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EXHIBIT 4.11
POPMAIL.COM, INC.
ADJUSTABLE WARRANT
Warrant No. [ ] Dated: As of June 12, 2000
PopMail.com, Inc., a Minnesota corporation (the "Company"), hereby
certifies that, for value received, Thompson Kernahan & Co., Inc., or its
registered assigns ("Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company up to the total number of shares of Common
Stock, $.01 par value per share (the "Common Stock"), of the Company (each such
share, a "Warrant Share" and all such shares, the "Warrant Shares") calculated
pursuant to Section 3 of this Warrant at an exercise price equal to $0.00001 per
share (as adjusted from time to time as provided herein, the "Exercise Price"),
at the times set forth herein through and including a period ending ten (10)
Trading Days following the Annual Look Back Period (as defined herein) (the
"Expiration Date"), and subject to the following terms and conditions:
1. REGISTRATION OF WARRANT.
The Company shall register this Warrant, upon records to be maintained
by the Company for that purpose (the "Warrant Register"), in the name of the
record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for all other
purposes, and the Company shall not be affected by notice to the contrary.
2. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) The Company shall register the transfer of any portion of
this Warrant in the Warrant Register, upon surrender of this Warrant,
with the Form of Assignment attached hereto duly completed and signed,
to the Transfer Agent or to the Company at the address specified in
Section 13. Upon any such registration or transfer, a new warrant to
purchase Common Stock, in substantially the form of this Warrant (any
such new warrant, a "New Warrant"), evidencing the portion of this
Warrant so transferred shall be issued to the transferee and a New
Warrant evidencing the remaining portion of this Warrant not so
transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed
the acceptance of such transferee of all of the rights and obligations
of a holder of a Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof by
the Holder to the office of the Company at the address specified in
Section 12 for one or more New Warrants, evidencing in the aggregate
the right to purchase the number of Warrant Shares which may then be
purchased hereunder. Any such New Warrant will be dated the date of
such exchange.
3. DURATION, VESTING AND EXERCISE OF WARRANT.
(a) Warrant Shares to be Issued. If the Average Market Price
for lowest ten (10) Trading Days of any Look Back Period should be less
than $ 4.00 per share, the Holder shall have the right to receive from
the Company within three days of a written request (the "Warrant
Request") sent to the Company within ten (10) Trading Days after the
end of each Look Back Period (the "Warrant Request Date) Warrant
Shares, which have been, in each case, registered with the U.S.
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Securities and Exchange Commission (the "SEC"), without any further
payment or consideration based upon the following formula:
N X (K-B)/B
In addition, if (a) the Average Market Price for any Monthly Look Back
Period is less than $4.00 per share and Holder does not submit a
Warrant Request for that period or (ii) Holder submits a Warrant
Request for any Monthly Look Back Period and the number of Warrant
Shares is limited by the 47% Limitation and if (b) the Average Market
Price for the Trading Days within the Annual Look Back Period is less
than $4.00 per share, then the Holder shall have the right to submit
another Warrant Request for Warrant Shares which shall collectively
include each such Monthly Look Back Period within ten (10) business
days after the end of the Annual Look Back Period. In this event,
Holder shall have the right to receive within three days of the Warrant
Request additional Warrant Shares for each such Monthly Look Back
Period which have been in each case registered with the SEC from the
Company without any further payment or consideration based upon the
formula set forth above, with the number of Warrant Shares to be
reduced by the number of Warrant Shares previously received with
respect to the applicable Monthly Look Back Periods.
