SETTLEMENT AGREEMENT AND GENERAL RELEASE
This Settlement Agreement and General Release (hereinafter
"Settlement Agreement") is made and entered into as of February 24, 1997 (the
"Effective Date") by and between (a) Stanley I. Berk ("Berk"), Stephen P.
Grayson, individually and on behalf of the Stephen P. Grayson Profit Sharing
Plan (collectively, "Grayson") and Stanley Berk & Associates, a partnership
of which Berk and Grayson are the general partners, (Berk, Grayson and
Stanley Berk & Associates are hereinafter collectively referred to as the
"Berk Parties") and (b) Karl-Magnus S. Karlsson ("Karlsson") and Scoop, Inc.,
a California corporation formerly known as Karlsson-DelRey Communications, Inc.
("Scoop") (Karlsson and Scoop are hereinafter collectively referred to
as the "Scoop Parties").
RECITALS
A. On or about October 24, 1995, Stanley Berk & Associates and
Karlsson entered into a Stock Purchase and Option Agreement, a true and
correct copy of which is attached hereto as Exhibit "A."
B. On or about October 24, 1995, Scoop and Stanley Berk &
Associates entered into a Line of Credit Agreement, a true and correct copy
of which is attached hereto as Exhibit "B."
C. By letter agreement dated July 25, 1996, Scoop and Berk
memorialized the resolution of various issues relating to Berk's prior and
future relationship with Scoop. A true and correct copy of this July 25,
1996 letter agreement is attached hereto as Exhibit "C."
D. On July 26, 1996, Berk executed a General Release discharging
Scoop and its officers, directors, employees, agents and representatives
(both individually and in their capacities as such) from all demands and
claims which he ever had, then had, or in the future may have against Scoop
or its officers, directors, employees, agents and representatives for any
cause, and expressly waiving his rights under California Civil Code
Section 1542. A true and correct copy of Berk's General Release dated
July 26, 1996 is attached hereto as Exhibit "D."
E. On July 26, 1996, Stanley Berk & Associates executed a General
Release discharging Scoop and its officers, directors, employees, agents and
representatives (both individually and in their capacities as such) from all
demands and claims which Stanley Berk & Associates ever had, then had or in
the future may have against Scoop or its officers, directors, employees,
agents and representatives for any cause, including without limitation any
claims arising under or related to the Stock Purchase and Option Agreement,
attached hereto as Exhibit "A," and the Line of Credit Agreement, attached
hereto as Exhibit "B," and expressly waiving its rights under California
Civil Code Section 1542. A true and correct copy of Stanley Berk &
Associates' General Release dated July 26, 1996 is attached hereto as
Exhibit "E."
F. By letter agreement dated July 30, 1996 (the "Grayson Letter
Agreement"), Karlsson granted Grayson an option to purchase shares of Common
Stock of Scoop owned by Karlsson under the terms and conditions provided
therein. The option granted pursuant to the Grayson Letter Agreement expired
on January 5,1997 and is no longer exercisable. A true and correct copy of
the Grayson Letter Agreement is attached hereto as Exhibit "F."
G. Stanley Berk & Associates is the record owner of an aggregate
of 386,339 shares of Scoop Common Stock (the "SB&A Shares"), representing all
of the shares acquired by Stanley Berk & Associates pursuant to the Stock
Purchase and Option Agreement attached hereto as Exhibit "A" and in
connection with the conversion and cancellation of Scoop indebtedness under
the Line of Credit Agreement attached hereto as Exhibit "B." Through their
respective interests in Stanley Berk & Associates, Berk is the beneficial
owner of 219,827 of the SB&A Shares and Grayson is the beneficial owner of
166,512 of the SB&A Shares. Grayson is the record and beneficial owner of an
aggregate of 28,302 shares of Scoop Common Stock (the "Grayson Shares") which
shares were acquired by Grayson in August 1996. The Berk Parties have
requested and Scoop has agreed to reissue the SB&A Shares to Berk and Grayson
in accordance with the beneficial ownership described above and to deliver
the stock certificates representing the SB&A Shares and the Grayson Shares to
Berk and Grayson concurrently with the delivery of stock certificates to all
of Scoop's shareholders prior to Scoop's initial public offering.
