Company Disclosure Letter or the Parent Disclosure Letter, as the case may
be, or to prevent or cure any misrepresentation, breach of warranty, or breach
of covenant.
7.6 SHAREHOLDER APPROVAL. As promptly as practicable after the
date hereof, the Company shall take all actions necessary in accordance with
Delaware Law and its Amended and Restated Certificate of Incorporation and
bylaws to institute an action by written consent of the Shareholders of the
Company to approve the principal terms of the Merger. Unless so doing will cause
the Board of Directors to violate its fiduciary duties under applicable law, the
Board of Directors will unanimously recommend approval of the proposal to
approve the principal terms of the Merger by the Company Stockholders.
7.7 CONFIDENTIALITY. Each of the Parties hereto hereby agrees to
keep such information or Knowledge obtained in any due diligence or other
investigation pursuant to the negotiation and execution of this Agreement or the
effectuation of the transactions contemplated hereby, confidential. In this
regard, the Company acknowledges, and will instruct its and its employees and
agents with access to confidential information of Parent, that Parent's Common
Stock is publicly traded and that any information obtained during the course of
its due diligence could be considered to be material non-public information
within the meaning of federal and state securities laws. Accordingly, the
Company acknowledges and agrees not to, and will instruct its
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<PAGE> 24
employees and agents with access to Parent's confidential information not to,
engage in any transactions in Parent's Common Stock in violation of applicable
insider trading laws.
7.8 FIRPTA COMPLIANCE. On the Closing Date, the Company shall deliver
to Parent a properly executed statement in a form reasonably acceptable to
Parent for purposes of satisfying Parent's obligations under U.S. Treasury
Regulation Section 1.1445-2(c)(3).
7.9 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each Party hereto, at
the request of another Party hereto, shall execute and deliver such other
instruments and do and perform such other reasonable acts and things as may be
necessary or desirable for effecting completely the consummation of the
Contemplated Transactions.
8. POST-CLOSING COVENANTS. With respect to the period following the
Effective Time:
8.1 GENERAL. In case at any time after the Effective Time any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under SECTION 10.2
below).
8.2 SHAREHOLDER APPROVAL. As promptly as practicable after the date
hereof, Parent shall take all actions necessary in accordance with the Minnesota
Business Corporation Act and its Articles of Incorporation and bylaws to duly
call, give notice of, convene and hold a meeting of its shareholders to consider
and vote upon (i) a proposal to approve the principal terms of the Merger, (ii)
a proposal to approve the issuance of the Parent Preferred Stock and the shares
of Common Stock of Parent issuable upon conversion thereof, and (iii) the
election of a Board of Directors composed of the following persons: Jesse Berst,
Daniel Conner, Prof. David Farber, Stephen King, Jerry Runyan, Gary Schneider,
Scott Schwartz, Lee Stein and Frank Wood. Parent shall set the record date for
such special meeting as soon as practicable following the date hereof. Parent
shall use reasonable efforts to solicit and obtain at or in advance of such
meeting the voting proxies from its shareholders sufficient to approve the
proposals set forth above. Parent will cause a Proxy Statement to be prepared,
filed with the SEC and submitted to the Parent Shareholders in accordance in all
material respects with all applicable laws and regulations. The Proxy Statement
will contain the unanimous recommendation of the Board of Directors of the
Company regarding each of the proposals set forth above. Parent has delivered to
the Company, concurrently with the execution of this Agreement, executed Voting
Agreements in the form attached hereto as Exhibit B from holders with beneficial
ownership of 90% of the number of outstanding shares of Parent Common Stock and
Parent Preferred Stock required to approve the proposals set forth above. Parent
shall provide the Proxy Statement to the Company and its counsel for review and
comment (and shall make such changes thereto as are reasonably requested by the
Company or its counsel), prior to providing the Proxy Statement to the SEC or
the Parent Shareholders.
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8.3 LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction (A) on or
prior to the Effective Time involving the Company or (B) arising out of Parent's
operation of the business of the Surviving Corporation following the Effective
Time in the manner in which it is presently conducted and planned to be
conducted, each of the other Parties will cooperate with the Party and its
counsel in the contest or defense, make available their personnel, and provide
such testimony and access to their books and records as shall be reasonably
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party.
8.4 TAX TREATMENT.
(a) It is the intent of the parties to this Agreement that the
Merger qualify as a tax-free reorganization under Section 368(a) of the Code,
and each of Parent, Sub, the Company and the Surviving Corporation covenants and
agrees not to take any actions inconsistent with such intent and agrees to use
best efforts to cause the Merger to qualify as a tax-free reorganization under
Section 368(a) of the Code. Each of Parent, Sub, the Company and the Surviving
Corporation agrees not to take any action from and after the Effective Time that
could reasonably be expected to cause the Merger not to be treated as a
"reorganization" under Section 368(a) of the Code.
(b) It is the intent of the parties to this Agreement that the
reduction in the Liquidation Value of the Parent Preferred Stock pursuant to
Section 4 of the Certificate of Designation attached hereto as Exhibit H upon
approval of the Merger and related matters by the shareholders of Parent, and
the increase in the Conversion Ratio of the Parent Preferred Stock pursuant to
Section 5(a) of such Certificate of Designation concurrently therewith, qualify
as a recapitalization within the meaning of Section 368(a)(1)(E) of the Code for
federal income tax purposes. Each of Parent, Sub, the Company and the Surviving
Corporation agree not to take any action that could reasonably be expected to be
inconsistent with such recapitalization qualification.
8.5 EMPLOYEE BENEFITS. Subject to any applicable legal, regulatory or
contractual limitations, Parent shall take all actions as are necessary to allow
employees of the Company who continue their employment with the Surviving
Corporation or who become employees of Parent or any subsidiary of Parent to
participate in the benefit programs of Parent to the same extent as similarly
situated employees of Parent, without undue delay after the Effective Time.
Without limiting the generality of the foregoing, (i) subject to any applicable
legal, regulatory or contractual limitations, to the extent that any employee of
the Company becomes eligible to participate in any employee benefit plan of
Parent after the Effective Time, Parent, the Surviving Corporation and their
subsidiaries shall credit such employee's service with the Company, to the same
extent as such service was credited under the similar employee benefit plans of
the Company immediately prior to
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the Effective Time, for purposes of determining eligibility to participate in
and vesting under, and for purposes of calculating the benefits under, such
employee benefit plan of Parent, and (ii) to the extent permitted by such
employee benefit plan of Parent and applicable law, Parent, the Surviving
Corporation and their subsidiaries shall waive any pre-existing condition
limitations, waiting periods or similar limitations under such employee benefit
plan of Parent and shall provide each such employee with credit for any
co-payments previously made and any deductibles previously satisfied.
8.6 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) For a period of five years from the Closing Date, Parent
shall, and shall cause the Surviving Corporation to, fulfill and honor all
rights to indemnification existing in favor of the current directors and
officers of the Company, as provided in the Company's Certificate of
Incorporation and Bylaws (as in effect as of the date of this Agreement) and as
provided in the indemnification agreements between the Company and such
directors and officers listed in SECTION 8.6 of the Company Disclosure Letter,
complete and correct copies of which have been provided to Parent.
(b) For five years after the Effective Time, Parent shall maintain
in effect directors' and officers' liability insurance covering those persons
who are currently covered by the Company's directors' and officers' liability
insurance policy with scope and coverage similar to Parent's existing directors'
and officers' liability insurance coverage.
(c) All expenses, including attorneys' fees, which may be incurred
by any Party in connection with any action to enforce the indemnity and other
obligations provided for in this SECTION 8.6 shall be paid by the prevailing
party in such action.
(d) This SECTION 8.6 shall survive the consummation of the
transactions contemplated hereby, is intended to benefit and may be enforced by
the directors and officers of the Company, and shall be binding on all
successors and assigns of Parent and the Company.
8.7 REGISTRATION STATEMENT ON FORM S-8. As soon as practicable after
the Closing, and in any event within ten (10) business days thereafter, Parent
shall file with the SEC a registration statement on Form S-8, which registration
will register all shares of Parent Common Stock issued or issuable up exercise
of stock options issued under the Company's 1999 Stock Plan or upon conversion
of shares of Parent Preferred Stock issued or issuable up exercise of stock
options issued under the Company's 1999 Stock Plan.
8.8 PURCHASE OF COMPANY PREFERRED STOCK. As soon as practicable after
the date hereof, and in any event prior to the Closing, Parent shall purchase
from Archery Venture Partners, L.P. ("Archery") all shares of Company Preferred
Stock held by Archery for cash, at the original issuance price thereof ($4.10),
unless Archery declines to accept the Parent's offer to purchase such shares of
Company Preferred Stock.
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9. CONDITIONS TO OBLIGATIONS TO CLOSE.
9.1 CONDITIONS TO PARENT'S AND SUB'S OBLIGATION TO CLOSE. The
obligations of Parent and Sub to consummate the transactions to be consummated
by them in connection with the Closing is subject to satisfaction or waiver of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in SECTION 5 above shall be accurate as of the date of this
Agreement and on and as of the Closing Date (it being understood that, for
purposes of determining the accuracy of such representations and warranties, (A)
any inaccuracies in such representations and warranties that do not and are not
reasonably expected to, in the aggregate, result in a Material Adverse Effect,
and (B) any update of or modification to the Company Disclosure Schedule made or
purported to have been made after the execution of this Agreement shall be
disregarded).
(b) COVENANTS. The Company shall have performed and complied with
all of its covenants hereunder in all material respects through the Closing.
(c) NO ACTIONS. No action, suit, or proceeding shall be pending
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling or charge shall be in effect) and no law, statute, ordinance,
rule, regulation or order shall have been enacted, enforced or entered which has
caused, or would reasonably be expected to cause, any of the effects under
clause (A) or (B) of this SECTION 9.1(C) to occur.
(d) CERTIFICATES. The Company shall have delivered to Parent a
certificate executed on behalf of the Company by its President and Secretary to
the effect that each of the conditions specified above in SECTION 9.1(A) to
9.1(C) (inclusive) is satisfied in all respects.