(b) For purposes of this Agreement the following terms shall
have the meanings set forth below:
N = 333,333 for each Monthly Look Back Period and in
the case of the Annual Look Back Period 333,333 for each
Monthly Look Back Period for which the Holder is submitting
another Warrant Request, in each case as adjusted for stock
dividends, stock splits, recapitalizations or similar
transactions;
K = $ 4.00 per share, as adjusted for stock
dividends, stock splits, recapitalizations or similar
transactions;
B = the average of the five lowest Closing Bid Prices
during each Look Back Period;
CLOSING BID PRICE means, for any security as of any
date, the last closing bid price on the Nasdaq Small Cap
Market (the "NASDAQ-SC") as reported by Bloomberg Financial
Markets ("BLOOMBERG"), or, if the Nasdaq-SC is not the
principal trading market for such security, the last closing
bid price of such security on the principal securities
exchange or trading market where such security is listed or
traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price of such security in the
over-the-counter market on the pink sheets or bulletin board
for such security as reported by Bloomberg, or, if no closing
bid price is reported for such security by Bloomberg, the last
closing trade price of such security as reported by Bloomberg
(the "Principal Trading Market"). If the Closing Bid Price
cannot be calculated for such security on such date on any of
the foregoing bases, the Closing Bid Price of such security on
such date shall be the fair market value as reasonably
determined in good faith by the Board of Directors of the
Company (all as appropriately adjusted for any stock dividend,
stock split or other similar transaction during such period);
AVERAGE MARKET PRICE means, with respect to any
security for any period, that price which shall be computed as
the arithmetic average of the Closing Bid Prices (as defined
above) for such security for each trading day in such period;
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LOOK BACK PERIOD shall mean (i) the first three (3)
thirty (30) consecutive Trading Days each commencing on the
first Trading Day immediately following the Effective Date
("each a Monthly Look Back Period") and (ii) the first thirty
(30) consecutive Trading Days immediately following the first
anniversary of the date of this Agreement ("Annual Look Back
Period");
TRADING DAY shall mean each day that quotations are
reported on the Company's Common Stock on the Principal
Trading Market;
EFFECTIVE DATE shall mean the date that the SEC
declares the Registration Statement (as defined in the
Registration Rights Agreement) registering the Common Stock
and the Warrant Shares to be effective.
It is the intent of the foregoing formula to (i) facilitate
the adjustment to a total of 1,000,000 shares of Common Stock issued in
connection with the Securities Purchase Agreement, dated of even date
herewith, over each applicable Look Back Period in accordance with the
terms of this Agreement and (ii) to provide an adjustment opportunity
to the Holder to receive Warrant Shares following the first anniversary
of the date of this Agreement in the event that (a) Holder elects not
to submit a Warrant Request in connection with a Monthly Look Back
Period or (b) if the Holder is unable to receive additional Warrant
Shares due to the 47% Limitation described herein. Notwithstanding this
provision, until after the thirty Trading Days following the first
anniversary of the date of this Agreement, (the purchase price per
share of Common Stock required to be delivered to the Holder in
accordance with this Agreement ($3,000,000 divided by the total shares
of Common Stock issued (including Warrant Shares) shall not be less
than 47% (the "47% Limitation") of the Closing Bid Price on the Closing
Date (the Floor Price Per Share"))). The following example is offered
as an example of the foregoing calculations.
Example: If on the Closing Date, the Closing Bid Price is
$1.00 then the Floor Price Per Share would be $0.47 (47% of
$1.00). Using this $0.47 Floor Price Per Share and assuming
the average of the 5 lowest Closing Bid Prices during the
applicable Look Back Period is $0.25 cents then the number of
Warrant Shares to be issued to the Holder would be calculated
as follows:
333,333 shares * ($4.00-$0.47) divided by $0.47. which equals 2,503,545
shares.
Conversely, if at the time of Warrant the average of the five lowest
Closing Bid Prices during the applicable Look Back Period is $3.00 then
the number of Warrant Shares to be delivered to the Holder would be
calculated as follows.
333,333 * ($4.00-$3.00) divided by $3.00 which equals 111,111 shares.
It is expressly understood that the 47% Limitation does not apply,
however to any Warrant Request of Warrant Shares made pursuant to the
Annual Look Back Period.
(c) Dispute Resolution. In the case of a dispute as to the
determination of the number of Warrant Shares, Average Market Price,
Closing Price, Look Back Period, Trading Day, or any other calculation
(the "Calculations"), the Company shall promptly issue to the holder
the number of shares of Common Stock that is not disputed and shall
submit the disputed determinations or arithmetic calculations to the
holder via facsimile within three (3) business days of receipt of such
holder's Warrant Request. If such holder and the Company are unable to
agree upon the
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determination of the Calculations within two (2) business days of such
disputed determination or arithmetic calculation being submitted to
the holder, then the Company shall within one (1) business day submit
via facsimile (A) the disputed determination of the Calculations to an
independent, reputable investment bank or (B) the disputed arithmetic
calculation of the Calculations to its independent, outside
accountant. The Company shall cause the investment bank or the
accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the holder of the results no
later than forty-eight (48) hours from the time it receives the
disputed determinations or calculations. Such investment bank's or
accountant's determination or calculation, as the case may be, shall
be binding upon all parties absent manifest error.
(i) Record Holder. The person or persons entitled to
receive the Warrant Shares shall be treated for all purposes
as the record holder or holders of such shares of Common Stock
on the Warrant Request Date.
