-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RBcu1Vov2N65O3L/DlMbJdqjhlhlf+1Ejfl/sJOokmpS04IxJfwZYdthDlspCVC6 Id6Ri7v54ULHitlGiYj8CA== /in/edgar/work/0000950124-00-005744/0000950124-00-005744.txt : 20000927 0000950124-00-005744.hdr.sgml : 20000927 ACCESSION NUMBER: 0000950124-00-005744 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20000922 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POPMAIL COM INC CENTRAL INDEX KEY: 0001044738 STANDARD INDUSTRIAL CLASSIFICATION: [5812 ] IRS NUMBER: 311487885 STATE OF INCORPORATION: MN FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-46468 FILM NUMBER: 727544 BUSINESS ADDRESS: STREET 1: 1331 CORPORATE DR STREET 2: SUITE 350 CITY: IRVING STATE: TX ZIP: 75038 BUSINESS PHONE: 9725505500 MAIL ADDRESS: STREET 1: 1331 CORPORATE DR STREET 2: STE 350 CITY: IRVING STATE: TX ZIP: 75038 FORMER COMPANY: FORMER CONFORMED NAME: CAFE ODYSSEY INC DATE OF NAME CHANGE: 19980526 FORMER COMPANY: FORMER CONFORMED NAME: HOTEL DISCOVERY INC DATE OF NAME CHANGE: 19970821 S-3 1 c57556s-3.txt REGISTRATION STATEMENT ON FORM S-3 1 As filed with the Securities and Exchange Commission September 22, 2000 Registration No. 333- -------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------------- POPMAIL.COM, INC. (Exact name of registrant as specified in charter) MINNESOTA 31-1487885 (State or other jurisdiction (I.R.S. employer of incorporation or organization) identification number) 1333 CORPORATE DRIVE, SUITE 350 IRVING, TEXAS 75038 (972) 550-5500 (Address, including zip code, and telephone number, including area code, of registrants' principal executive offices) COPIES TO: MR. GARY W. SCHNEIDER PHILIP J. TILTON, ESQ. CHIEF EXECUTIVE OFFICER MASLON EDELMAN BORMAN & BRAND, LLP POPMAIL.COM, INC. 3300 NORWEST CENTER 1333 CORPORATE DRIVE, SUITE 350 MINNEAPOLIS, MINNESOTA 55402-4140 IRVING, TEXAS 75038 (612) 672-8200 (972) 550-5500 FACSIMILE: (612) 672-8397 APPROXIMATE DATE OF THE COMMENCEMENT OF PROPOSED DISTRIBUTION: From time to time after the effective date of this Registration Statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.[ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE - ---------------------------- -------------------- ------------------------ ------------------------- ------------------ TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION TO BE REGISTERED REGISTERED PER SHARE (1) PRICE FEE - ---------------------------- -------------------- ------------------------ ------------------------- ------------------ COMMON STOCK, PAR VALUE $.01 PER SHARE 6,551,823 $.594 $3,891,783 $1,027.43 - ---------------------------- -------------------- ------------------------ ------------------------- ------------------
(1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) of the Securities Act based upon a $.594 per share average of the high and low prices of the Registrant's common stock on the Nasdaq SmallCap Market on September 20, 2000. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. 2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED SEPTEMBER 22, 2000 SELLING SHAREHOLDER OFFERING PROSPECTUS POPMAIL.COM, INC. 6,551,823 SHARES OF COMMON STOCK The 6,551,823 shares of common stock of PopMail.com, inc. (the "Company") offered hereby on a resale basis by the selling shareholders identified on page 21 include (i) 1,091,704 shares issued to affect PopMail.com's acquisition of an equity interest in Net Calendar, Inc.; (ii) 567,850 shares issuable upon conversion of the Company's Series E Convertible Preferred Stock; (iii) 450,706 shares issued to affect PopMail.com's acquisition of an equity interest in CraftClick.com, Inc.; (iv) 800,000 shares issued in connection with PopMail.com's merger with FanAsylum, Inc.; (v) 200,000 shares issuable upon the exercise of warrants issued pursuant to a financial public relations consulting agreement; (vi) 2,600,000 shares issuable upon the exercise of warrants issued to certain consultants; (vii) 93,243 shares issued to a former employee pursuant to a severance arrangement; (viii) 80,000 shares issuable upon exercise of warrants delivered to a lender in lieu of interest; (ix) 178,320 shares issuable upon exercise of warrants issued to investors in the Company's February 2000 private placement offering; and (x) 490,000 shares issued to certain other shareholders. Our common stock is listed on the Nasdaq SmallCap Market under the symbol "POPM." On September 21, 2000, the last sale price for the common stock as reported on the Nasdaq SmallCap Market was $.71875. The shares offered by this prospectus involve a high degree of risk. SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DESCRIPTION OF FACTORS WHICH SHOULD BE CONSIDERED BY INVESTORS BEFORE PURCHASING THE SHARES OFFERED BY THIS PROSPECTUS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. A REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE, AND MAY BE CHANGED. THIS PROSPECTUS IS INCLUDED IN THE REGISTRATION STATEMENT THAT WAS FILED BY POPMAIL.COM WITH THE SECURITIES AND EXCHANGE COMMISSION. THE SELLING SHAREHOLDERS CANNOT SELL THEIR SHARES UNTIL THAT REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THE SHARES OR THE SOLICITATION OF AN OFFER TO BUY THE SHARES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. The date of this Prospectus is September 22, 2000. 1 3 TABLE OF CONTENTS PROSPECTUS SUMMARY...................................................................................................... 3 RISK FACTORS............................................................................................................ 7 USE OF PROCEEDS......................................................................................................... 19 SELLING SHAREHOLDERS.................................................................................................... 20 PLAN OF DISTRIBUTION.................................................................................................... 22 WHERE YOU CAN FIND MORE INFORMATION..................................................................................... 23 NOTE REGARDING FORWARD-LOOKING STATEMENTS............................................................................... 24 LEGAL MATTERS........................................................................................................... 24 EXPERTS................................................................................................................. 24 DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.......................................................................... 25
No dealer, salesman or other person has been authorized to give any information or to make any representations other than those contained in this prospectus. You must not rely on any information or representations not contained in this prospectus, if given or made, as having been authorized by us. This Prospectus is not an offer or solicitation in respect to these securities in any jurisdiction in which such offer or solicitation would be unlawful. The delivery of this prospectus shall not under any circumstances, create any implication that there has been no change in our affairs or that the information contained in this prospectus is correct as of any time subsequent to the date of this prospectus. However, in the event of a material change, this Prospectus will be amended or supplemented accordingly. 2 4 PROSPECTUS SUMMARY As used in this prospectus, the terms "Company," "we," "us" and "our" refer to PopMail.com, inc. and its consolidated subsidiaries. THE COMPANY PopMail.com, inc. (f/k/a Cafe Odyssey, Inc.) consists of two divisions, the Internet division and the restaurant division. Our Internet division consists of three companies: PopMail Network, Inc. ("PopMail Network"), based in Dallas, Texas, a provider of permission and affinity based email services to broadcast stations, professional sports teams and other brand name clients in the media and entertainment industries which creates an affinity network of high profile brands; IZ.com, Inc. ("IZ"), based in Bellevue, Washington, a provider of digital publishing services, newsletters and technology for high end brands, and Fan Asylum, Inc., based in San Francisco, California ("Fan Asylum"), a provider of official fan club sites for recording artists in the music industry. Our Internet division is in the business of connecting entertainment and media brands with their fans through the use of email, fan club sites and high end publishing tools. The restaurant division develops, owns and operates restaurants with multiple themed dining rooms designed to appeal to the upscale casual dining market. We have Cafe Odyssey restaurants at the Mall of America in Bloomington, Minnesota, which opened in June 1998, and in the Denver Pavilions in Denver, Colorado, which opened in March 1999. We began operations as Hotel Mexico, Inc., which was incorporated in Ohio in January 1994. The Kenwood Restaurant Limited Partnership, an Ohio limited partnership was formed in June 1995 to own and operate the Kenwood Unit. Hotel Mexico's operations and the net assets of the Kenwood Restaurant Limited Partnership were combined in November 1996, and in August 1997, Hotel Mexico was reorganized as Hotel Discovery, Inc., a Minnesota corporation. On May 21, 1998, our Board of Directors and shareholders approved a change in corporate name from Hotel Discovery, Inc. to Cafe Odyssey, Inc. On September 15, 2000, the Company announced the execution of a letter of intent to sell the Company's restaurant division to a corporation organized by the division's current management group. The Company anticipates that the sale, if consummated, will be completed in the fourth quarter of the this fiscal year. On September 1, 1999, we completed a merger with popmail.com, inc. ("Old Popmail"). Old Popmail was a provider of Internet email services to radio stations across the country. Following the merger, we changed our name from Cafe Odyssey, Inc. to PopMail.com, inc. On December 3, 1999, ROI Acquisition Corporation, a Texas corporation and our wholly-owned subsidiary, acquired, effective as of November 30, 1999, substantially all of the assets and assumed substantially all of the liabilities of ROI Interactive, LLC ("ROI"), a Texas limited liability company. ROI provides exclusive email service and permission-based, opt-in marketing services to broadcast stations and professional sports teams and other clients. Effective February 9, 2000, we acquired IZ.com Incorporated ("IZ.com"), a Delaware corporation. IZ.com is developing a high end authoring tool that will enable them to provide strong brand marketers with a multi platform tool for private label and vertical label publishing. 3 5 Effective June 15, 2000, we acquired Fan Asylum, Inc., a California corporation. Fan Asylum operates and manages fan clubs and official artist web sites for some of the entertainment industry's most popular musicians and groups through the use of newsletters, email broadcasts, travel packages, tickets, concert hotlines and web page management. Currently, Fan Asylum manages fan clubs for 14 musicians or groups, including Aerosmith, Boyz II Men, Melissa Etheridge and Whitney Houston, among others. Our executive offices are located at 1333 Corporate Drive, Suite 350, Irving, Texas 75038 and our telephone number is (972) 550-5500. RECENT DEVELOPMENTS We completed our acquisition of IZ.com on February 9, 2000. Under the terms of the acquisition, IZ Acquisition Corporation, a Delaware corporation and our wholly-owned subsidiary, merged into IZ.com, and IZ.com became our wholly-owned subsidiary. In connection with the acquisition, IZ.com stockholders received shares of our Series F Convertible Preferred Stock in exchange for their IZ.com shares. As a result of the approval of our shareholders on June 13, 2000, the shares of Series F Preferred Stock will be convertible into approximately 7,375,000 million shares of our common stock. We also assumed IZ.com's outstanding options and warrants, which upon exercise are convertible into approximately 3,350,000 shares of our common stock. At our annual shareholder meeting on June 13, 2000, our shareholders elected Stephen D. King, Jesse Berst, Thomas W. Orr, Gary Schneider, and Michael L. Krienik to serve on the Company's board of directors until the next meeting of shareholders or until such person's successors have been duly elected and qualified. Our shareholders also approved amendments to the Company's 1997 Stock Option and Compensation Plan and the 1998 Director Stock Option Plan, which increased the number of shares available under such plans to 3,000,000 and 750,000, respectively. In May 2000, we raised gross proceeds of $4.5 million from the private placement offering of the Series G Preferred Shares, which have an aggregate stated value of $6 million. The purchaser of the Series G Preferred Stock also received a warrant to purchase up to 500,000 shares of our common stock at an exercise price of $2.51 per share for no additional consideration. Dividends on the Series G Preferred Stock, which are cumulative, accrue at a rate of 10 percent per annum, payable semi-annually, commencing on December 31, 2000. The dividend rate on the Series G Preferred Stock increases to 14 percent per annum upon any dividend payment default. At our option, the dividends may be paid in cash or in the Company's common stock at the applicable conversion price of the Series G Preferred Shares. The Series G Preferred Stock may not be converted before October 9, 2000. From October 10, 2000 to November 9, 2000, the conversion price will be equal to 97% of the adjusted market price of the common stock; from November 10, 2000 to January 7, 2001 the conversion price will be equal to 94% of the adjusted market price of the common stock; after January 8, 2001, the conversion price will be equal to 91% of the adjusted market price of the common stock; and if the common stock is delisted from Nasdaq, the conversion price will be equal to 75% of the adjusted market price of the common stock. The number of shares of common stock issuable upon conversion of the Series G Preferred Stock is limited to 20 percent of the issued and outstanding shares of common stock on the date the Series G Preferred Stock was issued, or approximately 7.2 million shares. We have agreed to redeem for cash, at 105 percent of stated value, any shares of Series G Preferred Stock which are not convertible into shares of common stock as a result of the foregoing limitation. On June 15, 2000, we completed the acquisition of Fan Asylum, Inc., a California corporation. Fan Asylum manages Web sites and fan clubs for 14 high profile musical performers. Through its Web 4 6 site management services, Fan Asylum designs the fan club Web site graphics, creates the Web page content, manages the on-line stores and hosts the fan club Web site for each of its artists. In connection with the acquisition of Fan Asylum, we agreed to pay aggregate purchase consideration, consisting of our common stock, valued at approximately $9 million, of which 800,000 shares valued at $2 million (the "Initial Shares") were delivered to Tim McQuaid, the former sole shareholder of Fan Asylum, at the closing of the transaction. The remaining purchase consideration is payable through the issuance of a total of 2,800,000 shares of common stock valued at approximately $7 million (the "Earn Out Shares") ratably over the next year upon Fan Asylum's satisfaction of specified customer acquisition objectives. The Initial Shares and the Earn Out Shares may not be transferred until March 11, 2001, and after that date, no more than 25% of the total purchase price shares may be sold during any 270 day period until June 14, 2003. The Earn Out Shares are subject to a reset provision under which, on the dates they are released from the sale restrictions, the shares will be supplemented with additional shares to bring the effective price for the shares being released to the current market price. Under the terms and conditions governing the acquisition, Mr. McQuaid is entitled, in certain circumstances, to cause the Company to repurchase the Initial Shares for up to $2 million in cash. Our commitment to potentially repurchase such shares is supported by a letter of credit currently secured by a $2 million cash deposit. In June 2000, we sold 1,000,000 shares of common stock at a purchase price of $3.00 per share to private investors, resulting in net proceeds to the Company of approximately $2.7 million. At the time of the closing, the investors received (a) five-year warrants to purchase 300,000 shares of common stock at an exercise price of $1.00 per share and (b) so called "adjustable warrants" to purchase additional shares of common stock at a nominal exercise price (one-thousandth of a cent per share). The adjustable warrants, described below, are intended to allow the investors to receive additional shares of common stock in future periods to bring the effective price per share of the investment to a percentage of the market value of the common stock on the date of adjustment. The common stock purchased by the investors and any shares purchased under the warrants may not be sold or transferred for a period of 180 days after the closing date. However, this restriction on transfer is terminated if the average market price of our common stock for any 20 consecutive trading days is $4.50 or greater. We have agreed to file a registration statement for the resale of the shares within 60 days after the closing date, and to use our best efforts to cause the registration statement to become effective within 120 days after the closing date. This registration statement was filed with the Securities and Exchange Commission (the "SEC") on August 14, 2000 but has not yet been declared effective by the SEC. If we are unable to cause this registration statement to be declared effective on or before October 13, 2000, the Company will incur penalties of $3,000 per day, payable to the investors. One-third of the shares purchased by the June 2000 investors (an aggregate 333,333 shares) are subject to adjustment in each of three "look-back" periods, which consist of three consecutive 30-day trading periods following the effective date of the registration statement covering the shares. However, there is no right to such an adjustment for any look-back period if the average market price for the lowest 10 trading days of any look-back period is greater than $4.00 per share. The number of additional shares issuable for a look-back period will be the amount sufficient to bring the effective purchase price for the shares to a level equal to 75% of the average market price during the period (with a minimum market price of $.47 that can be used for the calculation in the first year after the investment). For example, if the average market price for the first look-back period is $2.00 per share, the Company will adjust the 333,333 shares covered by the look-back period by issuing an additional 333,333 shares. This will bring the number of shares purchased for that portion of the investment to a total of 666,666 shares for the first $1,000,000 of the original investment, representing an effective price of $1.50 per share (75% of the $2.00 market price). The intention of the provision is to adjust the effective purchase price in three equal installments over the three periods starting when the registration statement becomes 5 7 effective. In addition, under the adjustable warrants there is another potential adjustment after one year from the closing date of the purchase, which is effective in two instances: (a) if