(e) GOVERNMENTAL AUTHORIZATIONS. The Parties shall have received
all authorizations, consents and approvals of governments and governmental
agencies referred to in SECTION 5.4 OR SECTION 7.2 above or disclosed in a
corresponding section in the Company Disclosure Letter, the lack of which would
have a Material Adverse Effect on the Company or Parent, or render the Merger or
the Contemplated Transactions unlawful.
(f) LEGAL OPINION. Parent shall have received from Wilson,
Sonsini, Goodrich & Rosati, P.C., counsel to the Company, an opinion in form and
substance substantially as set forth in EXHIBIT E attached hereto, addressed to
Parent, and dated as of the Closing Date.
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(g) NO MATERIAL ADVERSE EFFECT. There shall not have occurred any
event having a Material Adverse Effect on the Company since the date hereof.
(h) VOTING AGREEMENTS. The Voting Agreements executed and
delivered to Parent by each of the Affiliates of the Company shall remain in
full force and effect.
(i) DISSENTERS' RIGHTS. As of the Effective Time, no more than
3.5% of the outstanding shares of Company Capital Stock shall be Dissenting
Shares.
(j) COMPLETION OF FINANCING. Parent shall have completed a sale of
shares of Parent Common Stock with proceeds to Parent of no less than $3.55
million (a "FINANCING"); provided however that Parent shall not be entitled to
assert the foregoing as a condition to closing unless Parent shall have used its
best efforts to complete the Financing without delay. For avoidance of doubt,
the foregoing obligation of Parent to use its best efforts to complete the
Financing may include sale of shares of Parent Common Stock and/or warrants at a
significant discount to the market price of the Parent Common Stock, provided
that Parent shall not be obligated to issue shares of Parent Common Stock at a
purchase price of less than $1.66 per share.
Parent may waive any condition (in whole or in part) specified in this
SECTION 9.1 if it executes a writing so stating at or prior to the Closing.
9.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the
Company to consummated the transactions to be performed by it in connection with
the Closing is subject to satisfaction or waiver of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in SECTION 6 above shall be accurate as of the date of this
Agreement, and on and as of the Closing Date (it being understood that, for
purposes of determining the accuracy of such representations and warranties, (A)
any inaccuracies in such representations and warranties that do not and are not
reasonably expected to in the aggregate, result in a Material Adverse Effect
shall be disregarded, and (B) any update or modification to the Parent
Disclosure Schedule made or purported to have been made after execution of this
Agreement shall be disregarded).
(b) COVENANTS. Parent and Sub shall have performed and complied
with all of their covenants hereunder in all material respects through the
Closing.
(c) NO ACTIONS. No action, suit, or proceeding shall be pending
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect)
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and no law, statute, ordinance, rule, regulation or order shall have been
enacted, enforced or entered which has caused, or is reasonably expected to
cause, any of the effects under clause (A) or (B) of this Section 9.2(c) to
occur.
(d) CERTIFICATE. Parent shall have delivered to the Company a
certificate executed on behalf of Parent by its President or other duly
authorized officer to the effect that each of the conditions specified above in
Section 9.2(a) to 9.2(C) (inclusive) is satisfied in all respects.
(e) LEGAL OPINION. The Company shall have received from Maslon
Edelman Borman & Brand, LLP, counsel to Parent an opinion in form and substance
substantially as set forth in EXHIBIT F attached hereto, addressed to the
Company Stockholders, and dated as of the Closing Date.
(f) SHAREHOLDER VOTE. The principal terms of the Merger shall have
been approved by the vote of Persons holding a majority of the outstanding
shares of Company Common Stock and a majority of the outstanding shares of
Company Preferred Stock (all series of which shall vote together as a single
class) as of the record date for Persons entitled to vote with respect to the
Merger;
(g) NO MATERIAL ADVERSE EFFECT. There shall not have occurred any
event having a Material Adverse Effect on Parent since the date hereof.
(h) AVERAGE CLOSING PRICE. The Average Closing Price of the Parent
Common Stock as of the Closing Date shall be not less than $2.75 per share (as
adjusted for stock splits, stock dividends and similar events).
(i) NASDAQ STATUS. As of the Closing Date, the Parent Common Stock
shall continue to be listed on the Nasdaq Small Cap Market, and Parent shall not
have received any notice from Nasdaq or otherwise have Knowledge of any
circumstances which would reasonably be expected to lead to a de-listing of the
Parent Common Stock, other than such circumstances which can be corrected
without causing any of the other conditions in this Section 9.1(b) to be
violated, or which may result from voluntary actions which Parent may choose to
undertake following the Closing.
(j) VOTING AGREEMENTS. The Voting Agreements executed and
delivered to the Company by each of the Affiliates of Parent shall remain in
full force and effect.
(k) NASDAQ LISTING. The shares of Parent Common Stock issuable
upon conversion of the Parent Preferred Stock issuable in connection with the
Merger shall have been authorized for listing on the Nasdaq Small Cap Market
upon official notice of issuance.
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(l) REGISTRATION RIGHTS AGREEMENT. Parent shall have executed and
delivered the Registration Rights Agreement in the form attached hereto as
EXHIBIT G and such Agreement shall be in full force and effect.
(m) EMPLOYMENT AGREEMENTS. Parent shall have executed and
delivered Employment Agreements in the form attached hereto as EXHIBIT D with
each of the following persons: Jesse Berst, Robert Kenneally and Scott
Sternberg, and such agreements shall remain in full force and effect.
(n) PURCHASE OF SHARES. Parent shall have completed the purchase
of all shares of Series B Preferred Stock of Parent held by Archery Venture
Partners, at the original issuance price of such shares, unless otherwise agreed
by Archery Venture Partners.
(o) ADDITIONAL VOTING AGREEMENTS. Either (i) holders of at least
52.5% of the outstanding shares of Common Stock and Preferred Stock of Parent
(on an as-converted basis) (which number of shares is sufficient to ensure
ratification of the Merger and approval of the issuance of the Parent Preferred
Stock and the shares of Common Stock of Parent issuable upon conversion thereof)
shall have executed and delivered Parent Voting Agreements to the Company;
provided however holder of up to 7.5% of the outstanding shares of Common Stock
and Preferred Stock of Parent (on an as-converted basis) may have execute
modified versions of the Parent Voting Agreement which do not contain the
provisions thereof prohibiting sale of transfer of the shares held by such
holders, or (ii) holders of at least 50.1% of the outstanding shares of Common
Stock and Preferred Stock of Parent (on an as-conerted basis) (which number of
shares is sufficient to ensure ratification of the Merger and approval of the
issuance of the Parent Preferred Stock and the shares of Common Stock of Parent
issuable upon conversion thereof) shall have executed and delivered Parent
Voting Agreements to the Company all of which contain provisions prohibiting the
sale or transfer of shares held by such holders.
(p) COMPLETION OF FINANCING. Parent shall have completed a sale of
shares of Parent Common Stock with proceeds to Parent of no less than $3.55
million.
(q) CERTIFICATE OF DESIGNATION. The Certificate of Designation of
the Parent Preferred Stock shall have been duly approved and filed with the
Secretary of State of the State of Minnesota.
The Company may waive any condition (in whole or in part) specified in
this SECTION 9.2 if it executes a writing so stating at or prior to the Closing.
10. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNITY.
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All covenants of
Parent and the Company contained in this Agreement to be performed prior to the
Effective Time, and all
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representations and warranties of Parent and the Company contained in this
Agreement or in any instrument delivered by Parent or the Company pursuant to
this Agreement, shall survive the Merger for a period ending one (1) year from
the Effective Time.
10.2 INDEMNITY.
(a) From and after the Closing Date, VC agrees to indemnify and
hold Parent and its Representatives and Affiliates (including the Company)
(collectively, the "PARENT INDEMNIFIED PERSONS") from and harmless against all
claims, losses, liabilities, damages, deficiencies, costs, expenses (including
reasonable attorneys' fees and expenses of investigation) and diminution in
value (hereinafter individually a "LOSS" and collectively "LOSSES") incurred by
the Parent Indemnified Persons as a result of (A) any inaccuracy or breach of a
representation or warranty of the Company contained in this Agreement (as
modified by the Company Disclosure Letter) or in any instrument delivered by the
Company pursuant to this Agreement, or (B) any failure by the Company to perform
or comply with any covenant contained in this Agreement that is required to be
performed or complied with by the Company prior to the Closing. From and after
the Closing Date, Parent and Sub, jointly and severally agree to indemnify and
hold the Company Stockholders and their respective Representatives and
Affiliates (collectively, the "COMPANY INDEMNIFIED PERSONS") from and harmless
against all Losses incurred by the Company Indemnified Persons as a result of
(A) any inaccuracy or breach of a representation or warranty of Parent or Sub
contained in this Agreement (as modified by the Parent Disclosure Letter) or in
any instrument delivered by Parent or Sub pursuant to this Agreement, or (B) any
failure by Parent or Sub to perform or comply with any covenant contained in
this Agreement that is required to be performed or complied with by it prior to
the Closing.
(b) Notwithstanding anything contained herein to the contrary,
other than as set forth in the last sentence of this paragraph, VC shall not
have any liability or obligation to indemnify or hold harmless any Parent
Indemnified Person for any Losses unless and until Losses are incurred which
would be indemnifiable under SECTION 10.2(A) above but for the provisions of
this SECTION 10.2(B) in an amount equal to or exceeding $500,000 in the
aggregate (the "BASKET AMOUNT"). At such time as Losses which meet the foregoing
threshold have been incurred and would be indemnifiable under SECTION 10.2(A)
above but for the provisions of this SECTION 10.2(B), Parent and Sub shall be
entitled to indemnification for all Losses in excess such threshold. Losses
resulting from fraudulent misrepresentations by the Company shall be
indemnifiable without regard to the Basket Amount.