(ii) Company's Failure to Timely Deliver Warrant
Shares. If the Company shall fail to issue to a holder within
five (5) business days following the Warrant Request Date, a
certificate for the number of shares of Common Stock to which
such holder is entitled which are in each case registered with
the SEC, in addition to all other available remedies which
such holder may pursue hereunder, the Company shall pay
additional damages to such holder on each day after the fifth
(5th) business day following the date of receipt by the
Company of the Warrant Request Date, for which such delivery
is not timely effected, an amount calculated in accordance
with the following schedule:
LATE PAYMENT FOR EACH
BUSINESS DAYS LATE $10,000 OF WARRANT SHARES
(measured on the applicable Warrant Request Date)
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
11 $1,000 + $200 for each
Business Days Late Beyond 10 days
In addition to the foregoing damages payable, in the event that any of the
Warrant Shares are not registered with the SEC when delivered to the Holder,
Holder shall also be entitled to receive as additional damages in cash of an
amount equal to the lost benefit of the bargain with respect to such
unregistered Warrant Shares delivered. The lost benefit of the bargain shall
mean the difference between the Closing Price of the Warrant Shares on the day
they were first required to be delivered hereunder and the prices under which
the Holder is finally able to sell the Warrant Shares.
(d) The Company's obligations to issue and deliver Warrant Shares in
accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any
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judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. If the Company breaches its obligations under this Warrant,
then, in addition to any other liabilities the Company may have hereunder and
under applicable law, the Company shall pay or reimburse the Holder on demand
for all costs of collection and enforcement (including reasonable attorneys fees
and expenses).
4. PIGGYBACK REGISTRATION RIGHTS.
The Holder shall be entitled to the piggyback registration rights
afforded to a holder pursuant to that certain Registration Rights Agreement
dated as of the date hereof, among the Company and the signatories thereto.
5. PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes attributable to the
issuance of Warrant Shares upon the exercise of this Warrant; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the registration of any certificates for
Warrant Shares or Warrants in a name other than that of the Holder and the
Company shall not be required to issue or cause to be issued or deliver or cause
to be delivered the certificates for Warrant Shares unless or until the person
or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the reasonable satisfaction of
the Company that such tax has been paid. The Holder shall be responsible for all
other tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.
6. REPLACEMENT OF WARRANT.
If this Warrant is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation hereof, or in lieu of and substitution for this Warrant, a New
Warrant, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. Applicants for a New Warrant under such circumstances
shall also comply with such other reasonable regulations and procedures and pay
such other reasonable charges as the Company may prescribe.
7. RESERVATION OF WARRANT SHARES.
The Company covenants that it will at all times reserve and keep
available out of the aggregate of its authorized but unissued Common Stock,
solely for the purpose of enabling it to issue Warrant Shares upon exercise of
this Warrant as herein provided, the number of Warrant Shares which are then
issuable and deliverable upon the exercise of this entire Warrant, free from
preemptive rights or any other actual contingent purchase rights of persons
other than the Holder (taking into account the adjustments and restrictions of
Section 9). The Company covenants that all Warrant Shares that shall be so
issuable and deliverable shall, upon issuance and the payment of the applicable
Exercise Price in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable.
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8. CERTAIN ADJUSTMENTS.
The Exercise Price and number of Warrant Shares issuable upon exercise
of this Warrant are subject to adjustment from time to time as set forth in this
Section 8. Upon each such adjustment of the Exercise Price pursuant to this
Section 8, the Holder shall thereafter prior to the Expiration Date be entitled
to purchase, at the Exercise Price resulting from such adjustment, the number of
Warrant Shares obtained by multiplying the Exercise Price in effect immediately
prior to such adjustment by the number of Warrant Shares issuable upon exercise
of this Warrant immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or on any
other class of capital stock payable in shares of Common Stock, (ii)
subdivide outstanding shares of Common Stock into a larger number of
shares, or (iii) combine outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding before such event and of which the denominator shall
be the number of shares of Common Stock outstanding after such event.
Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a
subdivision or combination, and shall apply to successive subdivisions
and combinations.
(b) In case of any reclassification of the Common Stock, or
any compulsory share exchange pursuant to which the Common Stock is
converted into other securities, cash or property, the Holder shall
have the right thereafter to exercise this Warrant only for the shares
of stock and other securities, cash and property receivable upon or
deemed to be held by holders of Common Stock following such
reclassification or share exchange, and the Holder shall be entitled
upon such event to receive such amount of securities, cash or property
as equals the number of Warrant Shares such Holder would have been
entitled to had the Holder exercised this Warrant in full immediately
prior to such reclassification or share exchange. This provision shall
similarly apply to successive reclassifications or share exchanges.