the shares for any look-back period were adjusted but the full adjustment could not be taken because of the $.47 minimum on the market price used in the calculation or (b) in any look-back period, the investors elected not to exercise their rights to receive additional shares, even though the average trading value for that period was less than $4.00 per share. On July 27, 2000, Gary Schneider was appointed Chief Executive Officer of the Company, replacing Stephen D. King, who was appointed Chairman of the Board of Directors. On July 28, 2000, the Board of Directors elected Steve Mauldin as a Director of the Company. Effective August 4, 2000, the Board of Directors appointed Stephen Spohn as interim Chief Financial Officer. Mr. Spohn replaced Thomas W. Orr, who resigned from that position effective June 30, 2000. Mr. Orr remains a Director of the Company. Pursuant to an offer made by the Company to temporarily reduce the exercise price attributable to certain common stock purchase warrants, during the period from August 28, 2000 to September 18, 2000, 356,639 shares of the Company's common stock were issued for aggregate proceeds of approximately $267,479. On September 15, 2000, the Company announced the execution of a letter of intent to sell the Company's restaurant division to a corporation organized by the division's current management group. The Company anticipates that the sale, if consummated, will be completed in the fourth quarter of the this fiscal year. 6 8 RISK FACTORS An investment in our common stock is very risky. You may lose the entire amount of your investment. Prior to making an investment decision, you should carefully review this entire prospectus and consider the following risk factors: WE HAVE INCURRED LOSSES TO DATE AND IF OUR REVENUES DO NOT IMPROVE, WE WILL NEED ADDITIONAL FINANCING IN ORDER TO CONTINUE OPERATIONS AND PURSUE OUR BUSINESS PLAN. We incurred net losses of approximately $24.1 million in the first six months of 2000, $24.2 million during 1999, $6.7 million in 1998 and $4.0 million in 1997 and had a working capital deficit of approximately $8.7 million as of January 2, 2000. Our ability to continue our present operations and successfully implement our expansion plans is contingent upon our ability to increase our revenues and ultimately attain and sustain profitable operations. Without additional financing, the cash generated from our current operations will not be adequate to fund operations and service our indebtedness during 2000. There can be no assurance that additional financing will be available on terms acceptable to the Company or on any terms whatsoever. In the event that we are unable to fund our operations and our business plan, we will be unable to continue as a going concern. OUR COMMON STOCK COULD BE DELISTED FROM THE NASDAQ SMALLCAP MARKET, WHICH DELISTING COULD HINDER YOUR ABILITY TO OBTAIN ACCURATE QUOTATIONS AS TO THE PRICE OF OUR COMMON STOCK, OR DISPOSE OF OUR COMMON STOCK IN THE SECONDARY MARKET. Although our common stock is currently listed on the Nasdaq SmallCap Market, we cannot guarantee that an active public market for our common stock will continue to exist. In September 2000, the Company received a notice from The Nasdaq Stock Market indicating that the Company's common stock had failed to maintain a minimum bid price greater than or equal to $1.00 over the preceding thirty consecutive trading days as required under Marketplace Rule 4310(c)(4). Should the Company's common stock fail to achieve and maintain a bid price equal to or greater than $1.00 for a minimum of ten consecutive trading days anytime before December 12, 2000, the Company's common stock will be delisted from the Nasdaq SmallCap Market. To satisfy this objective, the Company may choose to implement a reverse stock split. In such event, there is a risk that the Company's stock price will not rise fully in proportion to the reverse split, resulting in a material loss in market value for the Company's shareholders. In addition, we have responded to numerous inquiries from Nasdaq expressing concern over various matters, including but not limited to a "going concern" qualification expressed by our former independent auditors as of January 3, 1999. Accordingly, our securities may be delisted from the Nasdaq SmallCap Market or be required to reapply for listing meeting the Nasdaq initial listing requirements, which are generally more stringent than the requirements currently governing the Company's listing. Additional factors giving rise to such delisting could include, but are not be limited to: (1) a reduction of our net tangible assets to below $2,000,000, (2) a reduction to one active market maker, (3) a reduction in the market value of the public float of our securities to less than $1,000,000, (4) a reduction of the trading price of our Common Stock to less than $1.00 per share or (5) the discretion of the Nasdaq SmallCap Market. In the event our securities are delisted from the Nasdaq SmallCap Market, trading, if any, in our common stock would thereafter be conducted in the over-the-counter markets in the so-called "pink sheets" or the National Association of Securities Dealer's "Electronic Bulletin Board." Consequently, the liquidity of our common stock would likely be impaired, not only in the number of shares which could be bought and sold, but also through delays in the timing of the transactions, reduction in the coverage of our securities by security analysts and the news media, and lower prices for our securities than might 7 9 otherwise prevail. In addition, our common stock would become subject to certain rules of the Securities and Exchange Commission relating to "penny stocks." These rules require broker-dealers to make special suitability determinations for purchasers other than established customers and certain institutional investors and to receive the purchasers' prior written consent for a purchase transaction prior to sale. Consequently, these "penny stock rules" may adversely affect the ability of broker-dealers to sell our common stock and may adversely affect your ability to sell shares of our common stock in the secondary market. WE ARE DEPENDENT ON THE ONGOING SERVICES OF CERTAIN OF OUR EXECUTIVES, THE LOSS OF WHICH COULD HAVE A DETRIMENTAL EFFECT ON OUR PROFITABILITY AND THE MARKET PRICE OF OUR STOCK. Our plan of business development and our day-to-day operations rely heavily on the experience of Stephen D. King, our Chairman, Gary Schneider, our Chief Executive Officer, Jesse Berst, the Chief Operating Officer, and Stephen Spohn, our Chief Financial Officer. The loss of any of them could adversely affect the success of our operations and strategic plans and, consequently, have a detrimental effect on the market price of our stock. WE MAY BE UNABLE TO HIRE QUALIFIED EMPLOYEES TO HELP IMPLEMENT AND MANAGE OUR EXPANSION PLANS, WHICH INABILITY COULD BE DETRIMENTAL TO THE VALUE OF YOUR INVESTMENT. Our success will depend in large part upon our ability to supplement our existing management team. We will need to hire additional corporate level and management employees to help implement and operate our plans for expansion of our Internet and restaurant divisions. The demand for individuals with management skills is high and many other businesses, most of which have greater name recognition and resources than the Company, compete for their services. Any inability or delay in obtaining additional key employees could have a material adverse effect on our expansion plans and, consequently, the market value of our stock. DUE TO OUR LIMITED OPERATING HISTORY, YOU MAY FIND IT DIFFICULT TO ASSESS OUR ABILITY TO OPERATE PROFITABLY. We have only been operating our Mall of America restaurant since June 1998 and our Denver restaurant since March 1999. In addition, Old PopMail was founded in December 1997, and ROI commenced operations in June 1998, while IZ.com Incorporated was incorporated in February 1999. Consequently, we face the added risks, expenses and difficulties related to developing and operating a new business enterprise. Given our lack of significant operating history, investors may have difficulty assessing the many factors which will determine our ability to generate future profits. ONE INDIVIDUAL CONTROLS A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK AND MAY INFLUENCE OUR AFFAIRS. Following our merger with popmail.com, inc. on September 1, 1999, James L. Anderson was elected to our Board of Directors and served as its Chairman until his resignation on January 24, 2000. Effective February 1, 2000, Mr. Anderson resigned from our Board. Based upon a Schedule 13D filed with the Securities and Exchange Commission on September 13, 1999, Mr. Anderson controlled indirectly or directly, as of that date, approximately 59.6 percent of our outstanding common stock. As of August 4, 2000, Mr. Anderson indirectly or directly controlled approximately 22.6 percent of our outstanding common stock. Accordingly, he may have the ability to determine the election of members of the Board of Directors and determine the approval of corporate transactions and other matters requiring shareholder approval. Unless and until Mr. Anderson substantially decreases his percentage 8 10 beneficial ownership in our common stock, he will continue to have significant influence over our affairs. DUE TO THE LARGE NUMBER OF OUTSTANDING OPTIONS AND WARRANTS, OUR SHAREHOLDERS FACE A RISK OF SUBSTANTIAL FUTURE DILUTION AND DOWNWARD PRESSURE ON THE TRADING PRICE OF OUR COMMON STOCK. We have a total of 40,595,464 shares of our common stock reserved for issuance pursuant to our stock options plans, outstanding preferred stock and common purchase warrants. Most of these shares have either been registered for resale or are subject to agreements providing for their registration for resale under certain circumstances. Accordingly, our existing shareholders face a substantial risk of dilution and the trading price of our common stock may decrease as these convertible securities are exercised or converted into shares of common stock and subsequently offered for sale through the Nasdaq SmallCap Market. THERE IS A RISK THAT DUE TO THE LIMITATIONS PLACED ON THE CONVERSION OF THE SERIES G PREFERRED SHARES, THE PREFERRED SHAREHOLDER'S INVESTMENT MAY NOT BE CONVERTED INTO COMMON STOCK AND WOULD HAVE TO BE REDEEMED IN CASH. The total number of shares of Common Stock issuable upon conversion of the Series G Preferred Stock and upon exercise of the Series G Warrant cannot exceed 20 percent of the number of shares of Common Stock of the Company issued and outstanding on May 2, 2000. In the event the holders of the Series G Preferred Stock and Warrant are unable to convert preferred shares into common stock because these limitations have been reached, we would be required to redeem the Series G Preferred Shares in cash at 105 percent of the stated value plus any accrued and unpaid dividends. It is possible that in such case we may not have sufficient cash and cash equivalents necessary to redeem the Series G Preferred Shares in cash. WE RELY HEAVILY ON OUR INTELLECTUAL PROPERTY RIGHTS AND OTHER PROPRIETARY INFORMATION; FAILURE TO PROTECT AND MAINTAIN THESE RIGHTS AND INFORMATION COULD PREVENT US FROM COMPETING EFFECTIVELY. Our success and ability to compete are substantially dependent on our internally developed technologies and trademarks, which we seek to protect through a combination of trade secret and trademark law, as well as confidentiality or license agreements with our employees, consultants, and corporate and strategic partners. If we are unable to prevent the unauthorized use of our proprietary information or if our competitors are able to develop similar technologies independently, the competitive benefits of our technologies, intellectual property rights and proprietary information will be diminished. WE MAY NOT PAY DIVIDENDS ON OUR COMMON STOCK, IN WHICH EVENT YOUR ONLY RETURN ON INVESTMENT, IF ANY, WILL OCCUR ON THE SALE OF OUR STOCK. To date, we have not paid any cash dividends on our common stock, and we do not intend to do so in the foreseeable future. Rather, we intend to use any future earnings to fund our operations and the growth of our business. Accordingly, the only return on an investment in our common stock will occur upon its sale. PURSUANT TO ITS AUTHORITY TO DESIGNATE AND ISSUE SHARES OF OUR STOCK AS IT DEEMS APPROPRIATE, OUR BOARD OF DIRECTORS MAY ASSIGN RIGHTS AND PRIVILEGES TO CURRENTLY UNDESIGNATED SHARES WHICH COULD 9 11 ADVERSELY AFFECT YOUR RIGHTS AS A COMMON SHAREHOLDER. Our authorized capital consists of 100,000,000 shares of capital stock. Our Board of Directors, without any action by the shareholders, may designate and issue shares in such classes or series (including classes or series of preferred stock) as it deems appropriate and establish the rights, preferences and privileges of such shares, including dividends, liquidation and voting rights. As of September 18, 2000, we have 45,991,200 shares of common stock, 193,183 shares of Series E Convertible Preferred Stock, 287,408 shares of Series F Convertible Preferred Stock outstanding and 600,000 shares of Series G 10% Convertible Preferred Stock. As of September 18, 2000, a further 40,595,464 shares of common stock have been reserved as follows: - a maximum of 734,719 shares of common stock reserved for issuance upon exercise of the Series E Preferred Shares, 193,183 shares of which are currently outstanding; - a maximum of 7,375,000 shares of common stock reserved for issuance upon conversion of Series F Convertible Preferred Stock; - a maximum of 6,724,282 shares of common stock reserved for issuance in connection with the Series G 10% Convertible Preferred Stock and upon exercise of certain warrants issued in connection with the Series G Preferred Stock; - 3,348,895 shares of common stock issuable upon exercise of options granted under the IZ.com Incorporated stock option plan assumed by the Company; - 2,600,000 shares issuable upon the exercise of the Class A Warrants issued as part of our initial public offering and the partial exercise of the underwriter's over-allotment; - 16,062,568 shares issuable upon the exercise of outstanding warrants (excluding the warrants issued in connection with the sale of the Series G Preferred Stock); - 3,000,000 shares reserved for issuance under our 1997 Stock Option and Compensation Plan, of which options reverting to 2,033,333 shares are currently outstanding; - 750,000 shares for issuance under our 1998 Director Stock Option Plan, of which options relating to 290,000 shares are currently outstanding. The rights of holders of preferred stock and other classes of common stock that may be issued could be superior to the rights granted to holders of the Units issued in our initial public offering. Our Board's ability to designate and issue such undesignated shares could impede or deter an unsolicited tender offer or takeover proposal. Further, the issuance of additional shares having preferential rights could adversely affect the voting power and other rights of holders of common stock. MINNESOTA LAW MAY INHIBIT OR DISCOURAGE TAKEOVERS, WHICH COULD REDUCE THE MARKET VALUE OF OUR STOCK. As a corporation organized under Minnesota law, we are subject to certain Minnesota statutes which regulate business combinations and restrict the voting rights of certain persons acquiring shares of its stock. By impeding a merger, consolidation, takeover or other business combination involving the Company or discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control of the Company, these regulations could adversely affect the market value of our stock. THE LIMITATIONS ON DIRECTOR LIABILITY CONTAINED IN OUR ARTICLES OF 10 12 INCORPORATION AND BYLAWS MAY DISCOURAGE SUITS AGAINST DIRECTORS FOR BREACH OF FIDUCIARY DUTY. As permitted by Minnesota law, our Amended and Restated Articles of Incorporation provide that members of our Board of Directors are not personally liable to you or the Company for monetary damages resulting from a breach of their fiduciary duties. These limitations on director liability may discourage shareholders from suing directors for breach of fiduciary duty and may reduce the likelihood of derivative litigation brought against a director by shareholders on the Company's behalf. Furthermore, our Bylaws provide for mandatory indemnification of directors and officers to the fullest extent permitted by Minnesota law. All of these provisions limit the extent to which the threat of legal action against our directors for any breach of their fiduciary duties will prevent such breach from occurring in the first instance. PURSUING AND COMPLETING POTENTIAL ACQUISITIONS COULD DIVERT MANAGEMENT ATTENTION AND FINANCIAL RESOURCES AND MAY NOT PRODUCE THE DESIRED BUSINESS RESULTS. We do not have specific personnel dedicated solely to pursuing and completing acquisitions. As a result, if we pursue any acquisition, our management, in addition to fulfilling their operational responsibilities, could spend significant time, management resources and financial resources to pursue and complete the acquisition and integrate the acquired business with our existing business. To finance any acquisition, we may use capital stock or cash or a combination of both. Alternatively, we may borrow money from a bank or other lender. If we use capital stock, our shareholders may experience dilution. If we use cash or debt financing, our financial liquidity would be reduced. In addition, acquisitions may result in nonrecurring charges or the amortization of significant goodwill that could adversely affect our ability to achieve and maintain profitability. Despite the investment of these management and financial resources and completion of due diligence with respect to these efforts, an acquisition may fail to produce the expected revenues, earnings or business and an acquired service or technology may not perform as expected for a variety of reasons, including: - Difficulties in the assimilation of the operations, technologies, products and personnel of the acquired company, - Risks of entering markets in which we have no or limited prior experience, - Expenses of any undisclosed or potential legal liabilities of the acquired company, - The applicability of rules and regulations that might restrict our ability to operate, and - The potential loss of key employees of the acquired company. If we make acquisitions in the future and the acquired businesses fail to perform as expected, our business operating results and financial condition may be materially adversely affected. FAILURE TO MANAGE OUR GROWTH MAY ADVERSELY AFFECT OUR BUSINESS. We have grown rapidly and expect to continue the growth both by hiring new employees and serving new business and markets. Our growth has placed, and will continue to place, a significant strain on our management and our operating and financial systems. 