(c) Notwithstanding, anything herein to the contrary, Parent's
aggregate liability under this Agreement for Losses incurred by the Company
Stockholders shall in no event exceed $20.5 million. Any such liability of
Parent may be satisfied by delivery of additional shares of Parent Common Stock,
based on the Average Closing Price as of the date of such delivery, but only if
such Average Closing Price is in excess of $2.00. Notwithstanding anything
herein to the
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contrary, VG's liability under this Agreement for Losses incurred by Parent
shall in no event exceed 50% of the value of the Merger Consideration received
by VG, valued based on the Average Closing Price as of the Closing Date. Any
such liability of VG may be satisfied by delivery of shares of Parent Preferred
Stock received in the Merger or shares of Parent Common Stock received upon
conversion thereof, based on the aforementioned Average Closing Price. VG agrees
that a certificates representing 50% the shares of Parent Preferred Stock issued
to VG, and the shares of Parent Common Stock issuable upon conversion thereof,
may bear a legend referring to VG's obligations under this Section 10.2 (the
"LEGEND"). All obligations of VG under this Agreement shall terminate on August
31, 2000. As promptly as practicable after such date, Parent shall cancel all
stock certificates submitted by VG bearing the Legend and issue to VG stock
certificates with like designations not bearing the Legend.
(d) None of the Parent Indemnified Persons will have recourse
against any of the Company Shareholders or any officer, director or affiliate of
the Company, or any of their respective officers, directors, shareholders or
affiliates, with respect to Losses incurred, except as specifically set forth in
this Section 10.2 with respect to VG. Any rights, remedies or claims the Parent
Indemnified Persons may now or hereinafter possess against any such persons or
their properties, whether direct or indirect, known or unknown, matured or
unmatured, whether under contract or by law, are hereby irrevocably waived and
will not be asserted.
11. TERMINATION.
11.1 TERMINATION OF THE AGREEMENT. The Parties may terminate this
Agreement as provided below:
(a) Parent and the Company may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) Parent or the Company may terminate this Agreement by written
notice to the other Parties if: (i) the Closing has not occurred by (A) March
31, 2000, provided, however, that the right to terminate this Agreement under
this SECTION 11.1(B)(I) shall not be available to any Party whose action or
failure to act has been a principal cause of or resulted in the failure of the
Merger to occur on or before such date and such action or failure to act
constitutes a breach of this Agreement; (ii) there shall be a final
nonappealable order of a court of competent jurisdiction in effect preventing
consummation of the Merger or (iii) there shall be any statute, rule, regulation
or order enacted, promulgated or issued or deemed applicable to the Merger by
any Governmental Body that would make consummation of the Merger illegal;
(c) Parent may terminate this Agreement by written notice to the
Company if neither it nor Sub is in breach of any representation, warranty,
covenant or agreement under this Agreement in a manner which would cause the
conditions to Closing set forth in SECTION 9.2(A) or 9.2(B) not to be satisfied,
and there has been a breach of any representation,
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warranty, covenant or agreement contained in this Agreement on the part of the
Company which would cause the conditions to Closing set forth in SECTION 9.1(A)
or 9.1(B) not to be satisfied, and such breach has not been cured within thirty
(30) calendar days after written notice to the Company; provided, however, that,
no cure period shall be required for a breach which by its nature cannot be
cured;
(d) the Company may terminate this Agreement by written notice to
Parent if it is not in breach of any representation, warranty, covenant or
agreement under this Agreement in a manner which would cause the conditions to
Closing set froth in SECTION 9.1(A) or 9.1(B) of this Agreement not to be
satisfied, and there has been a breach of any representation, warranty, covenant
or agreement contained in this Agreement on the part of Parent or Sub which
would cause the conditions to Closing set forth in SECTION 9.2(A) or 9.2(B) not
to be satisfied and such breach has not been cured within thirty (30) calendar
days after written notice to Parent; provided, however, that no cure period
shall be required for a breach which by its nature cannot be cured.
11.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to SECTION 11.1 above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party;
provided that each Party shall remain liable for any willful breaches of this
Agreement prior to its termination; and provided further that Section 7.7 hereof
shall survive any termination of this Agreement.
12. MISCELLANEOUS.
12.1 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
other Party, which will not be unreasonably withheld or delayed; provided,
however, that Parent may make any public disclosure which counsel advises is
required by applicable law or exchange requirements or any listing or trading
agreement concerning its publicly-traded securities (in which case Parent will
use its Best Efforts to advise the Company prior to making the disclosure and
provide the Company with an opportunity to review and comment on such disclosure
in advance of public release).
12.2 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties, the Company
Stockholders and those Persons referred to in Sections 8.4, 8.5, 8.6 and 10.2,
and their respective successors and permitted assigns.
12.3 ENTIRE AGREEMENT AND MODIFICATION. This Agreement (including the
exhibits hereto) constitutes the entire agreement among the Parties with respect
to the subject matter hereof and supersede any prior understandings, agreements,
or representations by or among the Parties, written or oral, to the extent they
related in any way to the subject matter hereof. This Agreement may not be
amended prior to the Effective Time except by a written agreement executed by
all
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Parties and after the Effective Time except by a written agreement signed by
Parent and a majority in interest of the Company Stockholders.
12.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties.
12.5 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which together will constitute
one and the same instrument.
12.6 HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.7 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, (c) one business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid or (d) one
business day after the business day of facsimile transmission, if delivered by
facsimile transmission with receipt of transmission confirmation and with copy
by first class mail, postage prepaid, and shall be addressed to the intended
recipient as set forth below:
If to Parent:
Popmail.com, Inc.
4801 West 81st Street, Suite 112
Bloomington, MN 55437
Attention: Stephen D. King, Chief Executive Officer
Facsimile: 612-837-9916
Copy to:
Maston Edelman Borman & Brand LLP
3300 Norwest Center
Minneapolis, MN 55402
Attention: William Mower
Facsimile: 612-672-8397
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If to the Company:
IZ.com Incorporated
1041 N. Formosa Blvd., Suite 210, Santa Monica Bldg.
West Hollywood, CA 90069
Attention: Lee H. Stein, Chairman & Chief Executive Officer
Facsimile: 310-___-___
Copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Rd.
Palo Alto, CA 94304
Attention: Barry Taylor/Ramsey Hanna
Facsimile: 650-845-5000
If to VC:
Virtual Capital LLC
P.O. Box 526
Zephyr Cove, NV 89448
Attention: Lee H. Stein
Facsimile: 775-588-0832
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties five (5) days' advance written notice to the other Parties pursuant to
the provisions above.
12.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
12.9 WAIVERS. The rights and remedies of the Parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
Party in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one Party, in whole or in part, by a waiver or renunciation of the
-30-
<PAGE> 36
claim or right unless in writing signed by the other Party; (b) no waiver that
may be given by a Party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one Party will be deemed to
be a waiver of any obligation of such Party or of the right of the Party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
12.10 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
12.11 EXPENSES. Each Party will bear its own costs and expenses
(including legal and accounting fees and expenses) incurred in connection with
this Agreement and the Contemplated Transactions. In the event the Merger is
consummated, Parent will bear the costs and expenses (including accounting and
legal fees and expenses) of the Company incurred in connection with this
Agreement and the Contemplated Transactions.
12.12 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
12.13 DISCLOSURE LETTERS.
(a) The disclosures in the Parent Disclosure Letter and the
Company Disclosure Letter, and those in any supplement thereto, will be deemed
to relate only to (i) the representations and warranties in the correspondingly
numbered Section of this Agreement or (ii) any other Section of this Agreement
to which such disclosures clearly relate, from the perspective of a reasonable
person without prior familiarity with Parent or the Company, as the case may be,
or the matters addressed in such representation and warranty.
(b) In the event of any inconsistency between the statements in
the body of this Agreement and those in the Parent Disclosure Letter or the
Company Disclosure Letter (other than an exception expressly set forth in the
Company Disclosure Letter the Parent Disclosure Letter or the which is deemed to
relate to such representation or warranty pursuant to Section 12.14(a) above),
the statements in the body of this Agreement will control.
12.14 ATTORNEYS' FEES. If any legal proceeding or other action relating
to this Agreement is brought or otherwise initiated, the prevailing party shall
be entitled to recover
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<PAGE> 37
reasonable attorneys fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
12.15 FURTHER ASSURANCES. The Parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
Party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
12.16 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
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<PAGE> 38
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
of the date first above written.
PARENT: POPMAIL.COM, INC.
By: /s/ Stephen D. King
--------------------------------
Name: Stephen D. King
------------------------------
Title: Chief Executive Officer
-----------------------------
COMPANY: IZ.COM INCORPORATED
By: /s/ Lee H. Stein
--------------------------------
Name: Lee H. Stein
------------------------------
Title: Chief Executive Officer
-----------------------------
SUB: IZ ACQUISITION CORPORATION
By: /s/ Stephen D. King
--------------------------------
Name: Stephen D. King
------------------------------
Title: Chief Executive Officer
-----------------------------
VG: VIRTUAL GROUP LLC
By: /s/ Lee H. Stein
--------------------------------
Name: Lee H. Stein
------------------------------
Title: President
-----------------------------
[AGREEMENT AND PLAN OF REORGANIZATION SIGNATURE PAGE]
<PAGE> 1
EXHIBIT 3.1
POPMAIL.COM, INC.
CERTIFICATE OF DESIGNATION OF
SERIES F CONVERTIBLE PREFERRED STOCK
Pursuant to Section 401(3)(b) of the Minnesota Business Corporation Act
(the "MBCA"), PopMail.com, inc. (the "Company"), a corporation organized and
existing under the MBCA, does hereby certify that pursuant to the authority
conferred upon the Board of Directors of the Company by the Articles of
Incorporation of the Company, and in accordance with the provisions of Section
401(3)(a) of the MBCA, the Board of Directors of the Company, as of January 19,
2000, adopted the following resolution creating a series of preferred stock
designated as Series F Convertible Preferred Stock:
RESOLVED: That pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of its Articles of
Incorporation, as amended, a series of preferred stock, $.01 par value, to be
titled the "Series F Convertible Preferred Stock" (the "Preferred Shares") of
the Company is hereby created and designated. The number of shares of Preferred
Shares shall be 425,000 shares. The voting powers, preferences and relative,
participating, optional and other special rights of the Preferred Shares, and
the qualifications, limitations and restrictions thereof, are as follows:
1. Designation. The series of preferred stock established hereby shall
be designated the "Series F Convertible Preferred Stock" (and shall be referred
to herein as the "Preferred Shares") and the authorized number of Preferred
Shares shall be 425,000.