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not
to holders of this Warrant) evidences of its indebtedness or assets or
rights or warrants to subscribe for or purchase any security (excluding
those referred to in Sections 8(a), (b) and (d)) (collectively,
"Assets"), then in each such case, the Holder shall be entitled to
receive, for each Warrant Share with respect to which this Warrant is
exercised after the record date fixed for determination of stockholders
entitled to receive such distribution, the Assets received by all
holders of Common Stock with respect to one share of Common Stock.
(d) If, within 90 Trading Days of any Look Back Period, the
Company or any subsidiary thereof shall issue or cause to be issued
rights, warrants, debt or other securities entitling the holder thereof
to acquire, or shall otherwise sell or distribute shares of Common
Stock or other securities, other than (i) issuances pursuant to any
exercise or conversion of any warrants, options, subscriptions,
convertible notes, convertible debentures, convertible preferred stock
or other convertible securities issued and outstanding on the Closing
Date (as defined in the Purchase Agreement) and set forth on Schedule
2.1(c) to the Purchase Agreement in accordance with the terms of such
securities as of such date; (ii) issuances pursuant to any grant or
exercise of any stock or options which may hereafter be granted or
exercised under any employee benefit plan of the Company now existing
or to be implemented in the future, or upon grant or exercise
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of any stock or options to or by any officer, director or employee,
whether or not under a plan, so long as the issuance of such stock or
options is approved by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose;
(iii) issuances pursuant to any Closing Warrants (as defined in the
Securities Purchase Agreement) issued pursuant to the Securities
Purchase Agreement; (iv) securities issued in connection with an
underwritten public offering of the Company; (v) securities issued in
connection with any merger, acquisition or consolidation, or purchase
of assets or business from another person, so long as the Company is
the surviving corporation and that such transaction is not primarily
for the purpose of raising capital, or (vi) in connection with the
issuance of Common Stock, not in excess of 1% of the Common Stock
issued and outstanding on the original issue date of this Warrant,
upon the exercise of warrants or other rights granted to any bank
other commercial financing institution, for a consideration per share
less than both (x) the market price at the time of such issuance or
distribution and (y) an Adjustment Price previously used in
calculating the vesting of Warrant Shares on previous Look Back Period
(such an issuance, a "Discounted Issuance"), then the Adjustment Price
previously used in calculating the vesting of Warrant Shares on any
previous Look Back Period (if greater than such issuance price) shall
equal the consideration per share at which such Discounted Issuance
was made and the Company shall, within ten (10) Trading Days of such
Discounted Issuance, issue to the Holder a number of shares of Common
Stock equal to the difference between the number of Warrant Shares
vested on any previous applicable Look Back Period based on the
Adjusted Price then in effect and the number of Warrant Shares which
would have vested on such previous Vesting Dates based on the imputed
Adjustment Price pursuant to the Discounted Issuance. Such adjustment
shall be made successively whenever such an issuance is made.
(e) In case of any (1) merger or consolidation of the Company
with or into another Person, or (2) sale by the Company of more than
one-half of the assets of the Company (on a book value basis) in one or
a series of related transactions, or (3) tender or other offer or
exchange (whether by the Company or another Person) pursuant to which
holders of Common Stock are permitted to tender or exchange their
shares for other securities, stock, cash or property of the Company or
another Person; then the Holder shall have the right thereafter to (A)
exercise this Warrant for the shares of stock and other securities,
cash and property receivable upon or deemed to be held by holders of
Common Stock following such merger, consolidation or sale, and the
Holder shall be entitled upon such event or series of related events to
receive such amount of securities, cash and property as the shares of
Common Stock for which this Warrant could have been exercised
immediately prior to such merger, consolidation or sales would have
been entitled, (B) in the case of a merger or consolidation, require
the surviving entity to issue to the Holder a warrant entitling the
Holder to acquire shares of such entity's common stock, which warrant
shall have terms identical (including with respect to exercise) to the
terms of this Warrant and shall be entitled to all of the rights and
privileges set forth herein and the agreements pursuant to which this
Warrant was issued (including, without limitation, as such rights
relate to the acquisition, transferability, registration and listing of
such shares of stock other securities issuable upon exercise thereof),
or (C) in the event of an exchange or tender offer or other transaction
contemplated by clause (3) of this Section, tender or exchange this
Warrant for such securities, stock, cash and other property receivable
upon or deemed to be held by holders of Common Stock that have tendered
or exchanged their shares of Common Stock following such tender or
exchange, and the Holder shall be entitled upon such exchange or tender
to receive such amount of securities, cash and property as the shares
of Common Stock for which this Warrant could have been exercised
immediately prior to such tender or exchange would have been entitled
as would have been issued. In the case of clause (B), the exercise
price applicable for the newly issued warrant shall be based upon the
amount of securities, cash and property that each share of
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Common Stock would receive in such transaction and the Exercise Price
immediately prior to the effectiveness or closing date for such
transaction. The terms of any such merger, sale, consolidation, tender
or exchange shall include such terms so as continue to give the Holder
the right to receive the securities, cash and property set forth in
this Section upon any conversion or redemption following such event.