11 13 Our personnel, systems, procedures and controls may be inadequate to support our future operations. In order to accommodate the increased size of our operations, we will need to hire, train and retain the appropriate personnel to manage our operations. We will also need to improve our financial and management controls, reporting systems and operating systems, all of which will require significant ongoing investments of the efforts of key personnel. IF WE FAIL TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE MARKET PRICE OF OUR COMMON STOCK MAY FALL SIGNIFICANTLY. The market price of publicly traded securities generally reflects, to a large degree, the expectations of industry analysts and significant investors with respect to the short and long-term operating results of the issuers. When issuers fail to meet such expectations, the market price of their publicly traded securities usually decreases, sometimes significantly, and may not recover. There can be no assurance that we will be able to satisfy the expectations of market analysts and investors to avoid a precipitous drop in the market price of our common stock. INTERNET DIVISION WE HAVE ENTERED INTO NEW BUSINESS VENTURES IN AN EVOLVING INDUSTRY IN WHICH THERE REMAIN UNPROVEN BUSINESS AND REVENUE MODELS. The Internet, music and email industry is rapidly evolving, extremely competitive, and the market place for internet-related shares has been very volatile. Furthermore, the music and email business continues to indicate changing revenue models in the market place. Consequently, there can be no assurance that sufficient revenues will be generated to support our current operations and other capital requirements. IN LIGHT OF RECENT CONSOLIDATION IN THE BROADCAST INDUSTRY AND RECENT DEVELOPMENTS IN THE MUSIC INDUSTRY, THE LOSS OF ANY SIGNIFICANT AFFILIATE OR ARTIST CONTRACTS WOULD NEGATIVELY IMPACT OUR OPERATIONS. The last few years have brought substantial concentration of power among a few players in the broadcast industry. Consequently, significant portions of the industry are controlled by relatively few organizations. We currently have over 500 clients. As consolidation increases, these contracts may be merged or lost due to the landscape of the industry. In light of such consolidation, however, the loss of any of these significant affiliation contracts or our inability to enter into contracts with other clients in the broadcast industry would negatively impact our operations. The reduction of artists touring and releasing new recording can significantly impact the level of activity on the fan club sites, membership and potential advertising associated with such. OUR EMAIL BASED PRODUCTS AND FAN CLUB SERVICES ARE DEPENDENT UPON THE INTERNET. The success of our services and products will depend in large part upon the continued development and expansion of the Internet. The Internet has experienced, and is expected to continue to experience, significant and geometric growth in the number of users and the amount of traffic. There can be no assurance that the Internet infrastructure will continue to be able to support the demands placed on it by this continued growth. In addition, the Internet could lose its viability due to delays in the development or adoption of new standards and protocols (for example, the next-generation Internet 12 14 Protocol) to handle increased levels of Internet activity, or due to increased governmental regulation. There can be no assurance that the infrastructure or complementary services necessary to make the Internet a viable commercial marketplace will be developed, or, if developed, that the Internet will become a viable commercial marketplace for services and products such as those we offer. If the necessary infrastructure or complementary services or facilities are not developed, or if the Internet does not become a viable commercial marketplace, our business, results of operations, and financial condition will be materially adversely affected. OUR FUTURE SUCCESS WILL DEPEND ON INCREASED ACCEPTANCE OF THE INTERNET AS A MEDIUM OF COMMERCE. The market for Internet email, fan club sites, private label newsletters and other services is relatively new and evolving rapidly. Our future success will depend, in part, upon our ability to provide services that are accepted by our existing and future clients as an integral part of their business model in providing content and information to their fans and viewers. The level of demand for Internet email, fan club sites, private label newsletters and other services will depend upon a number of factors, including the following: - the growth in consumer access to, and acceptance of, new interactive technologies such as the Internet; - the adoption of Internet-based business models; - the development of technologies that facilitate two-way communications between companies and target audiences; and - acquiring members to the brands services. Significant issues concerning the commercial use of Internet technologies, including security, reliability, privacy, cost, ease of use and quality of service, may inhibit the growth of services that use these technologies. Our future success will depend, in part, on our ability to meet these challenges, which must be met in a timely and cost-effective manner. We cannot be sure that we will succeed in effectively meeting these challenges, and our failure to do so could materially and adversely affect our business. Industry analysts and others have made many predictions concerning the growth of the Internet as a business medium. Many of these historical predictions have overstated the growth of the Internet. These predictions should not be relied upon as conclusive. The market for our Internet email and fan club services may not continue to grow, our services may not be adopted and individual personal computer users in business or at home may not use the Internet or other interactive media for commerce, interaction and communication. If the market for Internet email, fan club sites and other services fails to sustain growth, or develops more slowly than expected, or if our services do not achieve market acceptance, our business would be materially and adversely affected. INTERNET STOCKS ARE SUBJECT TO MARKET VOLATILITY. The stock market in general, and the market prices for Internet-related companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These fluctuations may adversely affect our stock price. If Internet usage does not continue to grow or its infrastructure fails, our business will suffer. If the Internet does not gain increased acceptance for business-to-consumer electronic commerce, our business will not grow or become profitable. We cannot be certain that the infrastructure or 13 15 complementary services necessary to maintain the Internet as a useful and easy means of transferring documents and data will continue to develop. The Internet infrastructure may not support the demands that growth may place on it and the performance and reliability of the Internet may decline. INCREASED COMPETITION RESULTING FROM AN INCREASE IN THE NUMBER OF EMAIL FAN CLUB AND BRANDED LABEL NEWSLETTERS PROVIDERS MAY HAVE AN ADVERSE EFFECT ON POPMAIL'S FUTURE BUSINESS OPERATIONS. Currently there are a growing number of email providers, artist web sites, newsletters providers and competitors to our business. To the extent we can execute our plan and are successful within the current target vertical markets in which we compete (i.e., broadcast, media, sports, music and entertainment), we anticipate continued growth of clients and members to our email services, newsletters and artist fan club sites. Others currently are competing and will attempt to compete in these Affinity vertical markets, which may have an adverse affect on our future business operations. THERE IS A RISK THAT GOVERNMENT REGULATION OF THE INTERNET COULD BECOME MORE EXTENSIVE. There are currently few laws or regulations directly applicable to access to or commerce on the Internet. However, due to the increasing popularity and use of the Internet, it is possible that a number of laws and regulations may be adopted with respect to the Internet, covering issues such as user privacy, pricing, characteristics, and quality of products and service. The Telecommunications Reform Act of 1996 imposes criminal penalties on anyone who distributes obscene, indecent, or patently offensive communications on the Internet. Other nations, including Germany, have taken actions to restrict the free flow of material deemed to be objectionable on the Internet. The adoption of any additional laws or regulations may decrease the growth of the Internet, which could in turn decrease the demand for our services and products, and increase our cost of doing business or otherwise have an adverse effect on our business, results of operations and financial condition. Moreover, the applicability to the Internet of existing laws in various jurisdictions governing issues such as property ownership, libel, and personal privacy is uncertain and will take years to resolve. Any such new legislation or regulation could have a material adverse effect on our business, results of operations, and financial condition. WE MAY NOT BE ABLE TO GENERATE SUFFICIENT REVENUE IF THE ACCEPTANCE OF ONLINE ADVERTISING, WHICH IS NEW AND UNPREDICTABLE, DOES NOT DEVELOP AND EXPAND AS WE ANTICIPATE. We plan to derive a substantial portion of our future revenues from online advertising and direct marketing in our branded email, fan club newsletters, artist web sites and Web-based programs. If these services do not continue to achieve market acceptance, we may not generate sufficient revenue to support our continued operations. The Internet has not existed long enough as an advertising medium to demonstrate its effectiveness relative to traditional advertising. Advertisers and advertising agencies that have historically relied on traditional advertising remain slow to adopt online advertising. Many potential advertisers have limited or no experience using email or the Web as an advertising medium. They may have allocated only a limited portion of their advertising budgets to online advertising, or may find online advertising to be less effective for promoting their products and services than traditional advertising media. If the market for online advertising fails to develop or develops more slowly than we expect, we may not sustain revenue growth or achieve or sustain profitability. The market for email advertising in general is vulnerable to the negative public perception associated with unsolicited email, known as "spam." Public perception, press reports or governmental action related to spam could reduce the overall demand for email advertising in general, which could reduce our revenue and prevent us from achieving or sustaining profitability. 14 16 IF WE DO NOT MAINTAIN AND EXPAND OUR CLIENT AND MEMBER BASE WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY FOR ADVERTISERS. Our revenue has been derived primarily from the licensing of our email services, set up and hosting fees through PopMail Network, creating content through IZ.com for specific brands and from management fees, ticket fees, commerce fees and artist travel packages through Fan Asylum. All three copies are seeking to provide timely and relevant information to their clients customers, fans and viewers with personalized content and information that is of most interest to the opt-in member or fan, through targeted email, personalized newsletters and fan club sites. If we are unable to maintain and expand our affinity brand member base and add clients to our "affinity brand network," advertisers could find our audience less attractive and effective for promoting their products and services and we could experience difficulty retaining our existing advertisers and attracting additional advertisers. To date, we have relied on referral-based marketing activities to attract a portion of our members and will continue to do so for the foreseeable future. This type of marketing is largely outside of our control and there can be no assurance that it will generate rates of growth in our member base comparable to what we have experienced to date. We would also be unable to grow our member base if a significant number of our current members and clients stopped using our service. Members may discontinue using our service if they object to having their online activities tracked or they do not find our content useful. In addition, our service allows our members to easily unsubscribe at any time by clicking through a link appearing at the bottom of our email messages and selecting the particular categories from which they want to unsubscribe. OUR BUSINESS DEPENDS ON OUR ABILITY TO PROVIDE SERVICES THAT CREATE, DELIVER AND DISTRIBUTE RELEVANT AND APPEALING CONTENT FROM AND FOR OUR CLIENTS THROUGH OUR AFFINITY EMAIL SERVICES, PUBLISHING TOOLS AND FAN CLUB SITES; IF WE ARE NOT ABLE TO CONTINUE TO DELIVER SUCH CONTENT OR TO PROVIDE SUCH SERVICES, WE MAY BE NOT ABLE TO MAINTAIN AND EXPAND OUR MEMBER AND FAN BASE, WHICH COULD NEGATIVELY AFFECT OUR ABILITY TO RETAIN AND ATTRACT THE ADVERTISERS WE NEED TO GENERATE ADDITIONAL REVENUES. Through IZ.com and Fan Asylum, we have relied on our editorial staff to identify and develop substantially all of our content utilizing content derived from other parties and from our clients. Because our members' preferences are constantly evolving, our editorial staff may be unable to accurately and effectively identify and develop content that is relevant and appealing to our members. As a result, we may have difficulty maintaining and expanding our member base, which could negatively affect our ability to retain and attract advertisers. If we are unable to retain and attract advertisers our revenue will decrease. Additionally, we license a small percentage of our content from third parties. The loss, or increase in cost, of our licensed content may impair our ability to assimilate and maintain consistent, appealing content in our email messages or maintain and improve the services we offer to consumers. We intend to continue to strategically license a portion of our content for our emails from third parties, including content that is integrated with internally developed content. These third-party content licenses may be unavailable to us on commercially reasonable terms, and we may be unable to integrate third-party content successfully. The inability to obtain any of these licenses could result in delays in product development or services until equivalent content can be identified, licensed and integrated. Any delays in product development or services could negatively affect our ability to maintain and expand our member base. IF WE DO NOT RESPOND TO OUR COMPETITION EFFECTIVELY, WE MAY LOSE 15 17 CURRENT CLIENTS AND MEMBERS AND FAIL TO ATTRACT NEW ADVERTISERS, REDUCING OUR REVENUES AND HARMING OUR FINANCIAL RESULTS. We face intense competition from both traditional and online advertising and direct marketing businesses. If we do not respond to this competition effectively, we may not be able to retain current advertisers or attract new advertisers, which would reduce our revenue and harm our financial results. Currently, several companies offer competitive email direct marketing services, such as coolsavings.com, MyPoints.com, NetCreations, YesMail.com, Digital Impact and Exactis. We also expect to face competition from online content providers, list aggregators as well as established online portals and community Web sites that engage in direct marketing programs. Additionally, we may face competition from traditional advertising agencies and direct marketing companies that may seek to offer online products or services. We also compete in high profile industries where our email services, publishing tools and fan club site offerings must meet the demands of our fans and clients. It is imperative that we continue to make enhancements to the email services, publishing tool and fan club site offerings if we are to continue growing our client and member base. Failure to make service and product enhancements could significantly impact our financial results. WE DEPEND HEAVILY ON OUR NETWORK INFRASTRUCTURE AND IF THIS FAILS IT COULD RESULT IN UNANTICIPATED EXPENSES AND PREVENT OUR MEMBERS FROM EFFECTIVELY UTILIZING OUR SERVICES, WHICH COULD NEGATIVELY IMPACT OUR ABILITY TO ATTRACT AND RETAIN MEMBERS AND ADVERTISERS. Our ability to successfully create and deliver our email messages and private label newsletters and to keep fan club sites current depends in large part on the capacity, reliability and security of our networking hardware, software and telecommunications infrastructure. Failures within our network infrastructure could result in unanticipated expenses to address such failures and could prevent our members from effectively utilizing our services, which could prevent us from retaining and attracting members and advertisers. While our technology platform is considered state of the art, we do not currently have fully redundant systems or a formal disaster recovery plan in place for all companies. Our system is susceptible to natural and man-made disasters, including earthquakes, fires, floods, power loss and vandalism. Further, telecommunications failures, computer viruses, electronic break-ins or other similar disruptive problems could adversely affect the operation of our systems. Our insurance policies may not adequately compensate us for any losses that may occur due to any damages or interruptions in our systems. Accordingly, we could be required to make capital expenditures in the event of unanticipated damage. In addition, our members depend on Internet service providers, or ISPs, for access to our Web site. Due to the rapid growth of the Internet, ISPs and Web sites have experienced significant system failures and could experience outages, delays and other difficulties due to system failures unrelated to our systems. These problems could harm our business by preventing our members from effectively utilizing our services. OUR FUTURE SUCCESS WILL DEPEND ON INCREASED ACCEPTANCE OF THE INTERNET AS A MEDIUM OF COMMERCE. The market for Internet email and other services is relatively new and evolving rapidly. Our future success will depend, in part, upon our ability to provide services that are accepted by our existing and future members as an integral part of their business model. The level of demand for Internet email and other services will depend upon a number of factors, including the following: 16 18 - the growth in consumer access to, and acceptance of, new interactive technologies such as the Internet; - the adoption of Internet-based business models; and - the development of technologies that facilitate two-way communication between companies and target audiences. Significant issues concerning the commercial use of Internet technologies, including security, reliability, cost, ease of use and quality of service, remain unresolved and may inhibit the growth of services that use these technologies. Our future success will depend, in part, on our ability to meet these challenges, which must be met in a timely and cost-effective manner. We cannot be sure that we will succeed in effectively meeting these challenges, and our failure to do so could materially and adversely affect our business. Industry analysts and others have made many predictions concerning the growth of the Internet as a business medium. Many of these historical predictions have overstated the growth of the Internet. These predictions should not be relied upon as conclusive. The market for our Internet email services may not develop, our services may not be adopted and individual personal computer users in business or at home may not use the Internet or other interactive media for commerce and communication. If the market for Internet email and other services fails to develop, or develops more slowly than expected, or if our services do not achieve market acceptance, our business would be materially and adversely affected. WE MAY INCUR LIABILITY FOR THE INVASION OF PRIVACY. The Federal Trade Commission has investigated businesses that have used personally identifiable information without permission or in violation of a stated privacy policy. We have established and communicated to our members a privacy policy. In the event that we convey personally identifiable information to our corporate customers without permission or in violation of our stated privacy policy, we may incur liability for the unlawful invasion of privacy. RESTAURANT DIVISION OUR ABILITY, OR INABILITY, TO RESPOND TO VARIOUS COMPETITIVE FACTORS AFFECTING THE RESTAURANT INDUSTRY MAY AFFECT THE MARKET PRICE OF OUR COMMON STOCK. The restaurant industry is highly competitive and is affected by changes in consumer preferences, as well as by national, regional and local economic conditions, and demographic trends. Discretionary spending priorities, traffic patterns, tourist travel, weather conditions, employee availability and the type, number and location of competing restaurants, among other factors, will also directly affect the performance of our restaurants. Changes in any of these factors in the markets where we currently operate our restaurants could adversely affect the results of our operations. Furthermore, the restaurant industry in general is highly competitive based on the type, quality and selection of the food offered, price, service, location and other factors and, as a result, has a high failure rate. The themed restaurant industry is relatively young, is particularly dependent on tourism and has seen the emergence of a number of new competitors. We compete with numerous well-established competitors, including national, regional and local restaurant chains, many of which have greater financial, marketing, personnel and other resources and longer operating histories than us. As a result, we may be unable to respond to the various competitive factors affecting the restaurant industry. 