2. Voting Rights. Along with the holders of common stock, each holder
of Preferred Shares shall have one vote on all matters submitted to the holders
of common stock for each share of common stock into which such Preferred Shares
would be converted if converted as of the date of such vote. In addition,
without the affirmative vote of the holders (acting together as a class) of at
least a majority of Preferred Shares at the time outstanding given in person or
by proxy at any annual or special meeting, or, if permitted by law, in writing
without a meeting, the Company shall not (i) alter, change or amend the
preferences or rights of the Preferred Shares, (ii) alter, change or amend its
Articles of Incorporation or Bylaws, or (iii) authorize or issue shares of any
class or series of stock having any preference or priority over the Preferred
Shares with respect to dividends or upon liquidation or change of control.
3. Dividends. In the event that the Company declares or pays any
dividends upon the common stock (whether payable in cash, securities or other
property), other than dividends payable solely in shares of common stock, the
Company shall also declare and pay to the holders of the Preferred Shares at the
same time that it declares and pays such dividends to the holders of the common
stock, the dividends which would have been declared and paid with respect to the
common stock issuable upon conversion of the Preferred Shares had all of the
outstanding Preferred Shares been converted immediately prior to the record date
for such dividend or, if no record date is fixed, the date as of which the
record holders of common stock entitled to such dividends are to be determined.
4. Liquidation Right and Preference. In the event of the liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary, the
holders of Preferred Shares shall be entitled to receive in cash, out of the
assets of the Company, an amount per share for each outstanding Preferred Share
equal to $125.26 (herein, "Liquidation Value"), before any payments shall be
made or any assets distributed to the holders of common stock or any other class
of shares of the Company. In the event the shareholders of the Company approve
the Merger and the issuance of the shares of Common Stock issuable upon
conversion of the Preferred Shares, the Liquidation Value shall be reduced to an
amount per Preferred Share equal to $69.59. If, upon any liquidation,
dissolution or winding up of the Company,
<PAGE> 2
the assets of the Company are insufficient to pay the Liquidation Value, the
holders of such Preferred Shares shall share pro rata in any such distribution
in proportion to the full amounts to which they would otherwise be respectively
entitled. Following payment of the Liquidation Value to the holders of Preferred
Shares upon such liquidation, dissolution or a winding up of the Company, the
holders of common stock and Preferred Shares shall then share ratably in all the
assets of the Company thereafter remaining. For purposes of this joint
distribution of assets to the holders of common stock and the holders of
Preferred Shares, each holder of Preferred Shares should be regarded as owning
that number of common stock into which such Preferred Shares would then be
convertible. A merger or consolidation of the Company which results in a change
of control or a sale of substantially all of the assets of the Company (other
than a sale of the Company's assets relating to its restaurant operations) shall
be treated as a liquidation event for purposes of this Section 4.
5. Conversion Rights.
(a) Conversion Ratio and Optional Conversion. A holder of Preferred
Shares shall initially be entitled to convert at any time any or all of such
Preferred Shares into common stock at the rate of 12.977 shares of common stock
per Preferred Share (the "Conversion Ratio"). The Conversion Ratio shall be
adjusted to 25.66 shares of Popmail Common Stock for each Preferred Share at
such time as the Company's shareholders approve the Merger and the issuance of
the shares of Common Stock issuable upon conversion of the Preferred Shares. The
Conversion Ratio shall be subject to adjustment pursuant to Sections 9(a) and
(b).
(b) Automatic Conversion. The Preferred Shares shall automatically
be converted into shares of common stock of the Company at the then applicable
Conversion Ratio (i) at such time as (1) the Company's shareholders have
approved the Merger and the issuance of the shares of Common Stock issuable upon
conversion of the Preferred Shares, (2) the Company shall have closed a private
Common Stock equity financing with proceeds to the Company of at least $6.0
million, and (3) the closing sales price of the Common Stock as reported by the
Nasdaq Small Cap Market for the five consecutive trading days preceding the date
of automatic conversion shall result in a valuation of the Company of no less
than $100 million (which valuation shall be calculated by multiplying the price
per share of Common Stock on each such trading day by the total number of shares
of Common Stock outstanding or issuable upon conversion of all outstanding
Preferred Shares (at the adjusted Conversion Ratio)) or (ii) upon the exercise
of the conversion privilege of at least 50 percent of the outstanding Preferred
Shares. The Conversion Ratio shall be subject to adjustment pursuant to Sections
9(a) and (b).
(c) Conversion Mechanics. In order to exercise the conversion
privilege, a holder of Preferred Shares shall (1) notify the Company in writing
of such holder's intent to convert a specified portion of such shares (the
"Conversion Notice" and the date of such notice which shall be the same or later
than the date notice is given, the "Conversion Notice Date") and (2) provide, on
or prior to the Conversion Notice Date, to the Company at its principal office
the certificate evidencing the Preferred Shares being converted, duly endorsed
to the Company and accompanied by written notice to the Company that the holder
elects to convert a specified portion or all of such Shares. Preferred Shares
converted at the option of the Holder shall be deemed to have been converted on
the day of receipt by the Company of the certificate representing such shares
for conversion in accordance with the foregoing provisions (the "Conversion
Date"), and at such time the rights of the holder of such Preferred Shares other
than the right to receive shares of common stock upon conversion of the
Preferred Shares pursuant to the terms hereof, as such holder, shall cease and
such holder shall be treated for all purposes as the record holder of common
stock issuable upon conversion. Preferred Shares converted automatically in
connection with an underwritten public offering or private placement of
securities shall be conditioned upon the closing of such offering, in which
event the person(s) entitled to receive the Common Stock issuable upon such
conversion of the Preferred Stock shall not be deemed to have converted such
Preferred Stock until immediately prior to the closing of such transaction. As
promptly as practicable on or after the Conversion Date, the Company shall issue
and mail or deliver to such holder a
<PAGE> 3
certificate or certificates for the number of shares of common stock issuable
upon conversion, computed to the nearest full share, and a certificate or
certificates for the balance of Preferred Shares surrendered, if any, not so
converted into common stock.
6. Registration Rights. Holders of the Preferred Shares shall have the
rights with respect to registration of such shares pursuant to the Securities
Act of 1933, as amended, and related state and Exchange registrations, as set
forth in a Registration Rights Agreement to be entered into by and between the
Company and such holders.
7. Preemptive Rights. Holders of Preferred Shares shall have no
preemptive rights with respect to any future issuances of securities by the
Company.
8. Tax Treatment. It is intended that a reduction in the Liquidation
Value pursuant to Section 4 hereof, and a concurrent increase in the Conversion
Ratio pursuant to Section 5(a) hereof, when taken together, qualify as a
recapitalization within the meaning of Internal Revenue Code Section
368(a)(1)(E) for federal income tax purposes.
9. Other Terms of Series F Convertible Preferred Shares.
(a) Stock Split, Stock Dividend, Recapitalization, etc. If the
Company, at any time while any Preferred Shares are outstanding, (a) shall pay a
stock dividend or otherwise make a distribution or distributions payable in
shares of its capital stock (whether payable in shares of its common stock or of
capital stock of any class), (b) subdivide outstanding shares of common stock
into a larger number of shares, (c) combine outstanding shares of common stock
into a smaller number of shares, or (d) issue by reclassification of shares of
common stock any shares of capital stock of the Company, the Conversion Ratio in
effect immediately prior thereto shall be adjusted so that the holder of any
Preferred Shares thereafter surrendered for conversion shall be entitled to
receive the number of shares of common stock which such holder would have owned
or have been entitled to receive after the happening of any of the events
described above had such Preferred Shares been converted immediately prior to
the happening of such event or the record date therefor, whichever is earlier.
Any adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of shareholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
(b) No Impairment. Unless approved in accordance with paragraph (2)
hereof the Company will not, by amendment of its Articles of Incorporation or
this Certificate of Designation or through any reorganization, transfer of
assets, merger, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Corporation but will at all times
in good faith assist in the carrying out of all the provisions of this paragraph
9(a) and in the taking of all such action as may be necessary or appropriate in
order to protect the Conversion Rights of the holders of the Preferred Shares
against impairment.
(c) Notices of Record Date. In the event that this Company shall
propose at any time:
(i) to declare any dividend or distribution upon
its Common Stock, whether in cash, property, stock or other securities, whether
or not a regular cash dividend and whether or not out of earnings or earned
surplus (for avoidance of doubt, the foregoing phrase does not include any stock
split or reverse stock split which results in an automatic adjustment of the
Conversion Ratio purchase to Section 9(a) above);
(ii) to offer for subscription pro rata to the
holders of any class or series of its stock any additional shares of stock of
any class or series or other rights;
<PAGE> 4
(iii) to effect any reclassification or
recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or
(iv) to merge with or into any other corporation
(other than a merger in which the holders of the outstanding voting equity
securities of the Company immediately prior to such merger hold more than fifty
percent (50%) of the voting power of the surviving entity immediately following
such merger), or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, this Company shall send to the holders
of the Preferred Stock:
(1) at least ten (10) days' prior written
notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled thereto) or for determining rights to
vote in respect of the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in
(iii) and (iv) above, at least ten (10) days' prior written notice of the date
when the same shall take place (and specifying the date on which the holders of
Common Stock shall be entitled to exchange their Common Stock for securities or
other property deliverable upon the occurrence of such event).