This provision shall similarly apply to successive such events.
(f) For the purposes of this Section 8, the following clauses
shall also be applicable:
(i) Record Date. In case the Company shall take a
record of the holders of its Common Stock for the purpose of
entitling them (A) to receive a dividend or other distribution
payable in Common Stock or in securities convertible or
exchangeable into shares of Common Stock, or (B) to subscribe
for or purchase Common Stock or securities convertible or
exchangeable into shares of Common Stock, then such record
date shall be deemed to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold
upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
(ii) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and the
disposition of any such shares shall be considered an issue or
sale of Common Stock.
(g) All calculations under this Section shall be made to the
nearest 1/100th of a share.
(h) If:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of
any rights; or
(iv) the approval of any stockholders of the Company
shall be required in connection with any reclassification of
the Common Stock of the Company, any consolidation or merger
to which the Company is a party, any sale or transfer of all
or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property; or
(v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the affairs of the
Company, then the Company shall cause to be mailed to each
Holder at their last addresses as they shall appear upon the
Warrant Register, at least 30 calendar days prior to the
applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the
date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights
or warrants are to be determined or (y) the date on which
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such reclassification, consolidation, merger, sale, transfer
or share exchange is expected to become effective or close,
and the date as of which it is expected that holders of
ommon Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other
property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up; provided, however,
that the failure to mail such notice or any defect therein
or in the mailing thereof shall not affect the validity of
the corporate action required to be specified in such
notice.
9. PAYMENT OF EXERCISE PRICE.
The Holder shall pay the Exercise Price in one of the following
manners:
(a) Cash Exercise. The Holder shall deliver immediately
available funds; or
(b) Cashless Exercise. The Holder shall surrender this Warrant
to the Company together with a notice of cashless exercise, in which
event the Company shall issue to the Holder the number of Warrant
Shares determined as follows:
X = Y (A-B)/A where:
X = the number of Warrant Shares to be issued to the
Holder.
Y = the number of Warrant Shares with respect to
which this Warrant is being exercised.
A = the average of the closing sale prices of the
Common Stock on the Principal Trading Market for the
five (5) trading days immediately prior to (but not
including) the Warrant Request Date.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
been commenced, on the issue date.
10. CERTAIN EXERCISE RESTRICTIONS.
(a) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any affiliate
thereof, beneficially owning (as determined in accordance with Section
13(d) of the Exchange Act of 1934 (the "Exchange Act") and the rules
promulgated thereunder) in excess of 4.999% of the then issued and
outstanding shares of Common Stock, including shares of Common Stock
issuable upon such exercise and held by such Holder after application
of this Section. Since the Holder will not be obligated to report to
the Company the number of shares of Common Stock it may hold at the
time of an exercise hereunder, unless the exercise at issue would
result in the issuance of shares of Common Stock in excess of 4.999% of
the then outstanding shares of Common Stock without regard to any other
shares of Common Stock which may be beneficially owned by the Holder or
an affiliate thereof, the Holder shall have the authority and
obligation to determine whether the restriction contained in this
Section will limit any particular exercise hereunder and to the extent
that the
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Holder determines that the limitation contained in this Section
applies, the determination of which portion of this Warrant is
exercisable shall be the responsibility and obligation of the Holder.
If the Holder has delivered a Form of Election to Purchase for a
number of Warrant Shares that would result in the issuance in excess
of the permitted amount hereunder, the Company shall notify the Holder
of this fact and shall honor the exercise for the maximum portion of
this Warrant permitted to be exercised on such Date of Exercise in
accordance with the periods described herein and disregard the balance
of such Form of Election to Purchase, as if never delivered The
provisions of this Section may be waived by a Holder (but only as to
itself and not to any other Holder) upon not less than 61 days' prior
notice to the Company. Other Holders shall be unaffected by any such
waiver.