17 19 WE HAVE ENTERED INTO NON-CANCELABLE LEASES UNDER WHICH WE ARE OBLIGATED TO MAKE PAYMENTS FOR TERMS OF 12 TO 15 YEARS. We have entered into long-term leases relating to the Kenwood, Mall of America and Denver restaurants. These leases are non-cancelable by us (except in limited circumstances) and range in term from 12 to 15 years. Although we have sold the Kenwood restaurant and assigned the related lease to an unrelated third party who is currently making the required lease payments, we remain the primary obligor under the lease. If we decide to close any of our existing restaurants, we may nonetheless be committed to perform our obligations under the applicable lease, which would include, among other things, payment of the applicable base rent for the balance of the respective lease term. Such continued obligations increase our chances of closing a restaurant without receiving an adequate return on our investment. AMONG OTHER ECONOMIC FACTORS OVER WHICH WE HAVE NO CONTROL, THE SUCCESS OF OUR RESTAURANTS WILL DEPEND ON CONSUMER PREFERENCES AND THE PREVAILING LEVEL OF DISCRETIONARY CONSUMER SPENDING. The success of our restaurant division depends to a significant degree on a number of economic conditions over which we have no control, including: - discretionary consumer spending; - the overall success of the malls, entertainment centers and other venues where Cafe Odyssey restaurants are or will be located; - economic conditions affecting disposable consumer income; and - the continued popularity of themed restaurants in general and the Cafe Odyssey concept in particular. Furthermore, most themed restaurants are especially susceptible to shifts in consumer preferences because they open at or near capacity and frequently respond to such shifts by experiencing a decline in revenue growth or of actual revenues. An adverse change in any or all of these conditions would have a negative effect on our operations and the market value of our common stock. OUR RESTAURANT DIVISION IS SUBJECT TO EXTENSIVE GOVERNMENT REGULATION WHICH COULD HAVE A NEGATIVE EFFECT ON OUR BUSINESS. The restaurant industry, and to a lesser extent, the retail merchandising industry, are subject to numerous federal, state, and local government regulations, including those relating to: - the preparation and sale of food - building and zoning requirements - environmental protections - minimum wage requirements - overtime - working and safety conditions - the sale of alcoholic beverages - sanitation - relationships with employees - unemployment - workers compensation 18 20 - citizenship requirements Any change in the current status of such regulations, including an increase in employee benefits costs, workers' compensation insurance rates, or other costs associated with employees, could substantially increase our compliance and labor costs. Because we pay many of our restaurant-level personnel rates based on either the federal or the state minimum wage, increases in the minimum wage would lead to increased labor costs. In addition, our operating results would be adversely affected in the event we fail to maintain our food and liquor licenses. Furthermore, restaurant operating costs are affected by increases in unemployment tax rates, sales taxes and similar costs over which we have no control. USE OF PROCEEDS We will not receive any proceeds from the resale of the shares offered by this prospectus. 19 21 SELLING SHAREHOLDERS The following table sets forth the number of shares of the common stock owned by the selling shareholders in this offering as of September 20, 2000 and after giving effect to this offering.
Shares Percentage Number of Percentage Beneficially Beneficial Shares Offered Beneficial Owned Before Ownership by Selling Ownership After Name Offering Before Offering Shareholder Offering - ---- -------- --------------- ----------- -------- Net Calendar, Inc. 1,091,704 2.4 1,091,704 * Satya P. Garg 435,231(1) * 252,375(2) * Leonard H. Timmel 217,617(3) * 126,190(2) * R&H Investments(a) 217,617(3) * 126,190(2) * Christopher Miller 130,009(4) * 63,095(2) * KMK Consulting Company, LLC 80,000 * 80,000 * Metropolitan Capital Partners, Inc. 270,000(5) * 60,000 * CraftClick.com, Inc. 450,706 1.0 450,706 * Tim McQuaid 800,000 1.8 800,000 * W. Campbell Birge 50,000 * 50,000 * Phillip Bane 300,000 * 300,000 * Continental Capital & Equity Corporation 200,000(6) * 200,000 * The Homer Fund, Ltd. 810,000 1.8 400,000(6) * The Shaar Fund, Ltd.(b) 900,000(7) * 800,000 * Gulfstream Financial Partners, LLC(c) 1,450,000(8) 3.1 800,000 1.4 Blake Capital Partners, LLC(d) 428,533(9) * 400,000 * Apache Bluffs Corp.(e) 200,000(10) * 200,000 * Katie Williams 93,243 * 93,243 * Fairview Partners 80,000(11) * 80,000 * Robert Deutschman as Trustee of the Robert and Ellen Deutschman Family Trust 26,250(12) * 3,750 * CLB Investment 43,750(13) * 6,250 * Timothy L. Maudlin 33,334(6) * 33,334 * Steven Garshell 11,111(6) * 11,111 * Herbert I. Byer 25,000(6) * 25,000 * Mark Kroeger 95,113(14) * 14,500 * Richard C. Lockwood 150,000(15) * 50,000 * Christopher D. Miller 12,500(6) * 12,500 * Thomas L. Goila Profit Sharing Trust U/A 12/1/92 12,500(6) * 12,500 * Bruce Le Duc 66,214(16) * 9,375 *
- ------------ a R&H Investments is principally controlled by Ray and Henry Schneider. b The Shaar Fund Ltd. is principally controlled by Samuel Levinson. c Gulfstream Financial Partners, LLC is owned by Henry Fong. d Blake Capital Partners, LLC is owned by Wayne W. Mills. e Apache Bluffs Corp. is principally controlled by John Lack. 20 22 *Less than 1%. (1) Includes 100,000 shares issuable upon the exercise (at a price of $3.00 per share) of a warrant issued in connection with a private placement offering. (2) Represents shares issuable upon the conversion of the Company's Series E Convertible Preferred Stock. (3) Includes 50,000 shares issuable upon the exercise (at a price of $3.00 per share) of a warrant issued in connection with a private placement and 167,617 shares issuable upon the conversion of the Company's Series E Convertible Preferred Stock. (4) Includes 83,809 shares issuable upon the conversion of the Company's Series E Convertible Preferred Stock. (5) Includes 210,000 shares issuable upon exercise of warrants (200,000 shares at a price of $0.75 per share and 10,000 shares at a price of $1.00 per share). (6) Represents shares issuable upon exercise of warrants exercisable at a price of $1.00 per share. (7) Includes 800,000 shares issuable upon exercise of warrants at $0.625 per share. (8) Includes 500,000 shares issuable upon exercise of warrants at $1.50 per share and 50,000 shares issuable upon exercise of warrants at $1.625 per share. Also includes 100,000 shares issuable upon exercise (at a price of $1.625 per share) of warrants held by Mr. Fong's children. (9) Includes 400,000 shares issuable upon exercise of warrants at $.625 per share and 28,533 shares issuable upon exercise of warrants at a $6.50 per share. (10) Represents 200,000 shares issuable upon the exercise (at a price of $.50 per share) of a warrant issued in connection with consulting services. (11) Represents shares issuable upon exercise of warrants exercisable at a price of $.75 per share. (12) Includes 22,500 shares issuable upon exercise of warrants at $3.00 per share and 3,750 shares issuable upon exercise of warrants at $1.00 per share. (13) Includes 37,500 shares issuable upon exercise of warrants at $3.00 per share and 6,250 shares issuable upon exercise of warrants at $1.00 per share. (14) Includes 80,613 shares issuable upon exercise of warrants at $3.00 per share and 14,500 shares issuable upon exercise of warrants at $1.00 per share. (15) Includes 100,000 shares issuable upon exercise of warrants at $3.00 per share and 50,000 shares issuable upon exercise of warrants at $1.00 per share. (16) Includes 62,500 shares issuable upon exercise (at $3.00 per share) of warrants and 3,714 shares issuable upon exercise (at $6.50 per share) of warrants. 21 23 PLAN OF DISTRIBUTION Pursuant to the terms of a Stock Purchase Agreement entered into by and between PopMail and the Selling Shareholder, we are registering the shares offered by this prospectus on behalf of the Selling Shareholder. We will pay all costs and expenses in connection with such registration. Any brokerage commissions and similar selling expenses attributable to the sale of shares will be borne by the Selling Shareholder. Sales of shares may be effected by the Selling Shareholder at various times in one or more types of transactions (which may include block transactions) on the Nasdaq SmallCap Market, in negotiated transactions, through put or call options transactions relating to the shares, through short sales of shares, or a combination of such methods of sale at market prices prevailing at the time of sale or at negotiated prices. Such transactions may or may not involve brokers or dealers. The Selling Shareholder has advised us that the Selling Shareholder has not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of the shares, nor is there an underwriter or coordinating broker acting in connection with the proposed sale of shares by the Selling Shareholder. We have agreed to indemnify the Selling Shareholder and the Selling Shareholder's officers, directors, employees and agents, and each person who controls the selling shareholder, in certain circumstances against certain liabilities, including liabilities arising under the Securities Act. The Selling Shareholder has agreed to indemnify PopMail and its directors and officers in certain circumstances against certain liabilities, including liabilities arising under the Securities Act. The Selling Shareholder and any broker-dealers that act in connection with the sale of securities might be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, and any commissions received by such broker-dealers and any profit on the resale of the securities sold by them while acting as principals might be deemed to be underwriting discounts or commissions under the Securities Act. Because the Selling Shareholder may be deemed to be an "underwriter" within the meaning of Section 2(11) of the Securities Act, the selling shareholder will be subject to the prospectus delivery requirements of the Securities Act. We have informed the Selling Shareholder that the anti-manipulative provisions of Regulation M promulgated under the Securities Exchange Act of 1934, as amended, may apply to the Selling Shareholder's sales in the market. The Selling Shareholder also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided such sales meet the criteria and conform to the requirements of that Rule. MINNESOTA ANTI-TAKEOVER LAW The Company is governed by the provisions of Sections 302A.671 and 302A.673 of the Minnesota Business Corporation Act. In general, Section 302A.671 provides that the shares of a corporation acquired in a "control share acquisition" have no voting rights unless voting rights are approved in a prescribed manner. A "control share acquisition" is an acquisition, directly or indirectly, of beneficial ownership of shares that would, when added to all other shares beneficially owned by the acquiring person, entitle the acquiring person to have voting power of 20 percent or more in the election of directors. In general, Section 302A.673 prohibits a publicly-held Minnesota corporation from engaging in a "business combination" with an "interested shareholder" for a period of four years after the date of transaction in which the person became an interested shareholder, unless the business combination is approved in a prescribed manner. "Business combination" includes mergers, asset sales and other transactions resulting in a financial benefit to the interested shareholder. An "interested shareholder" is a person who is the beneficial owner, directly or indirectly, or 10 percent or more of the 22 24 corporation's voting stock or who is an affiliate or associate of the corporation and at any time within four years prior to the date in question was the beneficial owner, directly or indirectly, of 10 percent or more of the corporation's voting stock. WHERE YOU CAN FIND MORE INFORMATION Federal securities law requires us to file information with the Securities and Exchange Commission concerning its business and operations. Accordingly, we file annual, quarterly, and special reports, proxy statements and other information with the Commission. You can inspect and copy this information at the Public Reference Facility maintained by the Commission at Judiciary Plaza, 450 5th Street, N.W., Room 1024, Washington, D.C. 20549. You can also do so at the following regional offices of the Commission: (1) New York Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048. (2) Chicago Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can receive additional information about the operation of the Commission's Public Reference Facilities by calling the Commission at 1-800-SEC-0330. The Commission also maintains a web site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding companies that, like PopMail.com, file information electronically with the Commission. The Commission allows us to "incorporate by reference" information that has been filed with it, which means that we can disclose important information to you by referring you to the other information we have filed with the Commission. The information that we incorporate by reference is considered to be part of this prospectus, and related information that we file with the Commission will automatically update and supersede information we have included in this prospectus. We also incorporate by reference any future filings we make with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, until the selling shareholders sell all of their shares or until the registration rights of the selling shareholders expire. This prospectus is part of a registration statement that we filed with the Commission (Registration No. 333-32232). The following are specifically incorporated herein by reference: 1. Annual Report on Form 10-KSB for the fiscal year ended January 2, 2000; 2. Quarterly Report on Form 10-QSB filed on May 17, 2000; 3. Quarterly Report on Form 10-QSB filed on August 16, 2000; 4. Current Report on Form 8-K/A filed on April 24, 2000; Current Report on Form 8-K filed on May 8, 2000; Current Report on Form 8-K filed on June 30, 2000; and Current Report on Form 8-K filed on September 20, 2000; and 5. The description of common stock included under the caption "Securities to be Registered" in the Company's registration statement on Form 8-A, File No. 0-23243, dated October 21, 1997, including any amendments or reports filed for the purpose of updating such description. You can request a free copy of the above filings or any filings subsequently incorporated by 23 25 reference into this prospectus by writing or calling us at the following address: PopMail.com, inc. Attention: Stephen Spohn, Chief Financial Officer 1333 Corporate Drive, Suite 350 Irving, TX 75038 (972) 550-5500 You should rely only on the information incorporated by reference or provided in this prospectus or any supplement or amendment to this prospectus. We have not authorized anyone else to provide you with different information or additional information. Selling shareholders will not make an offer of our common stock in any state where the offer is not permitted. You should not assume that the information in this prospectus, or any supplement or amendment to this prospectus, is accurate at any date other than the date indicated on the cover page of such documents. NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements contained in this prospectus and in the documents incorporated by reference in this prospectus are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as "believes," "anticipates," "expects," "estimates," "may," "will" or similar terms. Forward-looking statements also include projections of financial performance, statements regarding management's plans and objectives and statements concerning any assumption relating to the foregoing. Important factors regarding PopMail.com, inc.'s business, operations and competitive environment which may cause actual results to vary materially from these forward-looking statements are discussed under the caption "Risk Factors." LEGAL MATTERS Legal matters in connection with the validity of the shares offered by this Prospectus have been passed upon for the Company by Maslon Edelman Borman & Brand, LLP, Minneapolis, Minnesota. EXPERTS On September 30, 1999, with the approval of our Board of Directors, we engaged Grant Thornton LLP as our independent public accountants. Prior to the engagement of Grant Thornton LLP, Arthur Andersen LLP had served as our principal independent public accountants. The report prepared by Arthur Andersen LLP as of January 3, 1999 and for the year then ended, contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty of audit scope or accounting principles. However, such report included an explanatory paragraph with respect to the uncertainty regarding our ability to continue as a going concern, as discussed in Note 1 to the financial statements. In connection with the audits as of January 3, 1999 and December 27, 1997 and through September 30, 1999, there had been no disagreements with Arthur Andersen LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Arthur Andersen LLP, would have caused Arthur Andersen LLP to make reference to the subject matter of the disagreements in its report. The consolidated financial statements of PopMail.com, inc. (f/k/a Cafe Odyssey, Inc.) as of January 3, 1999, for the year then ended, incorporated by reference in this prospectus and elsewhere in the registration statement of which this prospectus is a part, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in its report with respect thereto, and are incorporated 24 26 herein in reliance upon the authority of Arthur Andersen LLP as experts in giving said report. The consolidated financial statements of PopMail.com, inc. (f/k/a Cafe Odyssey, Inc.) as of January 2, 2000, for the year then ended, incorporated by reference in this prospectus and elsewhere in the registration statement of which this prospectus is a part, have been audited by Grant Thornton LLP, independent certified public accountants, as indicated in its report with respect thereto, and are incorporated herein in reliance upon the authority of Grant Thornton LLP as experts in giving such report. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Minnesota Statutes Section 302A.521 provides that a corporation shall indemnify any person made or threatened to be made a party to any proceeding by reason of the former or present official capacity of such person against judgments, penalties, fines, including, without limitation, excise taxes assessed against such person with respect to an employee benefit plan, settlements, and reasonable expenses, including attorney's fees and disbursements, incurred by such person in connection with the proceeding, if, with respect to the acts or omissions of such person complained of in the proceeding, such person has not been indemnified by another organization or employee benefit plan for the same expenses with respect to the same acts or omissions; acted in good faith; received no improper personal benefit and Section 302A.255, if applicable, has been satisfied; in the case of a criminal proceeding, had no reasonable cause to believe the conduct was unlawful; and in the case of acts or omissions by persons in their official capacity for the corporation, reasonably believed that the conduct was in the best interests of the corporation, or in the case of acts or omissions by persons in their capacity for other organizations, reasonably believed that the conduct was not opposed to the best interests of the corporation. Subdivision 4 of Section 302A.521 of the Minnesota Statutes provides that a corporation's articles of incorporation or bylaws may prohibit such indemnification or place limits upon the same. The Company's articles and bylaws do not include any such prohibition or limitation. As a result, the Company is bound by the indemnification provisions set forth in Section 302A.521 of the Minnesota Statutes. As permitted by Section 302A.251 of the Minnesota Statutes, the Articles of Incorporation of the Company provide that a director shall, to the fullest extent permitted by law, have no personal liability to the Company and its shareholders for breach of fiduciary duty as a director. To the extent that indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. 25 27 6,551,823 SHARES POPMAIL.COM, INC. COMMON STOCK ---------------------- PROSPECTUS ---------------------- September 22, 2000 26 28 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses in connection with the issuance and distribution of the securities registered hereby are set forth in the following table:
SEC registration fee $ 1,027 Nasdaq SmallCap Market additional listing fee 17,500 Legal fees and expenses 10,000 Accounting fees and expenses 5,000 Miscellaneous 3,473 -------- Total $ 32,000 ========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Company is governed by Minnesota Statutes Chapter 302A. Minnesota Statutes Section 302A.521 provides that a corporation shall indemnify any person made or threatened to be made a party to any proceeding by reason of the former or present official capacity of such person against judgments, penalties, fines, including, without limitation, excise taxes assessed against such person with respect to an employee benefit plan, settlements, and reasonable expenses, including attorney's fees and disbursements, incurred by such person in connection with the proceeding, if, with respect to the acts or omissions of such person complained of in the proceeding, such person has not been indemnified by another organization or employee benefit plan for the same expenses with respect to the same acts or omissions; acted in good faith; received no improper personal benefit and Section 302A.255, if applicable, has been satisfied; in the case of a criminal proceeding, had no reasonable cause to believe the conduct was unlawful; and in the case of acts or omissions by persons in their official capacity for the corporation, reasonably believed that the conduct was in the best interests of the corporation, or in the case of acts or omissions by persons in their capacity for other organizations, reasonably believed that the conduct was not opposed to the best interests of the corporation. Subdivision 4 of Section 302A.521 of the Minnesota Statutes provides that a company's articles of incorporation or bylaws may prohibit such indemnification or place limits upon the same. The Company's articles and bylaws do not include any such prohibition or limitation. As a result, the Company is bound by the indemnification provisions set forth in Section 302A.521 of the Minnesota Statutes. As permitted by Section 302A.251 of the Minnesota Statutes, the Articles of Incorporation of the Company provide that a director shall have no personal liability to the Company and its shareholders for breach of his fiduciary duty as a director, to the fullest extent permitted by law. The Agency Agreement contains provisions under which the Company, on the one hand, and the Placement Agent, on the other hand, have agreed to indemnify each other (including officers and directors of the Company and the Placement Agent, and any person who may be deemed to control the Company or the Placement Agent) against certain liabilities, including liabilities under the Securities Act of 1933, as amended. ITEM 16. EXHIBITS. Exhibit Description of Document -------------- -------------------------------------------------------------- 5. Opinion of Maslon Edelman Borman & Brand, LLP 10.1 Common Stock Purchase Warrant dated August 24, 2000 issued to Fairview Partners II-1 29 10.2 Stock Purchase Agreement, dated August 8, 2000, by and between NetCalendar, Inc. and PopMail.com, inc. 23.1 Consent of Arthur Andersen LLP 23.2 Consent of Grant Thornton LLP 23.3 Consent of Grant Thornton LLP 23.4 Consent of Ernst & Young LLP 23.5 Consent of Maslon Edelman Borman & Brand, LLP (included in Exhibit 5). 24. Power of Attorney (included on page II-3). ITEM 17. UNDERTAKINGS. (a) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (b) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and (4) That, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-2 30 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Irving, State of Texas, on September 20, 2000. PopMail.com, inc. By: /s/ Gary W. Schneider -------------------------------- Gary W. Schneider Chief Executive Officer POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints Stephen D. King, Gary W. Schneider, Mark D. Dacko or William M. Mower, each or any of them, such person's true and lawful attorney-in-fact and agent with full power of substitution and resubstitution for such person and in such person's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as such person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1933, this registration statement has been signed below by the following persons on September 20, 2000 in the capacities indicated. NAME TITLE /s/ Stephen D. King Chairman - ---------------------------------------- Stephen D. King /s/ Gary W. Schneider Chief Executive Officer and Director - ---------------------------------------- (Principal Executive Officer) Gary W. Schneider /s/ Jesse Berst Chief Operating Officer and - ---------------------------------------- Director Jesse Berst /s/ Stephen Spohn Chief Financial Officer - ---------------------------------------- (Principal Accounting Officer) Stephen Spohn /s/ Thomas W. Orr Director - ---------------------------------------- Thomas W. Orr /s/ Michael L. Krienik Director - ---------------------------------------- Michael L. Krienik II-3 31 - ---------------------------------------- Director Steve Mauldin II-4 EX-5 2 c57556ex5.txt OPINION OF MASLON EDELMAN BORMAN & BRAND, LLP 1 EXHIBIT 5 September 20, 2000 PopMail.com, inc. 1333 Corporate Drive, Suite 350 Irving, Texas 75038 RE: Registration Statement on Form S-3 Gentlemen: We have acted as counsel to PopMail.com, inc., a Minnesota corporation (the "Company") in connection with the preparation of a registration statement on Form S-3 (the "Registration Statement") to be filed by the Company with the Securities and Exchange Commission on September 22, 2000 relating to the registration under the Securities Act of 1933, as amended (the "1933 Act", of 6,551,823 shares of the Company's common stock, $.01 par value (the "Shares") including 2,936,853 shares of common stock issuable upon exercise of common stock purchase warrants (the "Warrant Shares"). This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the 1933 Act. In connection with the rendering of this opinion, we have examined and are familiar with originals or copies, certified or otherwise identified to our satisfaction, of (i) the Registration Statement; (ii) the Certificate of Incorporation and the Bylaws of the Company, as amended, each as currently in effect; (iii) certain resolutions adopted by the Board of Directors of the Company relating to the issuance of the Shares, the preparation and filing of the Registration Statement and certain related matters; (iv) certain agreements, certificates of public officials, certificates of other officers or representatives of the Company or others; and (v) such other documents, certificates and records as we deemed necessary or appropriate as a basis for the opinions expressed herein. In our examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies and the authenticity of the originals of such copies. As to any facts material to the opinions expressed herein which we have not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Company and others. 2 We are attorneys licensed to practice in the State of Minnesota and the opinions expressed herein are limited to the laws of the State of Minnesota and the federal securities laws of the United States. Based upon and subject to the limitations, qualifications, exceptions and assumptions set forth herein, it is our opinion that: 1. The Company is a validly existing corporation in good standing under the laws of the State of Minnesota. 2. The Shares (exclusive of the Warrant Shares) have been duly authorized and are validly issued, fully paid and nonassessable. 3. The Warrant Shares have been duly authorized and, when issued against payment of the requisite exercise price, will be validly issued, fully paid and nonassessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. We also consent to the reference to our name under the caption "Legal Matters" in the prospectus filed as part of the Registration Statement. This opinion is furnished to you in connection with the filing of the Registration Statement and, except as provided in the immediately preceding paragraph, is not to be used, circulated, quoted for any other purpose or otherwise referred to or relied upon by any other person without the express written permission of this firm. Very truly yours, /s/ MASLON EDELMAN BORMAN & BRAND, LLP EX-10.1 3 c57556ex10-1.txt COMMON STOCK PURCHASE WARRANT 1 EXHIBIT 10.1 The Warrant and the securities issuable upon exercise of this Warrant (the "Securities") have not been registered under the Securities Act of 1933 (the "Securities Act") or under any state securities or Blue Sky laws ("Blue Sky Laws"). No transfer, sale, assignment, pledge, hypothecation or other disposition of this Warrant or the Securities or any interest therein may be made except (a) pursuant to an effective registration statement under the Securities Act and any applicable Blue Sky Laws or (b) if the Company has been furnished with both an opinion of counsel for the holder, which opinion and counsel shall be reasonably satisfactory to the Company, to the effect that no registration is required because of the availability of an exemption from registration under the Securities Act and applicable Blue Sky Laws, and assurances that the transfer, sale, assignment, pledge, hypothecation or other disposition will be made only in compliance with the conditions of any such registration or exemption. WARRANT TO PURCHASE SHARES OF COMMON STOCK OF POPMAIL.COM, INC. WARRANT NO. FP- __ Irving, Texas August 24, 2000 This certifies that, for value received, FAIRVIEW PARTNERS, or its successors or assigns (the "Holder") is entitled to purchase from Popmail.com, Inc. (the "Company") Eighty Thousand (80,000) fully paid and nonassessable shares (the "Shares") of the Company's Common Stock, $.01 par value (the "Common Stock") at an exercise price of $0.75 per share (the "Exercise Price"), subject to adjustment as herein provided. This Warrant may be exercised by Holder at any time after the date hereof; provided that, Holder shall in no event have the right to exercise this Warrant or any portion thereof later than August 24, 2004. This Warrant shall replace that certain Warrant No. FP-2 issued by the Company to Fairview Partners on May 15, 2000 (The "Initial Warrant"). Effective upon the issuance hereof, the Initial Warrant shall be canceled by the Company and be of no further force or effect. This Warrant is subject to the following provisions, terms and conditions: 1. Exercise of Warrant. The rights represented by this Warrant may be exercised by the Holder, in whole or in part (but not as to a fractional share of Common Stock), by the surrender of this Warrant (properly endorsed, if required, at the Company's principal office in Irving, Texas, or such other office or agency of the Company as the Company may designate by notice in writing to the Holder at the address of such Holder appearing on the books of the Company at any time within the period above named), and upon payment to it by certified check, bank draft or cash of the purchase price for such Shares. The Company agrees that the Shares so purchased shall have and are deemed to be issued to the Holder as the record owner of such Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such Shares as aforesaid. Certificates for the Shares of Common Stock so purchased shall be delivered to the Holder within a reasonable time, not exceeding ten (10) days, after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the number of Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time. The Company may require that any such new Warrant or any certificate for Shares purchased upon the exercise hereof bear a legend substantially similar to that which is contained on the face of this Warrant. 2. Transferability of this Warrant. This Warrant is issued upon the following terms, to which Holder consents and agrees: 2 a. Until this Warrant is transferred on the books of the Company, the Company will treat the Holder of this Warrant registered as such on the books of the Company as the absolute owner hereof for all purposes without being affected by any notice to the contrary. b. This Warrant may not be exercised, and this Warrant and the Shares underlying this Warrant shall not be transferable, except in compliance with all applicable state and federal securities laws, regulations and orders, and with all other applicable laws, regulations and orders. c. The Warrant may not be transferred, and the Shares underlying this Warrant may not be transferred, without the Holder obtaining an opinion of counsel satisfactory in form and substance to the Company's counsel stating that the proposed transaction will not result in a prohibited transaction under the Securities Act of 1933, as amended ("Securities Act"), and applicable Blue Sky laws. By accepting this Warrant, the Holder agrees to act in accordance with any conditions reasonably imposed on such transfer by such opinion of counsel. d. Neither this issuance of this Warrant nor the issuance of the Shares underlying this Warrant have been registered under the Securities Act. 3. Certain Covenants of the Company. The Company covenants and agrees that all Shares which may be issued upon the exercise of the rights represented by this Warrant, upon issuance and full payment for the Shares so purchased, will be duly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue hereof, except those that may be created by or imposed upon the Holder or its property, and without limiting the generality of the foregoing, the Company covenants and agrees that it will from time to time take all such actions as may be requisite to assure that the par value per share of the Common Stock is at all times equal to or less than the effective purchase price per share of the Common Stock issuable pursuant to this Warrant. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved free of preemptive or other rights for the exclusive purpose of issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. 4. Adjustment of Exercise Price and Number of Shares. The Exercise Price and number of Shares are subject to the following adjustments: a. Adjustment of Exercise Price for Stock Dividend, Stock Split or Stock Combination. In the event that (i) any dividends on any class of stock of the Company payable in Common Stock or securities convertible into or exercisable for Common Stock ("Common Stock Equivalents") shall be paid by the Company, (ii) the Company shall subdivide its then outstanding shares of Common Stock into a greater number of shares, or (iii) the Company shall combine its outstanding shares of Common Stock, by reclassification or otherwise, then, in any such event, the Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) determined by dividing (a) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the then existing Exercise Price, by (b) the total number of shares of Common Stock outstanding immediately after such event, and the resulting quotient shall be the adjusted Exercise Price per share. No adjustment of the Exercise Price shall be made if the amount of such adjustment shall be less than $.05 per share, but in such case any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustment or adjustments so carried forward, shall amount to not less than $.05 per share. 