Each such written notice shall be given by first class mail, postage
prepaid, addressed to the holders of Preferred Shares at the address for each
such holder as shown on the books of this Company and shall be deemed given when
so mailed.
(d) Reservation of Shares Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Preferred Shares, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Preferred Shares; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding Preferred Shares, the Company will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
(e) Status of Converted Stock. In the event any Preferred Shares
shall be converted pursuant to paragraph 5 hereof, the shares so converted shall
be canceled and shall not be issuable by the Company.
IN WITNESS WHEREOF, PopMail.com, inc. has caused this Certificate to be
duly executed in its corporate name on this 7th day of February, 2000.
POPMAIL.COM, INC.
By: /s/ Stephen D. King
-------------------
Its: Chief Executive Officer
-----------------------
<PAGE> 1
EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of January 21, 2000 (this
"AGREEMENT"), between Popmail.com, a Minnesota corporation, with principal
executive offices located at 4801 West 81st Street, Suite 112, Bloomington,
Minnesota 55437 (the "COMPANY"), and the stockholders of IZ.com Incorporated, a
Delaware corporation ("IZ.COM").
WHEREAS, upon the terms and subject to the conditions of the Agreement
and Plan of Reorganization dated as of January 21, 2000, between IZ.com and the
Company (the "REORGANIZATION AGREEMENT"), IZ.com is to be merged with and into a
wholly-owned subsidiary of the Company (the "MERGER"), all outstanding shares of
capital stock of IZ.com are to be converted into shares of Series F Preferred
Stock of the Company (the "PREFERRED SHARES") and all options, warrants and
other rights to purchase shares of capital stock of IZ.com will be converted
into equivalent options, warrants or other rights to purchase Preferred Shares;
and
WHEREAS, to induce IZ.com to execute and deliver the Reorganization
Agreement, the Company has agreed to provide with respect to the Common Stock
issuable upon conversion of the Preferred Shares and exercise of the options and
warrants assumed by the Company certain registration rights under the Securities
Act;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. DEFINITIONS
(a) As used in this Agreement, the following terms shall have the
meanings:
(i) "AFFILIATE," of any specified Person means any other
Person who directly, or indirectly through one or more intermediaries, is in
control of, is controlled by, or is under common control with, such specified
Person. For purposes of this definition, control of a Person means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such Person whether by contract, securities, ownership or otherwise;
and the terms "CONTROLLING" and "CONTROLLED" have the respective meanings
correlative to the foregoing.
(ii) "CLOSING DATE" means the date and time of closing of
the Merger.
(iii) "COMMISSION" means the Securities and Exchange
Commission.
(iv) "CURRENT MARKET PRICE" on any date of determination
means the closing bid price of a share of the Common Stock on such day as
reported on the Nasdaq SmallCap Market ("NASDAQ"); provided, if such security
bid is not listed or admitted to trading on the Nasdaq, as reported on the
principal national security exchange or quotation system on which such security
is quoted or listed or admitted to trading, or, if not quoted or listed or
admitted to
<PAGE> 2
trading on any national securities exchange or quotation system, the closing bid
price of such security on the over-the-counter market on the day in question as
reported by Bloomberg LP, or a similar generally accepted reporting service, as
the case may be.
(v) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder, or
any similar successor statute.
(vi) "PERSON" means any individual, partnership,
corporation, limited liability company, joint stock company, association, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
(vii) "PROSPECTUS" means the prospectus (including, without
limitation, any preliminary prospectus and any final prospectus filed pursuant
to Rule 424(b) under the Securities Act, including any prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance on Rule 430A under the Securities Act)
included in the Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by the Registration Statement and by all
other amendments and supplements to such prospectus, including all material
incorporated by reference in such prospectus and all documents filed after the
date of such prospectus by the Company under the Exchange Act and incorporated
by reference therein.
(viii) "PUBLIC OFFERING" means an offer registered with the
Commission and the appropriate state securities commissions by the Company of
its Common Stock and made pursuant to the Securities Act.
(ix) "REGISTRABLE SECURITIES" means the Common Stock issued
or issuable (i) upon conversion of the Preferred Shares and (ii) upon exercise
of options and warrants assumed by the Company pursuant to the Reorganization
Agreement, other than shares registered pursuant to a registration statement on
Form S-8 filed by the Company immediately after the Closing Date; provided,
however, a share of Common Stock shall cease to be a Registrable Security for
purposes of this Agreement when it no longer is a Restricted Security.
(x) "REGISTRATION STATEMENT" means a registration statement
of the Company filed on an appropriate form under the Securities Act providing
for the registration of, and the sale on a continuous or delayed basis by the
holders of, all of the Registrable Securities pursuant to Rule 415 under the
Securities Act, including the Prospectus contained therein and forming a part
thereof, any amendments to such registration statement and supplements to such
Prospectus, and all exhibits and other material incorporated by reference in
such registration statement and Prospectus.
(xi) "RESTRICTED SECURITY" means any share of Common Stock
issued or issuable upon conversion of the Preferred Shares except any such share
that (i) has been registered pursuant to an effective registration statement
under the Securities Act and sold in a manner contemplated by the prospectus
included in such registration statement, (ii) has been
-2-
<PAGE> 3
transferred in compliance with the resale provisions of Rule 144 under the
Securities Act (or any successor provision thereto) or is transferable pursuant
to paragraph (k) of Rule 144 under the Securities Act (or any successor
provision thereto), or (iii) otherwise has been transferred and a new share of
Common Stock not subject to transfer restrictions under the Securities Act has
been delivered by or on behalf of the Company.
(xii) "SECURITIES ACT" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, or any
similar successor statute.
(xiii) "STOCKHOLDERS" means the Shareholders who are
signatories to this Agreement and any transferee or assignee of Registrable
Securities who agrees to become bound by all of the terms and provisions of this
Agreement in accordance with Section 8 hereof.
(b) All capitalized terms used and not defined herein have the
respective meaning assigned to them in the Reorganization Agreement.
2. REGISTRATION
(a) FILING AND EFFECTIVENESS OF REGISTRATION STATEMENT. The
Company shall prepare and file with the Commission not later than 30 days after
receipt of a request therefore executed by a majority-in-interest of the
Stockholders (the "STOCKHOLDER NOTICE"), a Registration Statement relating to
the offer and resale of the Registrable Securities by the holders thereof and
shall use its best efforts to cause the Commission to declare such Registration
Statement effective under the Securities Act as promptly as practicable but not
later than 150 days after the date of the Stockholder Notice. The Company shall
notify the Stockholders by written notice that such Registration Statement has
been declared effective by the Commission within 24 hours of such declaration by
the Commission.
(b) REGISTRATION DEFAULT. If the Registration Statement covering
the Registrable Securities required to be filed by the Company pursuant to
Section 2(a) hereof is not (i) filed with the Commission within 30 days after
the date of the Stockholder Notice or (ii) declared effective by the Commission
within 150 days after the date of the Stockholder Notice (either of which,
without duplication, an "INITIAL DATE"), then the Company shall make the
payments to the Stockholders as provided in the next sentence as liquidated
damages and not as a penalty. The amount to be paid by the Company to the
Stockholders shall be determined as of each Computation Date (as defined below),
and such amount shall be equal to 1% (the "LIQUIDATED DAMAGE RATE") of the
Current Market Price of the Registrable Securities held by each such Shareholder
from the Initial Date to the first Computation Date and for each Computation
Date thereafter, calculated on a pro rata basis to the date on which the
Registration Statement is filed with (in the event of an Initial Date pursuant
to clause (i) above) or declared effective by (in the event of an Initial Date
pursuant to clause (ii) above) the Commission (the "PERIODIC AMOUNT"). The full
Periodic Amount shall be paid by the Company to the each Stockholder by wire
transfer of immediately available funds within three days after each Computation
Date.
As used in this Section 2(b), "COMPUTATION DATE" means the
date which is 30 days after the Initial Date and, if the Registration Statement
required to be filed by the Company
-3-
<PAGE> 4
pursuant to Section 2(a) has not theretofore been declared effective by the
Commission, each date which is 30 days after the previous Computation Date until
such Registration Statement is so declared effective.
Notwithstanding the above, if the Registration Statement covering
the Registrable Securities or the Additional Registrable Securities required to
be filed by the Company pursuant to Section 2(a) hereof, is not filed with the
Commission by the 30th day after the date of the Stockholder Notice, the Company
shall be in default of this Registration Rights Agreement.
(c) ELIGIBILITY FOR USE OF FORM S-3. The Company agrees that it
shall continue to file all reports and information required to be filed by it
with the Commission in a timely manner and take all such other action so as to
maintain eligibility for the use of Form S-3 under the Securities Act.
(d) (i) If the Company proposes to register any of its warrants,
Common Stock or any other shares of common stock of the Company under the
Securities Act in connection with an underwritten public offering, whether or
not for sale for its own account, it will each such time, give prompt written
notice at least 20 days prior to the anticipated filing date of the registration
statement relating to such registration to each Stockholder, which notice shall
set forth such Stockholder's rights under this Section 2(d) and shall offer the
Stockholder the opportunity to include in such registration statement such
number of Registrable Securities as the Stockholder may request. Upon the
written request of a Stockholder made within 10 days after the receipt of notice
from the Company (which request shall specify the number of Registrable
Securities intended to be disposed of by such Stockholder), the Company will use
its best efforts to effect the registration under the Securities Act of all
Registrable Securities that the Company has been so requested to register by the
Stockholder, to the extent requisite to permit the disposition of the
Registrable Securities so to be registered; provided, however, that (A) the
Stockholder must sell their Registrable Securities to the underwriters selected
as provided in Section 3(b) hereof on the same terms and conditions as apply to
the Company and (B) if, at any time after giving written notice of its intention
to register any Registrable Securities pursuant to this Section 3 and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such
Registrable Securities, the Company shall give written notice to the Stockholder
and, thereupon, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration. The Company's obligations under
this Section 2(d) shall terminate on the date that the registration statement to
be filed in accordance with Section 2(a) is declared effective by the Commission
provided that such registration statement remains current.