(b) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any affiliate
thereof, beneficially owning (as determined in accordance with Section
13(d) of the Exchange Act and the rules promulgated thereunder) in
excess of 9.999% of the then issued and outstanding shares of Common
Stock, including shares of Common Stock issuable upon such exercise and
held by such Holder after application of this Section. Since the Holder
will not be obligated to report to the Company the number of shares of
Common Stock it may hold at the time of an exercise hereunder, unless
the exercise at issue would result in the issuance of shares of Common
Stock in excess of 9.999% of the then outstanding shares of Common
Stock without regard to any other shares of Common Stock which may be
beneficially owned by the Holder or an affiliate thereof, the Holder
shall have the authority and obligation to determine whether the
restriction contained in this Section will limit any particular
exercise hereunder and to the extent that the Holder determines that
the limitation contained in this Section applies, the determination of
which portion of this Warrant is exercisable shall be the
responsibility and obligation of the Holder. If the Holder has
delivered a Form of Election to Purchase for a number of Warrant Shares
that would result in the issuance in excess of the permitted amount
hereunder, the Company shall notify the Holder of this fact and shall
honor the exercise for the maximum portion of this Warrant permitted to
be exercised on such Date of Exercise in accordance with the periods
described herein and disregard the balance of such Form of Election to
Purchase, as if never delivered. The provisions of this Section may be
waived by a Holder (but only as to itself and not to any other Holder)
upon not less than 61 days' prior notice to the Company. Other Holders
shall be unaffected by any such waiver.
11. FRACTIONAL SHARES.
The Company shall not be required to issue or cause to be issued
fractional Warrant Shares on the exercise of this Warrant. The number of full
Warrant Shares which shall be issuable upon the exercise of this Warrant shall
be computed on the basis of the aggregate number of Warrant Shares purchasable
on exercise of this Warrant so presented. If any fraction of a Warrant Share
would, except for the provisions of this Section 11, be issuable on the exercise
of this Warrant, the Company shall pay an amount in cash equal to the Exercise
Price multiplied by such fraction.
12. NOTICES.
Any and all notices or other communications or deliveries 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
6:30 p.m. (New York City 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 in this Section later than
6:30 p.m. (New York City time) on any date and earlier than
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11:59 p.m. (New York City time) on such date, (iii) the Business Day following
the date of mailing, if sent by nationally recognized overnight courier service
with next day delivery specified thereon, or (iv) upon actual receipt by the
party to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to 1333 Corporate Drive, Suite
350, Irving, Texas 75038, facsimile number (972) 550-5581, Attention: Stephen D.
King, or (ii) if to the Holder, to the Holder at the address or facsimile number
appearing on the Warrant Register or such other address or facsimile number as
the Holder may provide to the Company in accordance with this Section 12.
13. WARRANT AGENT.
(a) The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days' notice to the Holder, the Company may
appoint a new warrant agent.
(b) Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation
to which the Company or any new warrant agent shall be a party or any
corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services
business shall be a successor warrant agent under this Warrant without
any further act. Any such successor warrant agent shall promptly cause
notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder's last address as
shown on the Warrant Register.
14. MISCELLANEOUS.
(a) This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and permitted
assigns. This Warrant may be amended only in writing signed by the
Company and the Holder and their successors and assigns.
(b) Subject to Section 14(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the
Company and the Holder any legal or equitable right, remedy or cause
under this Warrant. This Warrant shall inure to the sole and exclusive
benefit of the Company and the Holder.
(c) This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or
affect any of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant
shall not in any way be affected or impaired thereby and the parties
will attempt in good faith to agree upon a valid and enforceable
provision which shall be a commercially reasonable substitute therefor,
and upon so agreeing, shall incorporate such substitute provision in
this Warrant.
15. GOVERNING LAW.
This Agreement and each Warrant Certificate hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware without regard to the principles of conflict of laws. The
parties further agree that any action between them shall be heard in
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Atlanta, Georgia, and expressly consent to the jurisdiction and venue
of the Superior Court of Fulton County, Georgia, and the United States
District Court for the Northern District of Georgia, Atlanta Division
for the adjudication of any civil action asserted pursuant to this
Paragraph.
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SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
POPMAIL.COM, INC.
By:
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Name:
--------------------------------
Title:
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THOMSON KERNAGHAN & CO., LTD.
By:
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Name:
--------------------------------
Title:
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