3 b. Adjustment of Number of Shares Purchasable on Exercise of Warrants. Upon each adjustment of the Exercise Price pursuant to this Section, the Holder shall thereafter (until another such adjustment) be entitled to purchase at the adjusted Exercise Price the number of shares, calculated to the nearest full share, obtained by multiplying the number of shares specified in such Warrant (as adjusted as a result of all adjustments in the Exercise Price in effect prior to such adjustment) by the Exercise Price in effect prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price. c. Notice as to Adjustment. Upon any adjustment of the Exercise Price and any increase or decrease in the number of shares of Common Stock purchasable upon the exercise of the Warrant, then, and in each such case, the Company within thirty (30) days thereafter shall give written notice thereof, by first class mail, postage prepaid, addressed to each Holder as shown on the books of the Company, which notice shall state the adjusted Exercise Price and the increased or decreased number of shares purchasable upon the exercise of the Warrants, and shall set forth in reasonable detail the method of calculation and the facts upon which such calculation is based. d. Effect of Reorganization, Reclassification, Merger, etc. If at any time while this Warrant is outstanding there should be (i) any capital reorganization of the capital stock of the Company (other than the issuance of any shares of Common Stock in subdivision of outstanding shares of Common Stock by reclassification or otherwise and other than a combination of shares provided for in Section 4(a) hereof), (ii) any consolidation or merger of the Company with another corporation, or any sale, conveyance, lease or other transfer by the Company of all or substantially all of its property to any other corporation, which is effected in such a manner that the holders of Common Stock shall be entitled to receive cash, stock, securities, or assets with respect to or in exchange for Common Stock, or (iii) any dividend or any other distribution upon any class of stock of the Company payable in stock of the Company of a different class, other securities of the Company, or other property of the Company (other than cash), then, as a part of such transaction, lawful provision shall be made so that Holder shall have the right thereafter to receive, upon the exercise hereof, the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from such consolidation or merger, or of the corporation to which the property of the Company has been sold, conveyed, leased or otherwise transferred, as the case may be, which the Holder would have been entitled to receive upon such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer, if this Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, consolidation, merger, sale, conveyance, lease or other transfer. In any such case, appropriate adjustments (as determined by the Board of Directors of the Company) shall be made in the application of the provisions set forth in this Warrant (including the adjustment of the Exercise Price and the number of Shares issuable upon the exercise of the Warrant) to the end that the provisions set forth herein shall thereafter be applicable, as near as reasonably may be, in relation to any shares or other property thereafter deliverable upon the exercise of the Warrant as if the Warrant had been exercised immediately prior to such capital reorganization, reclassification of capital stock, such consolidation, merger, sale, conveyance, lease or other transfer and the Holder had carried out the terms of the exchange as provided for by such capital reorganization, consolidation or merger. The Company shall not effect any such capital reorganization, consolidation, merger or transfer unless, upon or prior to the consummation thereof, the successor corporation or the corporation to which the property of the Company has been sold, conveyed, leased or otherwise transferred shall assume by written instrument the obligation to deliver to the Holder such shares of stock, securities, cash or property as in accordance with the foregoing provisions such Holder shall be entitled to purchase. 4 5. No Rights as Stockholders. This Warrant shall not entitle the Holder as such to any voting rights or other rights as a stockholder of the Company. 6. Registration Rights. a. Piggyback Registration Rights. Provided that the Shares are not then included in a current registration statement of the Company, if the Company, at any time before the fifth anniversary of the issuance of this Warrant, shall file a registration statement with the Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as amended, for the purpose of registering shares of Common Stock for sale to the public, the Company shall give to the Holder at least twenty (20) days advance written notice of its intention to file such registration statement and Holder shall have the right to have included in such registration statement such number of the Shares as it shall designate to the Company within ten (10) days after the date of such notice, provided that the number of Shares to be included in such registration statement, when added to all the other shares to be included therein, does not exceed the number of shares which the Company and its underwriters, if any, reasonably fix for inclusion. If the number of Shares to be included in such registration statement is less than the total number of Shares which the Holder has requested to be included, then the Holder and other holders of shares of Common Stock or other securities of the Company entitled to include shares of Common Stock in such registration shall participate in the underwriting pro rata based upon the total number of shares of Common Stock requested to be registered by all of such holders. The Holder shall furnish the Company with such information as may be required in connection with such registration statement and will cooperate to cause such registration to become effective at the earliest practicable time. If the shares to which such registration relates are to be sold in an underwritten offering, the Holder, as a condition to the inclusion of the shares in the registration statement, shall agree that its Shares will be sold only as a part of such underwritten offering and at the price and upon the terms fixed by the Company and its underwriters, subject to the right of the Holder to withdraw the Shares therefrom. b. Demand Registration Rights. On a one-time basis only, during the three year period commencing May 15, 2002, upon request by the Holder or Holders of a majority in interest of this Warrant, and of any Shares, the Company will promptly take all necessary steps to register or qualify, under the 1933 Act and the securities laws of such states as the holders may reasonably request, such number of Shares issued and to be issued upon conversion of the Warrants and shares of common stock of the Company owned at such time by such holders pursuant to the conversion of that certain $2,000,000 Senior Convertible Note issued as of the date of this Warrant requested by such holders in their request to the Company. The Company shall keep effective and maintain any registration, qualification, notification, or approval specified in this section for such period as may be reasonably necessary for such Holder or Holders of this Warrant and/or such Shares to dispose thereof and from time to time shall amend or supplement the prospectus used in connection therewith to the extent necessary in order to comply with applicable law. 7. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Minnesota. 8. Amendments and Waivers. The provisions of this Warrant may not be amended, modified or supplemented, and waiver or consents to departures from the provisions hereof may not be given, unless the Company agrees in writing and has obtained the written consent of the Holder. 9. Notices. All notices or communications hereunder, except as herein otherwise specifically provided, shall be in writing and if sent to the Holder shall be mailed, delivered, or telefaxed and confirmed to the Holder at his or her address set forth on the records of the Company; or if sent to 5 the Company shall be mailed, delivered, or telefaxed and confirmed to PopMail.com, Inc., 1333 Corporate Drive, Suite 350, Irving, Texas 75038 or to such other address as the Company or the Holder shall notify the other as provided in this Section. [The remainder of this page has been intentionally left blank.] 6 IN WITNESS WHEREOF, PopMail.com, Inc. has caused this Warrant to be signed by its duly authorized officer in the date set forth above. POPMAIL.COM, INC. By_____________________________________ Its____________________________________ 7 SUBSCRIPTION FORM To be signed only upon exercise of Warrant. The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, ____________________ of the shares of Common Stock of PopMail.com, Inc. (the "Shares") to which such Warrant relates and herewith makes payment of $_____________ therefor in cash, certified check or bank draft and requests that a certificate evidencing the Shares be delivered to, _______________________________, the address for whom is set forth below the signature of the undersigned: Dated: ____________________ _______________________________________ (Signature) _______________________________________ _______________________________________ (Address) [ ] [ ] [ ] ASSIGNMENT FORM To be signed only upon authorized transfer of Warrant. FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto _____________________________________ the right to purchase shares of Common Stock of PopMail.com, Inc. to which the within Warrant relates and appoints ____________________ attorney, to transfer said right on the books of _________________ with full power of substitution in the premises. Dated: ____________________ _______________________________________ (Signature) _______________________________________ _______________________________________ (Address) EX-10.2 4 c57556ex10-2.txt STOCK PURCHASE AGREEMENT, DATED 8/8/00 1 EXHIBIT 10.2 STOCK PURCHASE AGREEMENT BY AND BETWEEN NETCALENDAR, INC. AND POPMAIL.COM, INC. ------------------------------ AUGUST 8, 2000 ------------------------------ 2 STOCK PURCHASE AGREEMENT This Stock Purchase Agreement (the "Agreement") is entered into as of August 8, 2000 (the "Effective Date") by and between NetCalendar, Inc., a corporation organized under the laws of the State of Delaware (hereinafter "NetCalendar"), and PopMail.com, inc., a Minnesota corporation ("PopMail"). W I T N E S S E T H: WHEREAS, PopMail desires to purchase 27,624 shares of NetCalendar common stock, par value $0.01 per share (the "Shares") and NetCalendar is willing to sell the Shares to PopMail pursuant to the terms, and subject to the conditions set forth hereinafter. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: A G R E E M E N T: ARTICLE 1 PURCHASE AND SALE OF STOCK 1.1 Purchase and Sale. Pursuant to the terms, and subject to the conditions set forth herein, NetCalendar shall issue and sell the Shares to PopMail, and PopMail shall purchase the Shares from NetCalendar for the price of $1,000,000 (the "Purchase Price") payable in the manner specified in Section 1.2. 1.2 Payment of the Purchase Price. The Purchase Price shall be paid in shares of PopMail common stock, $.01 par value, ("Purchase Price Shares") delivered to NetCalendar at the closing (the "Closing") of the purchase transaction contemplated herein selected by mutual agreement of the parties, but not later than August 26, 2000 (the "Initial Closing Date"). For purposes of this Section 1.2, the Purchase Price Shares shall be valued at the average closing share price of PopMail common stock for the ten consecutive trading days preceding the second business day prior to the Initial Closing Date (the "Initial Closing Share Price"); provided, however, that PopMail shall not be obligated to issue shares of its common stock at an effective per share price of less than $.50. If the average closing share price of PopMail common stock for the ten consecutive trading days preceding the second business day prior to the Initial Closing Date is less than $.50, PopMail shall offer to NetCalendar Purchase Price Shares at an effective per share price of $.50 and NetCalendar shall have the option to accept such offer (in which event the Initial Closing Share Price shall be $.50) or to reject such offer and terminate this Agreement pursuant to Section 6.1. 3 1.3 The Closing. The Closing shall take place at the offices of Maslon Edelman Borman & Brand, LLP, 3300 Wells Fargo Center, Minneapolis, MN 55402. At the Closing, NetCalendar shall deliver to PopMail a certificate representing the Shares in a form reasonably satisfactory to PopMail and its counsel and duly executed by authorized officers of NetCalendar. At the Closing, PopMail shall deliver to NetCalendar certificates representing the Purchase Price Shares in a form reasonably satisfactory to NetCalendar and its counsel and duly executed by authorized officers of PopMail. 1.4 Supplemental Closing. During the seven (7) business day period commencing on the 435th day following the Initial Closing Date, NetCalendar shall make the following determinations: (a) the average per share selling price (the "Average Selling Price") of all Purchase Price Shares, if any, sold by NetCalendar during the 15-month period beginning upon the Initial Closing Date pursuant to the provisions of Section 5.2 hereof, and (b) the number of Purchase Price Shares, if any, which NetCalendar offered for sale at any time pursuant to the provisions of Section 5.2 hereof, but was not able to sell due to lack of a buyer during the applicable period (the "Unsold Purchase Price Shares"). NetCalendar shall provide to PopMail written notice of each such determination in reasonable detail, which notice shall include a certificate containing any Unsold Purchase Price Shares (the "Lookback Notice"). If the Average Selling Price of Purchase Price Shares sold by NetCalendar during such period is less than the Initial Closing Share Price of such shares, NetCalendar shall have the right to receive additional cash or, at PopMail's option, shares of PopMail common stock ("Supplemental Purchase Price Shares") equal in value to the amount by which the Initial Closing Share Price exceeds the Average Selling Price, multiplied by the number of Purchase Price Shares sold by NetCalendar during such 15-month period (such amount constituting the "Supplemental Purchase Price"). In addition to the Supplemental Purchase Price, to the extent NetCalendar has returned any Unsold Purchase Price Shares with the Lookback Notice, NetCalendar shall have the right to receive, in exchange therefor, such number of NetCalendar Shares as provided below. On the 10th business day following the date of the Lookback Notice delivered in accordance herewith(the "Supplemental Closing Date"), PopMail shall deliver to NetCalendar (a) either cash or one or more certificates executed by duly authorized officers of PopMail representing Supplemental Purchase Price Shares equal in value to the Supplemental Purchase Price, and (b) such number of Shares as shall have been purchased by PopMail with the Unsold Purchase Price Shares as of the Initial Closing Date. For purposes of this Section 1.4, the value of the Supplemental Purchase Price Shares shall be equal to the average closing share price of PopMail common stock for the ten consecutive trading days preceding the second business day prior to the Supplemental Closing Date. In the event that the Supplemental Registration Statement is not declared effective by the Securities and Exchange Commission (the "SEC") on or before the Supplemental Registration Due Date, or is not maintained effective throughout the Supplemental Registration Period, pursuant to the provisions of Section 5.3 hereof, NetCalendar 4 shall be entitled to return to PopMail certificates representing such number of Supplemental Purchase Price Shares as shall then be held by NetCalendar (such shares representing the "Unrealized Supplemental Purchase Price") and PopMail shall, within five (5) days following receipt of same, either pay to NetCalendar the Unrealized Supplemental Purchase Price in cash or return to NetCalendar that number of Shares as shall have been equivalent in value to the Unrealized Supplemental Purchase Price as of the Initial Closing Date. ARTICLE 2 REPRESENTATIONS AND WARRANTIES 2.1 Representations and Warranties of NetCalendar. NetCalendar hereby represents and warrants to PopMail as of the date hereof as follows: (a) Organization and Qualification. NetCalendar is a corporation, validly existing and in good standing under the laws of the State of Delaware, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. NetCalendar is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, (x) adversely affect the legality, validity or enforceability of the Shares or this Agreement, (y) have a material adverse effect on the results of operations, assets, or financial condition of NetCalendar, or (z) adversely impair NetCalendar's ability to perform fully on a timely basis its material obligations under this Agreement (a "Material Adverse Effect"). (b) Authorization; Enforcement. NetCalendar has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and to otherwise carry out its obligations thereunder. The execution and delivery of this Agreement by NetCalendar and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of NetCalendar. This Agreement has been duly executed by NetCalendar and when delivered in accordance with the terms hereof shall constitute the legal, valid and binding obligation of NetCalendar enforceable against NetCalendar in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application. NetCalendar is not in violation of any provision of its certificate of incorporation, bylaws or other charter documents. (c) Capitalization. The authorized, issued and outstanding capital stock of NetCalendar is set forth in Schedule 2.1(c). The only shares of currently issued and outstanding NetCalendar capital stock (including shares of common stock) 5 entitled to preemptive or similar rights are shares of Series A, B and C Convertible Preferred Stock. Except as disclosed in Schedule 2.1(c), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or, securities, rights or obligations convertible into or exchangeable for, or giving any person any right to subscribe for or acquire any shares of common stock, or contracts, commitments, understandings, or arrangements by which NetCalendar is or may become bound to issue additional shares of common stock, or securities or rights convertible or exchangeable into shares of common stock. (d) Issuance of the Shares. The Shares are duly authorized, and, when issued against payment as contemplated by this Agreement, shall be validly issued. (e) No Conflicts. The execution, delivery and performance of this Agreement by NetCalendar and the consummation by NetCalendar of the transactions contemplated hereby do not and will not (i) conflict with or violate any provision of its certificate of incorporation, bylaws or other charter documents (each as amended through the date hereof), (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument (evidencing a NetCalendar debt or otherwise) to which NetCalendar is a party or by which any property or asset of NetCalendar is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which NetCalendar is subject (including federal and state securities laws and regulations), or by which any property or asset of NetCalendar is bound or affected, except in the case of each of clauses (ii) and (iii), as could not, individually or in the aggregate, have or result in a Material Adverse Effect. The business of NetCalendar is not being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations which, individually or in the aggregate, could not have or result in a Material Adverse Effect. (f) Consents and Approvals. NetCalendar is not required to obtain any consent, waiver, authorization or order of, or make any filing or registration with, any court or other federal, state, local, foreign or other governmental authority or other Person (defined below) in connection with the execution, delivery and performance by NetCalendar of this Agreement other than where the failure to obtain such consent, waiver, authorization or order, or to give or make such notice or filing, could not have or result in, individually or in the aggregate, a Material Adverse Effect. NetCalendar shall deliver to PopMail the Shares in the manner contemplated hereby free and clear of all liens and encumbrances of any nature whatsoever. A "Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 6 (g) Litigation; Proceedings. Except as specifically disclosed in Schedule 2.1(g), there is no action, suit, notice of violation, proceeding or investigation pending or, to the knowledge of NetCalendar, threatened against or affecting NetCalendar or any of its properties before or by any court, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or the Shares or (ii) could, individually or in the aggregate, have or result in a Material Adverse Effect. (h) No Default or Violation. NetCalendar (i) is not in default under or in violation of (and has not received notice of a claim that it is in default under or that it is in violation of) any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound, (ii) is not in violation of any order of any court, arbitrator or governmental body, or (iii) is not in violation of any statute, rule or regulation of any governmental authority, except as could not individually or in the aggregate, have or result in, a Material Adverse Effect. (i) Private Offering. Assuming the accuracy of the representations and warranties of PopMail set forth in Sections 2.2(j), (k) and (l), the offer, issuance and sale of the Shares to PopMail as contemplated hereby are exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). (j) Investment Intent. NetCalendar is acquiring the Purchase Price Shares, and may acquire the Supplemental Purchase Price Shares, for NetCalendar's own account for investment purposes only and not with a view to or for distributing or reselling such securities except pursuant to a registration statement then effective under the Securities Act. (k) Access to Information. NetCalendar acknowledges that NetCalendar has been afforded (i) the opportunity to ask such questions as NetCalendar has deemed necessary of, and to receive answers from, representatives of PopMail concerning the merits and risks of investing in the Purchase Price Shares and the Supplemental Purchase Price Shares; (ii) access to information about PopMail and PopMail's financial condition, results of operations, business, properties, management and prospects sufficient to enable NetCalendar to evaluate NetCalendar's investment; and (iii) the opportunity to obtain such additional information which PopMail possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision. (l) Reliance. NetCalendar understands and acknowledges that (i) the Purchase Price Shares and the Supplemental Purchase Price Shares are being issued to NetCalendar without registration under the Securities Act in a private placement that is exempt from the registration provisions of the Securities Act and (ii) the availability of such exemption, depends in part on, and PopMail will rely upon the accuracy and truthfulness of, the 7 foregoing representations and NetCalendar hereby consents to such reliance. 