(ii) If in connection with a registration pursuant to this
Section 2(d), the managing underwriter thereof advises the Company that, in its
view, the number of shares of Common Stock, Warrants or other shares of Common
Stock that the Company and the Stockholders and any other holders of similar
registration rights intend to include in such registration exceeds the largest
number of shares of Common Stock or Warrants (including any other shares of
Common Stock or Warrants of the Company) that can be sold without having an
adverse effect on such Public Offering (the "MAXIMUM OFFERING SIZE"), the
Company will include in such registration, only that number of shares of Common
Stock or Warrants, as applicable, such that the number of shares of Registrable
Securities registered does not exceed the Maximum Offering Size, with the
difference
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between the number of shares in the Maximum Offering Size and the number of
shares to be issued by the Company to be allocated (after including all shares
to be issued and sold by the Company) among the Stockholders and any other
holders of similar registration rights pro rata on the basis of the relative
number of shares of Common Stock or Warrants offered for sale under such
registration by each of the Company and the Stockholders and any other holders
of similar registration rights.
If as a result of the proration provisions of this Section 2(d)(ii),
any Stockholder is not entitled to include all such Registrable Securities in
such registration, such Stockholder may elect to withdraw its request to include
any Registrable Securities in such registration. With respect to registrations
pursuant to this Section 2(d), the number of securities required to satisfy any
underwriters' over-allotment option shall be allocated pro rata among the
Company and the Stockholders and any other holders of similar registration
rights on the basis of the relative number of shares of Common Stock or Warrants
otherwise to be included by each of them in the registration with respect to
which such over-allotment option relates.
3. OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the
Company shall:
(a) Promptly (i) prepare and file with the Commission such
amendments (including post-effective amendments) to the Registration Statement
and supplements to the Prospectus as may be necessary to keep the Registration
Statement continuously effective and in compliance with the provisions of the
Securities Act applicable thereto so as to permit the Prospectus forming part
thereof to be current and useable by Stockholders for resales of the Registrable
Securities for a period of two years from the date on which the Registration
Statement is first declared effective by the Commission (the "EFFECTIVE TIME")
or such shorter period that will terminate when all the Registrable Securities
covered by the Registration Statement have been sold pursuant thereto in
accordance with the plan of distribution provided in the Prospectus, transferred
pursuant to Rule 144 under the Securities Act or otherwise transferred in a
manner that results in the delivery of new securities not subject to transfer
restrictions under the Securities Act (the "REGISTRATION PERIOD") and (ii) take
all lawful action such that each of (A) the Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, not misleading and
(B) the Prospectus forming part of the Registration Statement, and any amendment
or supplement thereto, does not at any time during the Registration Period
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing provisions of this Section 3(a), the Company may,
during the Registration Period, suspend the use of the Prospectus for a period
not to exceed 60 days (whether or not consecutive) in any 12-month period if the
Board of Directors of the Company determines in good faith that because of valid
business reasons, including pending mergers or other business combination
transactions, the planned acquisition or divestiture of assets, pending material
corporate developments and similar events, it is in the best interests of the
Company to suspend such use, and prior to or contemporaneously with suspending
such use the Company provides the Stockholders with written notice of such
suspension, which notice need not specify the nature of the event giving rise to
such suspension. At the end of
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any such suspension period, the Company shall provide the Stockholders with
written notice of the termination of such suspension;
(b) During the Registration Period, comply with the provisions of the
Securities Act with respect to the Registrable Securities of the Company covered
by the Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the Stockholders as set forth in the Prospectus forming part of
the Registration Statement;
(c) (i) Prior to the filing with the Commission of any Registration
Statement (including any amendments thereto) and the distribution or delivery of
any Prospectus (including any supplements thereto), provide (A) draft copies
thereof to a representative designated by the Stockholders and reflect in such
documents all such comments as such representative (and its counsel) reasonably
may propose and (B) to the Stockholder representative a copy of the accountant's
consent letter to be included in the filing and (ii) furnish to each Stockholder
whose Registrable Securities are included in the Registration Statement and its
legal counsel identified to the Company, (A) promptly after the same is prepared
and publicly distributed, filed with the Commission, or received by the Company,
one copy of the Registration Statement, each Prospectus, and each amendment or
supplement thereto, and (B) such number of copies of the Prospectus and all
amendments and supplements thereto and such other documents, as such Stockholder
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Stockholder;
(d) (i) Register or qualify the Registrable Securities covered by the
Registration Statement under such securities or "blue sky" laws of such
jurisdictions as the Stockholders who hold a majority-in-interest of the
Registrable Securities being offered reasonably request, (ii) prepare and file
in such jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof at all times during the Registration Period,
(iii) take all such other lawful actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) take all such other lawful actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (B) subject itself to general taxation in any such jurisdiction or
(C) file a general consent to service of process in any such jurisdiction;
(e) As promptly as practicable after becoming aware of such event, notify
each Stockholder of the occurrence of any event, as a result of which the
Prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and
promptly prepare an amendment to the Registration Statement and supplement to
the Prospectus to correct such untrue statement or omission, and deliver a
number of copies of such supplement and amendment to each Stockholder as such
Stockholder may reasonably request;
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(f) As promptly as practicable after becoming aware of such event, notify
each Stockholder who holds Registrable Securities being sold (or, in the event
of an underwritten offering, the managing underwriters) of the issuance by the
Commission of any stop order or other suspension of the effectiveness of the
Registration Statement at the earliest possible time and take all lawful action
to effect the withdrawal, recession or removal of such stop order or other
suspension;
(g) Cause all the Registrable Securities covered by the Registration
Statement to be listed on the principal national securities exchange, and
included in an inter-dealer quotation system of a registered national securities
association, on or in which securities of the same class or series issued by the
Company are then listed or included;
(h) Maintain a transfer agent and registrar, which may be a single entity,
for the Registrable Securities not later than the effective date of the
Registration Statement;
(i) Cooperate with the Stockholders who hold Registrable Securities being
offered to facilitate the timely preparation and delivery of certificates for
the Registrable Securities to be offered pursuant to the registration statement
and enable such certificates for the Registrable Securities to be in such
denominations or amounts, as the case may be, as the Stockholders reasonably may
request and registered in such names as the Stockholder may request; and, within
three business days after a registration statement which includes Registrable
Securities is declared effective by the Commission, deliver and cause legal
counsel selected by the Company to deliver to the transfer agent for the
Registrable Securities (with copies to the Stockholders whose Registrable
Securities are included in such registration statement) an appropriate
instruction and, to the extent necessary, an opinion of such counsel;
(j) Take all such other lawful actions reasonably necessary to expedite and
facilitate the disposition by the Stockholders of their Registrable Securities
in accordance with the intended methods therefor provided in the Prospectus
which are customary under the circumstances;
(k) Make generally available to its security holders as soon as
practicable, but in any event not later than three (3) months after (i) the
effective date (as defined in Rule 158(c) under the Securities Act) of the
Registration Statement, and (ii) the effective date of each post-effective
amendment to the Registration Statement, as the case may be, an earnings
statement of the Company and its subsidiaries complying with Section 11(a) of
the Securities Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(l) In the event of an underwritten offering, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the managers reasonably agree should
be included therein and to which the Company does not reasonably object and make
all required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after it is notified of the matters to be included or
incorporated in such Prospectus supplement or post-effective amendment;
(m) (i) Make reasonably available for inspection by Stockholders, any
underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by such
Stockholders or any such underwriter all relevant financial and other
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records, pertinent corporate documents and properties of the Company and its
subsidiaries, and (ii) cause the Company's officers, directors and employees to
supply all information reasonably requested by such Stockholders or any such
underwriter, attorney, accountant or agent in connection with the Registration
Statement, in each case, as is customary for similar due diligence examinations;
provided, however, that all records, information and documents that are
designated in writing by the Company, in good faith, as confidential,
proprietary or containing any material nonpublic information shall be kept
confidential by such Stockholders and any such underwriter, attorney, accountant
or agent (pursuant to an appropriate confidentiality agreement in the case of
any such holder or agent), unless such disclosure is made pursuant to judicial
process in a court proceeding (after first giving the Company an opportunity
promptly to seek a protective order or otherwise limit the scope of the
information sought to be disclosed) or is required by law, or such records,
information or documents become available to the public generally or through a
third party not in violation of an accompanying obligation of confidentiality;
and provided, further, that, if the foregoing inspection and information
gathering would otherwise disrupt the Company's conduct of its business, such
inspection and information gathering shall, to the maximum extent possible, be
coordinated on behalf of the Stockholders and the other parties entitled thereto
by one firm of counsel designed by and on behalf of the majority in interest of
Stockholders and other parties;
(n) In connection with any underwritten offering, make such representations
and warranties to the Stockholders participating in such underwritten offering
and to the managers, in form, substance and scope as are customarily made by the
Company to underwriters in secondary underwritten offerings;
(o) In connection with any underwritten offering, obtain opinions of
counsel to the Company (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managers) addressed to the
underwriters, covering such matters as are customarily covered in opinions
requested in secondary underwritten offerings (it being agreed that the matters
to be covered by such opinions shall include, without limitation, as of the date
of the opinion and as of the Effective Time of the Registration Statement or
most recent post-effective amendment thereto, as the case may be, the absence
from the Registration Statement and the Prospectus, including any documents
incorporated by reference therein, of an untrue statement of a material fact or
the omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, subject to customary
limitations);
(p) In connection with any underwritten offering, obtain "cold comfort"
letters and updates thereof from the independent public accountants of the
Company (and, if necessary, from the independent public accountants of any
subsidiary of the Company or of any business acquired by the Company, in each
case for which financial statements and financial data are, or are required to
be, included in the Registration Statement), addressed to each underwriter
participating in such underwritten offering (if such underwriter has provided
such letter, representations or documentation, if any, required for such cold
comfort letter to be so addressed), in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
secondary underwritten offerings;
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(q) In connection with any underwritten offering, deliver such documents
and certificates as may be reasonably required by the managers, if any; and
(r) In the event that any broker-dealer registered under the Exchange Act
shall be an "AFFILIATE" (as defined in Rule 2729(b)(1) of the rules and
regulations of the National Association of Securities Dealers, Inc. (the "NASD
RULES") (or any successor provision thereto)) of the Company or has a "CONFLICT
OF INTEREST" (as defined in Rule 2720(b)(7) of the NASD Rules (or any successor
provision thereto)) and such broker-dealer shall underwrite, participate as a
member of an underwriting syndicate or selling group or assist in the
distribution of any Registrable Securities covered by the Registration
Statement, whether as a holder of such Registrable Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, the Company shall assist such broker-dealer in complying
with the requirements of the NASD Rules, including, without limitation, by (A)
engaging a "QUALIFIED INDEPENDENT UNDERWRITER" (as defined in Rule 2720(b)(15)
of the NASD Rules (or any successor provision thereto)) to participate in the
preparation of the Registration Statement relating to such Registrable
Securities, to exercise usual standards of due diligence in respect thereof and
to recommend the public offering price of such Registrable Securities, (B)
indemnifying such qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 5 hereof, and (C) providing
such information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the NASD Rules.