2.2 Representations and Warranties of PopMail. PopMail hereby represents and warrants to NetCalendar as of the date hereof as follows: (a) Organization and Qualification. PopMail is a corporation, validly existing and in good standing under the laws of the State of Minnesota, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. PopMail is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, (x) adversely affect the legality, validity or enforceability of the Purchase Price Shares, the Supplemental Purchase Price Shares or this Agreement, (y) have a material adverse effect on the results of operations, assets, or financial condition of PopMail, or (z) adversely impair PopMail's ability to perform fully on a timely basis its material obligations under this Agreement (a "Material Adverse Effect"). (b) Authorization; Enforcement. PopMail has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and to otherwise carry out its obligations thereunder. The execution and delivery of this Agreement by PopMail and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of PopMail. This Agreement has been duly executed by PopMail and when delivered in accordance with the terms hereof shall constitute the legal, valid and binding obligation of PopMail enforceable against PopMail in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application. PopMail is not in violation of any provision of its articles of incorporation, bylaws or other charter documents. (c) Capitalization. The authorized, issued and outstanding capital stock of PopMail is set forth in Schedule 2.2(c). Except as disclosed in Schedule 2.2(c), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or, securities, rights or obligations convertible into or exchangeable for, or giving any person any right to subscribe for or acquire any shares of common stock, or contracts, commitments, understandings, or arrangements by which PopMail is or may become bound to issue additional shares of common stock, or securities or rights convertible or exchangeable into shares of common stock. 8 (d) Issuance of the Purchase Price Shares and the Supplemental Purchase Price Shares. The Purchase Price Shares and the Supplemental Purchase Price Shares are duly authorized, and, when issued against payment as contemplated by this Agreement, shall be validly issued. (e) No Conflicts. The execution, delivery and performance of this Agreement by PopMail and the consummation by PopMail of the transactions contemplated hereby do not and will not (i) conflict with or violate any provision of its articles of incorporation, bylaws or other charter documents (each as amended through the date hereof), (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument (evidencing a PopMail debt or otherwise) to which PopMail is a party or by which any property or asset of PopMail is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which PopMail is subject (including federal and state securities laws and regulations), or by which any property or asset of PopMail is bound or affected, except in the case of each of clauses (ii) and (iii), as could not, individually or in the aggregate, have or result in a Material Adverse Effect. The business of PopMail is not being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations which, individually or in the aggregate, could not have or result in a Material Adverse Effect. (f) Consents and Approvals. PopMail is not required to obtain any consent, waiver, authorization or order of, or make any filing or registration with, any court or other federal, state, local, foreign or other governmental authority or other Person (defined below) in connection with the execution, delivery and performance by PopMail of this Agreement other than where the failure to obtain such consent, waiver, authorization or order, or to give or make such notice or filing, could not have or result in, individually or in the aggregate, a Material Adverse Effect. PopMail shall deliver to PopMail the Purchase Price Shares and, if applicable, the Supplemental Purchase Price Shares in the manner contemplated hereby free and clear of all liens and encumbrances of any nature whatsoever. A "Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. (g) Litigation; Proceedings. Except as specifically disclosed in Schedule 2.2(g), there is no action, suit, notice of violation, proceeding or investigation pending or, to the knowledge of PopMail, threatened against or affecting PopMail or any of its properties before or by any court, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement 9 or the Purchase Price Shares or the Supplemental Purchase Price Shares or (ii) could, individually or in the aggregate, have or result in a Material Adverse Effect. (h) No Default or Violation. PopMail (i) is not in default under or in violation of (and has not received notice of a claim that it is in default under or that it is in violation of) any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound, (ii) is not in violation of any order of any court, arbitrator or governmental body, or (iii) is not in violation of any statute, rule or regulation of any governmental authority, except as could not individually or in the aggregate, have or result in, a Material Adverse Effect. (i) Private Offering. Assuming the accuracy of the representations and warranties of NetCalendar set forth in Sections 2.1(j), (k) and (l), the offer, issuance and sale of the Purchase Price Shares and the Supplemental Purchase Price Shares to NetCalendar as contemplated hereby are exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). (j) Investment Intent. PopMail is acquiring the Shares for PopMail's own account for investment purposes only and not with a view to or for distributing or reselling such securities. (k) Access to Information. PopMail acknowledges that PopMail has been afforded (i) the opportunity to ask such questions as PopMail has deemed necessary of, and to receive answers from, representatives of NetCalendar concerning the merits and risks of investing in the Shares; (ii) access to information about NetCalendar and NetCalendar's financial condition, results of operations, business, properties, management and prospects sufficient to enable PopMail to evaluate PopMail's investment; and (iii) the opportunity to obtain such additional information which PopMail possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision. (l) Reliance. PopMail understands and acknowledges that (i) the Shares are being issued to PopMail without registration under the Securities Act in a private placement that is exempt from the registration provisions of the Securities Act and (ii) the availability of such exemption, depends in part on, and NetCalendar will rely upon the accuracy and truthfulness of, the foregoing representations and PopMail hereby consents to such reliance. ARTICLE 3 INDEMNIFICATION 3.1 Survival of Representations and Warranties. Notwithstanding any investigation made by or on behalf of any of the parties hereto or the results of any such investigation and notwithstanding the participation of such party in the Closing, 10 the representations and warranties contained in Article 2 hereof shall survive the Closing, provided that claims based upon any alleged breach of a representation or warranty contained in Sections 2.1(g) or 2.2(g) may be brought at any time on or prior to the expiration of any relevant statute of limitations governing the underlying claim. 3.2 Indemnification of PopMail. NetCalendar agrees to indemnify and hold harmless PopMail, and each of PopMail's subsidiaries, and their respective officers, directors, employees, agents, affiliates and shareholders against and in respect of: (i) any and all losses, damages or deficiencies (whether as a result of a direct claim by PopMail against NetCalendar, a third party claim against PopMail or otherwise) resulting to PopMail from any and all breaches of representations, warranties, covenants or other terms of this Agreement by NetCalendar made or contained in this Agreement or in any certification, list, document, exhibit or schedule delivered to PopMail under or in connection with this Agreement or the transactions contemplated herein; and (ii) all costs and expenses incident to any and all actions, suits, proceedings, claims, demands, assessments, settlements or judgments in respect of the foregoing, regardless of the merit thereof, including PopMail's reasonable legal and accounting fees and expenses (whether incident to the foregoing or to PopMail's enforcement of said rights of defense and indemnity) (items (i) and(ii) above shall be referred to herein collectively as "PopMail's Damages"). 3.3 Procedure for Indemnification of PopMail. If any action, suit or proceeding shall be commenced against PopMail or any claim, demand or assessment be asserted against PopMail in respect of which PopMail proposes to demand indemnification, PopMail shall notify NetCalendar to that effect with reasonable promptness. PopMail will have the right to cause NetCalendar to assume the entire control of the defense, compromise or settlement thereof, including, at the expense of NetCalendar, employment of counsel satisfactory to PopMail and, in connection therewith, PopMail shall cooperate fully to make available to NetCalendar all pertinent information under its control. With respect to any action, suit, proceeding claim, demand or assessment made against PopMail as to which PopMail does not cause NetCalendar to assume control of the defense thereof, NetCalendar shall thereafter reimburse PopMail for all of PopMail's Damages, as and when they are incurred. 3.4 Indemnification of NetCalendar. PopMail agrees to indemnify and hold harmless NetCalendar, and each of NetCalendar's subsidiaries, and their respective officers, directors, employees, agents, affiliates and stockholders against and in respect of: (i) any and all losses, damages or deficiencies (whether as a result of a direct claim by NetCalendar against PopMail, a third party claim against NetCalendar or otherwise) resulting to NetCalendar from any and all breaches of representations, warranties, covenants or other terms of this Agreement by PopMail made or contained in this Agreement or in any certification, list, document, exhibit or schedule delivered to NetCalendar under or in connection with 11 this Agreement or the transactions contemplated herein; and (ii) all costs and expenses incident to any and all actions, suits, proceedings, claims, demands, assessments, settlements or judgments in respect of the foregoing, regardless of the merit thereof, including NetCalendar's reasonable legal and accounting fees and expenses (whether incident to the foregoing or to NetCalendar's enforcement of said rights of defense and indemnity) (items (i) and(ii) above shall be referred to herein collectively as "NetCalendar's Damages"). 3.5 Procedure for Indemnification of NetCalendar. If any action, suit or proceeding shall be commenced against NetCalendar or any claim, demand or assessment be asserted against NetCalendar in respect of which NetCalendar proposes to demand indemnification, NetCalendar shall notify PopMail to that effect with reasonable promptness. NetCalendar will have the right to cause PopMail to assume the entire control of the defense, compromise or settlement thereof, including, at the expense of PopMail, employment of counsel satisfactory to NetCalendar and, in connection therewith, NetCalendar shall cooperate fully to make available to PopMail all pertinent information under its control. With respect to any action, suit, proceeding claim, demand or assessment made against NetCalendar as to which NetCalendar does not cause PopMail to assume control of the defense thereof, PopMail shall thereafter reimburse NetCalendar for all of NetCalendar's Damages, as and when they are incurred. ARTICLE 4 OTHER AGREEMENTS OF THE PARTIES 4.1 Transfer Restrictions. (a) The Shares, Purchase Price Shares, the Supplemental Purchase Price Shares and the Additional Shares (defined in Section 3.3 below) may only be disposed of pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption from or in a transaction not subject to the registration requirements thereof. In connection with any transfer of such securities other than pursuant to an effective registration statement, the issuer may require the transferor thereof to provide to the issuer an opinion of counsel experienced in the area of federal securities laws selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the issuer and its counsel, to the effect that such transfer does not require registration under the Securities Act of 1933, as amended. (b) Each of NetCalendar and PopMail agree to the imprinting, so long as is required by this Section 3.1(b), of either of the following legends on certificates and other documents representing the Shares, Purchase Price Shares, Supplemental Purchase Price Shares and Additional Shares: 12 Legend (1): THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. Legend (2): THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE TRANSFERRED ONLY IF REGISTERED UNDER SUCH APPLICABLE ACTS OR UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION. 4.2 The legends set forth above shall be removed from such certificates and other documents and the issuer shall issue a certificate without any legend (upon surrender of the legended certificates or other documents duly endorsed) to each holder of such certificates and other documents upon which it is stamped if (i) such securities are registered for resale under the Securities Act or (ii) such legend is not required pursuant to Rule 144(k) promulgated under the Securities Act. Each of NetCalendar and PopMail agrees that it will provide the other, upon request, with certificates representing the issuer's securities issued pursuant to this Agreement free from such legend at such time as such legend is no longer required in accordance with this Section. 4.3 Appointment to Board of Advisors; Appointment to Board of Directors. (a) Promptly upon the Closing of the purchase of the Shares contemplated by this Agreement, NetCalendar shall appoint one person designated by PopMail to the NetCalendar Board of Advisors and permit such person (or any replacement designated by PopMail) to fully participate in the duties and other activities of the Board of Advisors, and shall reimburse such person for any and all expense reasonably incurred in connection therewith, so long as PopMail owns any of the Shares. PopMail hereby designates as PopMail's first appointee to serve on the NetCalendar Board of Advisors. (b) In the event that PopMail fully exercises the Option pursuant to Section 4.4 below as to all 27,624 Additional Shares, and PopMail causes the Initial Registration Statement defined in Section 5.1 to be declared effective on or before the Initial Registration Due Date, NetCalendar shall cause PopMail's 13 designee (or any replacement designee subsequently identified by PopMail) to be appointed to the NetCalendar Board of Directors. So long as (i) the Initial Registration Statement is maintained effective throughout the Registration Period and any Supplemental Registration Statement is maintained effective throughout the Supplemental Registration Period, and (ii) PopMail owns in excess of eight percent (8%) of NetCalendar's issued and outstanding shares of capital stock, on a fully diluted, as-converted basis, PopMail's designee shall continue to serve on the NetCalendar Board of Directors. 4.4 Option to Purchase Additional Shares. NetCalendar hereby grants to PopMail an option (the "Option") to purchase up to 27,624 additional shares of NetCalendar common stock (the "Additional Shares") at a per share price of $36.2004 (the "Exercise Price"), payable in cash. To exercise the Option, PopMail must deliver written notice thereof (the "Option Notice") to NetCalendar on or before the 30th day following the Initial Closing Date. In the event that PopMail elects to exercise the Option, the parties shall select a mutually agreeable closing date, time and location within thirty (30) days of the Option Notice, at which PopMail will deliver to NetCalendar the aggregate Exercise Price and NetCalendar shall deliver to PopMail certificates representing the Additional Shares. 4.5 Notice of Breaches. Each of NetCalendar and PopMail shall give prompt written notice to the other of any breach of any representation, warranty or other agreement contained in this Agreement, as well as any events or occurrences arising after the date hereof and prior to the Initial Closing Date which would reasonably be likely to cause any representation or warranty or other agreement of such party, as the case may be, contained herein to be materially incorrect or breached as the date thereof. However, no disclosure by either party pursuant to this Section 4.5 shall be deemed to cure any breach of any representation, warranty or other agreement contained herein ARTICLE 5 REGISTRATION OF POPMAIL COMMON STOCK 5.1 Filing of Initial Registration Statement. On or before the 30th day following the Initial Closing Date, PopMail shall prepare and file a registration statement on Form S-3 (or any successor form thereto) (the "Initial Registration Statement") covering the resale of the Purchase Price Shares issued pursuant to Section 1.2 hereof with the SEC pursuant to Rule 415 of the Securities Act. PopMail will use its reasonable best efforts to have the Initial Registration Statement declared effective by the SEC on or before the 75th day following the Initial Closing Date (the Initial Registration Due Date"). PopMail shall maintain the effectiveness of the Initial Registration Statement at all times until the second anniversary of the Initial Closing Date (the "Registration Period"). 5.2 Resale of Purchase Price Shares. NetCalendar may sell pursuant to the Initial Registration Statement up to 25 percent of the Purchase Price Shares during each of four successive 90 14 day periods commencing on the date the Initial Registration Statement is declared effective by the SEC (the "Effective Date"). NetCalendar may sell any remaining Purchase Price Shares pursuant to the Initial Registration Statement during the period commencing on the 361 day following the Effective Date and ending upon the expiration of the Registration Period and, thereafter, pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended. 5.3 Supplemental Registration Statement. In the event that PopMail issues Supplemental Purchase Price Shares pursuant to the provisions of Section 1.4 hereof, PopMail shall prepare and file a registration statement on Form S-3 (or any successor form thereto) (the "Supplemental Registration Statement") covering the resale of such securities with the SEC pursuant to Rule 415 of the Securities Act. PopMail will use its reasonable best efforts to have the Supplemental Registration Statement declared effective by the SEC on or before the 75th day following the Supplemental Closing Date (the "Supplemental Registration Due Date"). PopMail shall maintain the effectiveness of the Supplemental Registration Statement at all times until the first anniversary of the Supplemental Closing Date (the "Supplemental Registration Period"). 5.4 Filing of Amendments. PopMail shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Initial Registration Statement (and, if applicable, the Supplemental Registration Statement) and the prospectus(es) used in connection therewith as may be necessary to keep such Registration Statements effective at all times through the Registration Period and the Supplemental Registration Period. 5.5 Qualification Under Blue Sky Laws. PopMail shall use its reasonable best efforts to (i) register and qualify the securities covered by the Initial Registration Statement and Supplemental Registration Statement (collectively, the "PopMail Shares") under such other securities or blue sky laws of such jurisdictions as NetCalendar may reasonably request, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times through the Registration Period and, if applicable, the Supplemental Registration Period and (iv) take all other actions reasonably necessary or advisable to qualify the PopMail Shares for sale in such jurisdictions; provided, however, that PopMail shall not be required in connection therewith or as a condition thereto to (I) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 5.5, (II) subject itself to general taxation in any such jurisdiction, (III) file a general consent to service of process in any such jurisdiction, except as may be required for such registration and qualification or any exemption therefrom, or (IV) make any change in its charter or bylaws. 15 5.6 Registration Expenses. All expenses (other than fees and expenses of investment bankers retained by NetCalendar, if any, and brokerage commissions) incurred in connection with registrations, filings or qualifications pursuant to this Article 5, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees and the fees and disbursements of counsel for PopMail, shall be borne by PopMail; provided, however, that NetCalendar shall bear the fees and out-of-pocket expenses of its own legal counsel and any accountants and agents engaged by NetCalendar. 5.7 Indemnification. In the event any PopMail Shares are included in a registration statement pursuant to this Agreement: (a) To the extent permitted by law, PopMail (in such capacity an "Indemnifying Party") shall indemnify and hold NetCalendar (in such capacity an "Indemnified Person") harmless against any losses, claims, damages, expenses or liabilities (collectively the "Claims") to which NetCalendar becomes subject under the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any of the following statements, omissions or violations in the Initial Registration Statement or Supplemental Registration Statement, or any post-effective amendment thereof, or any prospectus included therein: (i) any untrue statement or alleged untrue statement of a material fact contained in either registration statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of the applicable registration statement, or contained in the final prospectus (as amended or supplemented, if PopMail files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by PopMail of the Securities Act, the Exchange Act or any state securities law or any rule or regulation (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations"). PopMail shall reimburse NetCalendar promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by NetCalendar in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 5.7 shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to PopMail by NetCalendar expressly for use in connection with the preparation of either the Initial Registration Statement or the Supplemental Registration Statement or any such amendment thereof. Such indemnity shall remain in full force and effect 16 regardless of any investigation made by or on behalf of such Indemnified Person. (b) In connection with the Initial Registration Statement and, if applicable, the Supplemental Registration Statement, NetCalendar (in such capacity an "Indemnifying Party") agrees to indemnify and hold harmless, to the same extent and in the same manner set forth in Section 5.7(a), PopMail, each of its directors, each of its officers who signs the Registration Statement, each person, if any, who controls PopMail within the meaning of the Securities Act or the Exchange Act, and any other shareholder selling securities pursuant to the applicable registration statement or any of its directors or officers or any person who controls such shareholder within the meaning of the Securities Act or the Exchange Act (each an "Indemnified Party"), against any Claim to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished to PopMail by NetCalendar expressly for use in connection with either or both registration statement; and NetCalendar will promptly reimburse any legal or other expenses reasonably incurred by the Indemnified Parties in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 5.7(b) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of NetCalendar, which consent shall not be unreasonably withheld; provided, further, however, that NetCalendar shall be liable under this Section 5.7(b) for only that amount of a Claim as does not exceed the net proceeds to NetCalendar as a result of the sale of the Purchase Price Shares or the Supplemental Purchase Price Shares pursuant to either the Initial Registration Statement or the Supplemental Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party. (c) Promptly after receipt by the Indemnified Person or any Indemnified Party under this Section 5.7 of notice of the commencement of any action (including any governmental action), the Indemnified Person or such Indemnified Party shall, if a Claim in respect thereof is to made against any Indemnifying Party under this Section 5.7, deliver to the Indemnifying Party a written notice of the commencement thereof and this Indemnifying Party shall have the right to participate in, and, to the extent the Indemnifying Party so desires, jointly with any other Indemnifying Party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the Indemnifying Parties; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnifying Party, if, in the reasonable opinion of counsel retained by the Indemnifying Party, the representation by such counsel of the Indemnified Person or Indemnified Party and the Indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Person or 17 Indemnified Party and other party represented by such counsel in such proceeding. The failure to deliver written notice to the Indemnifying Party within a reasonable time of the commencement of any such action shall not relieve such Indemnifying Party of any liability to the Indemnified Person or Indemnified Party under this Section 5.7, except to the extent that the Indemnifying Party is prejudiced in its ability to defend such action. The indemnification required by this Section 5.7 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. 5.8 Contribution. To the extent any indemnification provided for herein is prohibited or limited by law, the Indemnifying Party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 5.7 to the fullest extent permitted by law; provided, however, that (a) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 5.7, (b) 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 and (c) contribution by NetCalendar shall be limited in amount to the net amount of proceeds received by NetCalendar from the sale of the Purchase Price Shares and the Supplemental Purchase Price Shares. 5.9 Reports under Exchange Act. With a view to making available to NetCalendar the benefits of Rule 144 or any other similar rule or regulation of the SEC that may at any time permit NetCalendar to sell securities of PopMail to the public without registration, until such time as NetCalendar have sold all the Purchase Price Shares and the Supplemental Purchase Price Shares pursuant to the Initial Registration Statement and, if applicable, the Supplemental Registration Statement, or Rule 144, PopMail agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144; (b) file with the SEC all reports and other documents required of PopMail under the Securities Act and the Exchange Act; and (c) furnish to NetCalendar so long as NetCalendar owns Purchase Price Shares or Supplemental Purchase Price Shares, promptly upon request, (i) a written statement by PopMail that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of PopMail and such other reports and documents so filed by PopMail and (iii) such other information as may be reasonably requested to permit NetCalendar to sell such securities pursuant to Rule 144 without registration. ARTICLE 6 18 TERMINATION; REMEDIES 6.1 Termination. This Agreement will be terminated and, except as set forth below, the provisions hereof shall have no further force or effect in the earliest event that: (a) The average closing share price of PopMail common stock for the ten consecutive trading days preceding the second business day prior to the Initial Closing Date is less than $.50 and NetCalendar rejects PopMail's offer of Purchase Price Shares made pursuant to Section 1.1; (b) The Initial Registration Statement is not declared effective by the SEC on or before the Initial Registration Due Date, and NetCalendar elects (as hereby authorized) to terminate this Agreement at any time during the 60-day period following the Initial Registration Due Date by providing written notice thereof (the "Termination Notice") to PopMail during such period; provided, however, that NetCalendar may not elect to terminate this Agreement if the Initial Registration Statement is declared effective by the SEC prior to NetCalendar providing such Termination Notice. Within ten (10) days of the date of such Termination Notice, PopMail shall deliver to NetCalendar the certificates representing the Shares and NetCalendar shall deliver to PopMail the certificates representing the Purchase Price Shares; or (c) The Initial Registration Statement, having once been declared effective by the SEC, is not maintained effective by PopMail throughout the Registration Period, and NetCalendar elects (as hereby authorized) to terminate this Agreement at any time during the 60-day period following the date upon which the Initial Registration shall become not effective, by providing written notice thereof (the "Termination Notice") to PopMail during such period; provided, however, that NetCalendar may not elect to terminate this Agreement if the Initial Registration Statement, having become not effective, is again made effective by the SEC prior to NetCalendar providing such Termination Notice. Within ten (10) days of the date of such Termination Notice, NetCalendar shall deliver to PopMail certificates representing such number of Purchase Price Shares as shall then be held by NetCalendar, and PopMail shall deliver to NetCalendar certificates representing such number of Shares as shall equal the value of the Purchase Price Shares tendered by NetCalendar hereunder, with the value of the Purchase Price Shares and the Shares exchanged under this Section 6.1(c) each being determined as of the Initial Closing Date. 6.2 Litigation Expense. In the event any party hereto is made or shall become a party to any litigation commenced by or against the other party involving the enforcement of any of the rights or remedies of such party, or arising on account of a default of the other party in its performance of any of the other party's obligations hereunder, then the prevailing party in such litigation shall be entitled to full reimbursement by the other party of any and all costs incurred by such prevailing party in 19 connection with such litigation, including the costs, fees and expenses of any and all attorneys' fees. ARTICLE 7 MISCELLANEOUS 7.1 Fees and Expenses. Each party shall pay the fees and expenses of its advisers and other experts in connection with the transactions contemplated by this Agreement. 7.2 Entire Agreement. This Agreement, together with any Exhibits and Schedules hereto, contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters. 7.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 4:30 p.m. (Minneapolis time) on a business day, (ii) the business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified herein later than 4:30 p.m. (Minneapolis time) on any date and earlier than 11:59 p.m. (Minneapolis time) on such date, (iii) the business day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to PopMail: PopMail.com, inc. 5700 W. Plano Parkway Suite 1000 Plano, TX 75093 telephone: 972-381-2742 facsimile: 972-381-2743 Attention: Mr. Gary Schneider With copy to: Philip J. Tilton, Esq. Maslon Edelman Borman & Brand, LLP 3300 Wells Fargo Center Minneapolis, MN 55402 telephone: 612-672-8200 facsimile: 612-672-8397 If to NetCalendar: NetCalendar, Inc. 1901 N. Ft. Myer Drive, Suite 702 Arlinton, Virginia 22209 telephone: 703.812.1500 facsimile: 703.812.1507 20 Attention: Mr. Edward L. Neumann With copy to: J. Stephen Britt, Esq. Enterprise Business Law Group LLC 7900 Westpark Drive, Suite T-305 McLean, Virginia 22102 telephone: 703.848.8317 facsimile: 703.848.8333 7.4 Waivers. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. 7.5 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. 7.6 Assignment and Delegation. Neither party may assign its rights nor delegate its duties or obligations arising under this Agreement without the written consent of the other, which consent may be withheld for any reason or no reason. The assignment by a party of this Agreement or any rights hereunder shall not affect the obligations of such party under this Agreement. 7.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and, other than with respect to permitted assignees under Section 7.6, is not for the benefit of, nor may any provision hereof be enforced by, any other Person. 7.8 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Minnesota without regard to the principles of conflicts of law thereof. 7.9 Survival. The representations, warranties, agreements and covenants contained in this Agreement shall survive after the Closing Date. 7.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same 21 force and effect as if such facsimile signature page were an original thereof. 7.11 Severability. In case any one or more of the provisions of this Agreement shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. 7.12 Remedies. Each of the parties to this Agreement acknowledges and agrees that the other parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the parties hereto agrees that the other parties shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions of this Agreement in any action instituted in any court of the United States of America or any state thereof having jurisdiction over the parties to this Agreement and the matter, in addition to any other remedy to which they may be entitled, at law or in equity. 22 IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be duly executed by their respective authorized persons as of the date first indicated above. NETCALENDAR, INC. By: /s/ Edward L. Neumann ------------------------------ Edward L. Neumann Its: Chief Executive Officer POPMAIL.COM, INC. By: /s/ Gary W. Schneider ------------------------------ Gary Schneider Its: Chief Executive Officer EX-23.1 5 c57556ex23-1.txt CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our report dated February 19, 1999 included in PopMail.com, inc.'s (formerly Cafe Odyssey, Inc.) Form 10-KSB for the year ended January 3, 1999 and to all references to our firm included in this Registration Statement. /s/ ARTHUR ANDERSEN LLP Minneapolis, Minnesota September 15, 2000 EX-23.2 6 c57556ex23-2.txt CONSENT OF GRANT THORNTON LLP 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our report dated March 24, 2000, accompanying the consolidated financial statements included in the Annual Report of PopMail.com, inc. (formerly Cafe Odyssey, Inc.) on Form 10-KSB for the year ended January 2, 2000. We hereby consent to the incorporation by reference of said report in the Registration Statement of PopMail.com, inc. on Form S-3 to be filed with the Securities and Exchange Commission on or about September 22, 2000. /s/ GRANT THORNTON LLP Minneapolis, Minnesota September 22, 2000 EX-23.3 7 c57556ex23-3.txt CONSENT OF GRANT THORNTON LLP 1 EXHIBIT 23.3 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our report dated January 21, 2000, accompanying the financial statements of ROI Interactive, LLC as of June 30, 1999, and for the year then ended, included in the amendment to the Current Report on Form 8-K/A filed on February 15, 2000. We hereby consent to the incorporation by reference of said report in the Registration Statement of PopMail.com, inc. on Form S-3 to be filed with the Securities and Exchange Commission on or about September 22, 2000. /s/ GRANT THORNTON LLP Minneapolis, Minnesota September 22, 2000 EX-23.4 8 c57556ex23-4.txt CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.4 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the use of our report dated January 10, 2000, with respect to the financial statements of IZ.com Incorporated included in the Current Report on Form 8-K/A of PopMail.com, inc. which is incorporated by reference in PopMail.com, inc.'s Registration Statement on Form S-3 expected to be filed with the Securities and Exchange Commission on or about September 22, 2000. ERNST & YOUNG LLP San Diego, California September 20, 2000 -----END PRIVACY-ENHANCED MESSAGE-----