4. OBLIGATIONS OF THE STOCKHOLDERS
In connection with the registration of the Registrable Securities, the
Shareholders shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Shareholder that such Shareholder shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. As least seven
days prior to the first anticipated filing date of the Registration Statement,
the Company shall notify each Shareholder of the information the Company
requires from each such Shareholder (the "REQUESTED INFORMATION") if such
Shareholder elects to have any of its Registrable Securities included in the
Registration Statement. If at least two business days prior to the anticipated
filing date the Company has not received the Requested Information from in
Shareholder (a "NON-RESPONSIVE STOCKHOLDER"), then the Company may file the
Registration Statement without including Registrable Securities of such
Non-Responsive Stockholder and have no further obligations to the Non-Responsive
Stockholder with respect to such registration;
(b) Each Shareholder by its acceptance of the Registrable Securities agrees
to cooperate with the Company in connection with the preparation and filing of
the Registration Statement hereunder, unless such Stockholder has notified the
Company in writing of its election to exclude all of its Registrable Securities
from the Registration Statement; and
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(c) Each Shareholder agrees that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described in Section 3(e) or
3(f), it shall immediately discontinue its disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Shareholder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 3(e) and, if so directed by the Company, such
Shareholder shall deliver to the Company (at the expense of the Company) or
destroy (and deliver to the Company a certificate of destruction) all copies in
such Shareholder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice.
5. EXPENSES OF REGISTRATION
The Company shall pay all expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Section 3, including, without limitation, all
registration, listing, and qualifications fees, printing and engraving fees,
accounting fees, and the fees and disbursements of counsel for the Company. The
expenses paid by the Company will not include any advisory fees incurred by the
Stockholders, other than the reasonable fees and expenses of a single counsel
for the Stockholders, up to a maximum of $15,000.
6. INDEMNIFICATION AND CONTRIBUTION
(a) The Company shall indemnify and hold harmless each Shareholder and each
underwriter, if any, which facilitates the disposition of Registrable
Securities, and each of their respective officers and directors and each person
who controls such Shareholder or underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act (each such person being
sometimes hereinafter referred to as an "INDEMNIFIED PERSON") from and against
any losses, claims, damages or liabilities, joint or several, to which such
Indemnified Person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or an
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, not misleading, or
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Prospectus or an omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company hereby agrees to
reimburse such Indemnified Person for all reasonable legal and other expenses
incurred by them in connection with investigating or defending any such action
or claim as and when such expenses are incurred; provided, however, that the
Company shall not be liable to any such Indemnified Person in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon (i) an untrue statement or alleged untrue statement made in, or an
omission or alleged omission from, such Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to the
Company by such Indemnified Person expressly for use therein or (ii) in the case
of the occurrence of an event of the type specified in Section 3(e), the use by
the Indemnified Person of an outdated or defective Prospectus after the Company
has provided to such Indemnified Person an updated Prospectus correcting the
untrue statement or alleged untrue statement or omission or alleged omission
giving rise to such loss, claim, damage or liability.
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(b) INDEMNIFICATION BY THE STOCKHOLDERS AND UNDERWRITERS. Each Stockholder
agrees, as a consequence of the inclusion of any of its Registrable Securities
in a Registration Statement, and each underwriter, if any, which facilitates the
disposition of Registrable Securities shall agree, as a consequence of
facilitating such disposition of Registrable Securities, severally and not
jointly, to (i) indemnify and hold harmless the Company, its directors
(including any person who, with his or her consent, is named in the Registration
Statement as a director nominee of the Company), its officers who sign any
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, claims, damages or liabilities to which the
Company or such other persons may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in such Registration Statement or
Prospectus or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in light of the circumstances under which they were
made, in the case of the Prospectus), not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such holder or
underwriter expressly for use therein; provided, however, that no Stockholder or
underwriter shall be liable under this Section 6(b) for any amount in excess of
the net proceeds paid to such Stockholder or underwriter in respect of shares
sold by it, and (ii) reimburse the Company for any legal or other expenses
incurred by the Company in connection with investigating or defending any such
action or claim as such expenses are incurred.
(c) NOTICE OF CLAIMS, ETC. Promptly after receipt by a party seeking
indemnification pursuant to this Section 6 (an "INDEMNIFIED PARTY") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "CLAIM"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to this
Section 6 is being sought (the "INDEMNIFYING PARTY") of the commencement
thereof; but the omission to so notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party,
except to the extent that the Indemnifying Party is materially prejudiced and
forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees, costs
and expenses, (y) the Indemnified Party and the Indemnifying Party shall
reasonably have concluded that representation of the Indemnified Party by the
Indemnifying Party by the same legal counsel would not be appropriate due to
actual or, as reasonably determined by legal counsel to the Indemnified Party,
potentially differing interests between such parties in the conduct of the
defense of such Claim, or if there may be legal defenses available to the
Indemnified Party that are in addition to or disparate from those available to
the Indemnifying Party, or (z) the Indemnifying Party shall have failed to
employ legal counsel reasonably satisfactory to the Indemnified Party within a
reasonable period of time after notice of the
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commencement of such Claim. If the Indemnified Party employs separate legal
counsel in circumstances other than as described in clauses (x), (y) or (z)
above, the fees, costs and expenses of such legal counsel shall be borne
exclusively by the Indemnified Party. Except as provided above, the Indemnifying
Party shall not, in connection with any Claim in the same jurisdiction, be
liable for the fees and expenses of more than one firm of counsel for the
Indemnified Party (together with appropriate local counsel). The Indemnified
Party shall not, without the prior written consent of the Indemnifying Party
(which consent shall not unreasonably be withheld), settle or compromise any
Claim or consent to the entry of any judgment that does not include an
unconditional release of the Indemnifying Party from all liabilities with
respect to such Claim or judgment.
(d) CONTRIBUTION. If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an Indemnified Person under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such Indemnifying Party or by such Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation (even if the Stockholders or any underwriters were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in this Section
6(d). The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of the Stockholders and any
underwriters in this Section 6(d) to contribute shall be several in proportion
to the percentage of Registrable Securities registered or underwritten, as the
case may be, by them and not joint.
(e) Notwithstanding any other provision of this Section 6, in no event
shall any (i) Stockholder be required to undertake liability to any person under
this Section 6 for any amounts in excess of the dollar amount of the proceeds to
be received by such Stockholder from the sale of such Stockholder's Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) pursuant to any Registration Statement under which such Registrable
Securities are to be registered under the Securities Act and (ii) underwriter be
required to undertake liability to any Person hereunder for any amounts in
excess of the aggregate discount, commission or other compensation payable to
such underwriter with respect to the Registrable Securities underwritten by it
and distributed pursuant to the Registration Statement.
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(f) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have to any
Indemnified Person and the obligations of any Indemnified Person under this
Section 6 shall be in addition to any liability which such Indemnified Person
may otherwise have to the Company. The remedies provided in this Section 6 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to an indemnified party at law or in equity.
7. RULE 144
With a view to making available to the Shareholders the benefits of Rule
144 under the Securities Act or any other similar rule or regulation of the
Commission that may at any time permit the Stockholders to sell securities of
the Company to the public without registration ("RULE 144"), the Company agrees
to use its best efforts to:
(a) comply with the provisions of paragraph (c) (1) of Rule 144; and
(b) file with the Commission in a timely manner all reports and other
documents required to be filed by the Company pursuant to Section 13 or 15(d)
under the Exchange Act; and, if at any time it is not required to file such
reports but in the past had been required to or did file such reports, it will,
upon the request of any Stockholder, make available other information as
required by, and so long as necessary to permit sales of, its Registrable
Securities pursuant to Rule 144.
8. LOCK-UP
Each Stockholder may not sell, make any short sale of, pledge, grant any
option to purchase, or otherwise transfer or dispose of any of the Registerable
Securities held by such Holder at any time prior to August 31, 2000; provided
however that the Stockholders of the Company are agreeing to the foregoing
restriction in reliance on the Company's representation that holders of a
majority of the outstanding restricted shares of capital stock of the Company
(as defined below) are subject to similar restrictions; to the extent that and
at such time as a majority of the outstanding shares of capital stock of the
Company which have not been resold on the public market are no longer subject to
similar restrictions, the Company shall notify the Stockholders as soon as
practicable and the foregoing restriction shall no longer apply to the
Stockholders it. For purposes of the foregoing, "restricted" shares means all
shares of capital stock which have not been sold to the public pursuant to a
registration statement under the Act or pursuant to Rule 144 or Rule 701 under
the Act. The Company may impose stop-transfer instructions with respect to the
shares (or securities) subject to the foregoing restriction until the end of the
application of such restriction. Transfers to immediate family members of a
Stockholder, or to beneficial trusts or other estate planning vehicles shall be
exempt from the foregoing restriction.
9. ASSIGNMENT
The rights to have the Company register Registrable Securities pursuant to
this Agreement shall be automatically assigned by the Shareholders to any
transferee of all or any portion of the Registrable Securities, but only if: (a)
the Shareholder agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
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reasonable time after such assignment, (b) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (i) the
name and address of such transferee or assignee and (ii) the securities with
respect to which such registration rights are being transferred or assigned, (c)
immediately following such transfer or assignment, the securities so transferred
or assigned to the transferee or assignee constitute Restricted Securities, and
(d) at or before the time the Company received the written notice contemplated
by clause (b) of this sentence the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein.
10. AMENDMENT AND WAIVER
Any provision of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Stockholders who hold a majority-in-interest of the Registrable Securities.
Any amendment or waiver effected in accordance with this Section 9 shall be
binding upon each Stockholder and the Company.
11. MISCELLANEOUS
(a) A person or entity shall be deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Except as may be otherwise provided herein, any notice or other
communication or delivery required or permitted hereunder shall be in writing
and shall be delivered personally or sent by certified mail, postage prepaid, or
by a nationally recognized overnight courier service, and shall be deemed given
when so delivered personally or by overnight courier service, or, if mailed,
three days after the date of deposit in the United States mails, as follows:
(i) to the Company, to:
Popmail.com, Inc.
4801 West 81st Street, Suite 112
Bloomington, MN 55437
Attention: Stephen D. King
(612) 837-9917
(612) 837-9916 (Fax)
with a copy to:
Maslon Edelman Borman & Brand, LLP
3300 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Attention: William M. Mower, Esq.
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<PAGE> 15
(612) 672-8358
(612) 672-8397 (Fax)
(ii) if to a Stockholder, at such
Stockholder's address as set forth
on the signature page hereof, or
such other address as the
Stockholder shall have supplied to
the Company.
The Company, or any Stockholder may change the foregoing address by notice given
pursuant to this Section 10(c).
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Delaware.
(e) The remedies provided in this Agreement are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(f) The Company shall not enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof or adversely affects the rights of the Stockholders under
Section 2(d) hereof. The Company is not currently a party to any agreement
granting any registration rights with respect to any of its securities to any
person which conflicts with the Company's obligations hereunder or gives any
other party the right to include any securities in any Registration Statement
filed pursuant hereto, other than pursuant to certain agreements Parent has
provided to counsel for the Company, except for such rights and conflicts as
have been irrevocably waived. Without limiting the generality of the foregoing,
without the written consent of the holders of a majority in interest of the
Registrable Securities, the Company shall not grant to any person the right to
request it to register any of its securities under the Securities Act unless the
rights so granted are subject in all respect to the prior rights of the holders
of Registrable Securities set forth herein, and are not otherwise in conflict or
inconsistent with the provisions of this Agreement. The restrictions on the
Company's rights to grant registration rights under this paragraph shall
terminate on the date the Registration Statement to be filed pursuant to Section
2(a) is declared effective by the Commission.
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<PAGE> 16
(g) This Agreement and the Reorganization Agreement, constitute the entire
agreement among the parties hereto with respect to the subject matter hereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein. This Agreement and the Reorganization
Agreement, supersede all prior agreements and undertakings among the parties
hereto with respect to the subject matter hereof.
(h) Subject to the requirements of Section 8 hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.
(i) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(j) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning thereof.
(k) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. A facsimile transmission of this signed Agreement shall be legal
and binding on all parties hereto.
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<PAGE> 17
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
COMPANY: POPMAIL.COM, INC.
By: /s/ Stephen D. King
----------------------------------
Name: Stephen D. King
Title: Chief Executive Officer
STOCKHOLDERS: Name:/s/[Each stockholder of IZ.com
Incorporated]
--------------------------------
By:
----------------------------------
Title:
-------------------------------
Address:
-----------------------------
-----------------------------
Facsimile:
---------------------------
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EXHIBIT 99.1
Wednesday February 9, 4:08 pm Eastern Time
Company Press Release
SOURCE: PopMail.com, inc
PopMail.com, inc. Completes Merger with Iz.com
* Jesse Berst named Chief Operating Officer of PopMail.com, inc. * Content focus
added to distribution
DALLAS, Feb. 9 /PRNewswire/ -- PopMail.com, inc. (Nasdaq: POPM - news), a
leading permission- and affinity-based email marketing company for the
broadcast, media, sports, and entertainment industries, today announced it has
completed the merger of online convergent media company Iz.com.
In conjunction with the closing of the acquisition, the Company completed a
$6.75 million private placement of common stock. In addition to each share of
common stock sold, a warrant was attached. This financing will be used for
working capital, sales, marketing, and further development of member lists.
Stephen D. King, CEO of PopMail.com, inc, stated, "We are pleased to announce
the merger with Iz.com. We now have additional tools to help clients monetize
email. PopMail.com's approach drives traffic to their Web sites and to their
real-world operations, such as TV stations and sports teams. Our affinity
marketing builds loyal subscribers that are more inclined to open the email and
more inclined to buy." By combining PopMail's permission-based email and
Iz.com's management and resources, PopMail.com is positioned to expand its
member base and grow revenues. The acquisition of Iz.com also adds extensive
entertainment management experience. This will enhance the Company's ability to
acquire a larger client base in the entertainment sector, as well as attract and
retain new affinity members. As of February 8, 2000, PopMail.com had signed
contracts with 750 companies in the broadcast, media, sports and entertainment
industries.
Board and Management Additions
Internet email pioneer Jesse Berst has officially joined the Board of
PopMail.com, inc. In addition to his strategic role as Board member, Berst will
join the Company on a full-time basis as Chief Operating Officer of PopMail.com,
inc. Prior to joining PopMail.com, Mr. Berst was a Vice President at ZDNet.
Berst will occupy the Board seat recently vacated by Mr. Anderson who has
resigned from the Board to pursue other business interests.
Jesse Berst, in the office of Chief Operating Officer, will be directly
responsible for strategy and policy regarding monetization of PopMail.com's
email database. In addition, Mr. Berst will head content development, as well as
Internet and email strategic initiatives.
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Commenting on Mr. Berst's role as Chief Operating Officer, Mr. King continued,
"We are fortunate to attract a senior executive of Jesse's experience and
caliber who has not only been successful in acquiring knowledge of the
technology sector over the past two decades, but who also possesses the ability
to pass his knowledge on to an audience of eager listeners. Jesse's background
in the Internet and publishing industry will allow us to more rapidly grow our
four main verticals, while his proven, hands on experience in the email
messaging arena will assist in revenue and member growth. His ability to provide
valuable content to drive revenue and monetize PopMail's current and growing
member base will prove valuable going forward."
Jesse Berst is editorial director of ZDNet's popular AnchorDesk website. His
"Berst Alerts" go out via email to millions of subscribers every week.
AnchorDesk will continue to be published through its contract with Iz.com.
Jesse Berst is one of the world's most widely known technology commentators.
Named "Most Prominent Cyber Journalist" by the 1999 PRESStige awards and one of
the world's most influential tech journalists by Marketing Computers Magazine,
he is the originator and editorial director of ZDNet AnchorDesk, the Internet's
most popular site for technology news analysis. AnchorDesk was named one of
eight "Web Sites We Can't Live Without" by Fast Company Magazine and chosen
"Best Overall Web Site" by the Society of Professional Journalists.
Mr. Berst's columns have appeared in many of the leading computer magazines in
the US, Europe and Asia, including PC Computing and PC World (Japan). He is a
popular keynote speaker and moderator at computer conferences and expositions
and has appeared at dozens of international, national and regional events
including Comdex, Seybold Seminars, Windows World, Windows Solutions, and many
more. Jesse is widely quoted for his industry expertise in publications such as
The Wall Street Journal, Time, Newsweek, Business Week, The New York Times, and
dozens more. For several years, he was the anchor of CyberNews, a technology
news segment for NorthWest CableNews. He has appeared on Good Morning America,
ABC World News Tonight, CNBC, CNN, CBS Radio News and numerous other television
and radio programs.
Mr. Berst has also authored or co-authored numerous computer books. His most
recent effort is The Magnet Effect: What comes next in the Internet and how to
know in time to cash in, due this summer from McGraw-Hill.
Iz.com is rich in personnel and possesses strengths in media, Internet, and
television production. Because of this, the Company expects to make further
announcements regarding increased management responsibilities and future Board
additions. This focused media Internet strategy, combining content and
distribution will allow the Company to continue to grow its member base and
revenues.
About PopMail.com, inc.
PopMail.com, inc. is a "permission marketing" and "affinity-based" email
marketing company, serving the needs of individual businesses in a one-on-one
relationship with their customers. The
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Company targets four main vertical markets for its network services: Broadcast,
Media, Sports and Entertainment industries. Companies in these vertical markets
typically have customers who have a strong affinity towards their products and
services, such as a favorite sports team, radio station or upcoming broadcast or
publication. Combining these email services allows companies to cut through the
clutter and inefficiencies of traditional marketing and begin promoting and
branding more effectively and efficiently to their viewers, listeners, fans and
customers on the topics and items that are of interest to them.
The Private Securities Litigation Reform Act of 1995 provides a "safe- harbor"
for forward-looking statements. Certain information included in this press
release (as well as information included in oral statements or other written
statements made by or to be made by the Company) contains statements that are
forward-looking, such as statements relating to plans for future expansion. Such
forward-looking information involves important risks and uncertainties that
could significantly affect anticipated results in the future; and accordingly,
such results may differ from those expressed in any forward-looking statement
made by or on behalf of the Company. These risks and uncertainties include, but
are not limited to, completion of definitive purchase agreements, ability to
obtain needed capital, ability to attract and retain key and other personnel,
those relating to development activities, dependence on existing management,
leverage and debt service, domestic or global economic conditions, and changes
in customer preferences and attitudes. For more information, review the
Company's filings with the Securities and Exchange Commission.
SOURCE: PopMail.com, inc
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