H. Various disputes have arisen between the parties hereto during
the course of their business relationship as a result of and/or which are
related to the agreements attached hereto as Exhibits "A" through "F," as
reflected most recently in a draft complaint captioned "Stanley I. Berk,
individually & dba Stanley Berk & Associates v. Karl-Magnus S. Karlsson."
The draft complaint alleges claims for specific performance, breach of
written agreement, breach of oral agreement, fraud - promise with no
intention of performing, declaratory relief and breach of the covenant of
good faith and fair dealing. A true and correct copy of this draft complaint
is attached hereto as Exhibit "G."
I. The parties hereto, without admitting any liability or
wrongdoing with respect to the documents attached hereto as Exhibits "A"
through "G" or with respect to any other matter, have agreed to settle all
matters between them as set forth in this Settlement Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants, agreements and releases set forth below, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
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1. SETTLEMENT TERMS. In addition to the releases set forth
herein, the parties hereto have agreed to the settlement terms set forth
below. In connection therewith, the Berk Parties acknowledge and agree that
the consideration given to Berk and Grayson pursuant to Sections 1.1, 1.2,
1.3 and all other provisions of this Settlement Agreement are provided to
them individually and in their capacities as the sole general partners of
Stanley Berk & Associates and, accordingly, constitute good and valuable
consideration for all of the Berk Parties' releases and covenants herein.
1.1 Concurrent with the execution of this Settlement
Agreement, (i) Scoop shall issue to Grayson a warrant exercisable into 11,250
shares of Scoop Common Stock in the form attached hereto as Exhibit "H"; and
(ii) Karlsson shall grant to Berk an option to purchase 11,250 shares of
Scoop Common Stock now owned by Karlsson in the form attached hereto as
Exhibit "I." Berk and Grayson shall have registration rights with respect to
the 22,500 shares of Scoop Common Stock (collectively, the "Warrant Shares")
subject to the warrant and the option described in clause (i) and (ii) above
as set forth in Section 5 below.
1.2 Scoop shall pay Berk $30,000 and shall pay Grayson
$30,000, with payments to each made in twelve consecutive monthly
installments of $2,500 each beginning the earlier of: (i) the first month
following the closing of an underwritten initial public offering of Scoop's
Common Stock or (ii) July 1997. The monthly payments shall be due on or
before the tenth day of each applicable month.
1.3 Scoop represents and warrants that neither Karlsson,
AMKEK ( a Karlsson family partnership) or Karlsson's spouse or children will
have the right to have any of their respective shares of Scoop Common Stock
(collectively, the "Karlsson Shares") registered with Scoop's initial public
offering. Scoop shall include the Grayson Shares in the shares being
registered for the account of security holders in Scoop's registration
statement for the initial public offering; provided that Grayson agrees to
enter into a lock-up agreement in the form required by Scoop's underwriters
prohibiting the sale, transfer or other disposition of the Grayson Shares for
ninety (90) days immediately following Scoop's initial public offering; and
provided further that following such ninety (90) day period, in the event
Grayson desires to sell any of the Grayson Shares prior to the expiration of
the lock-up agreement covering the SB&A Shares, Grayson agrees to effect such
sales through Scoop's lead underwriter so long as the commissions charged
Grayson in connection with such sales do not exceed the commissions
customarily charged for comparable sales by nationally recognized discount
brokerage firms such as Charles Schwab & Co. In connection with Scoop's
initial public offering, Karlsson, on the one hand, and Stanley Berk &
Associates, Berk and Grayson, on the other hand, each agrees to enter into a
lock-up agreement covering the Karlsson Shares and the SB&A Shares
(regardless of whether the SB&A Shares are held of record by Stanley Berk &
Associates or by Berk and Grayson, individually), respectively. Such lock-up
agreements shall be in the form and for the period required by Scoop's
underwriters, provided that: the lock-up agreements covering the SB&A Shares
and the Karlsson Shares, respectively, (i) shall require the same lock-up
period (not to exceed one year) and (ii) shall permit Berk to sell an
aggregate
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of 21,700 of the SB&A Shares and shall permit Karlsson to sell 50,000 of the
Karlsson Shares without the lead underwriter's prior consent, subject in each
case to applicable holding periods under Rule 144. The lock-up agreement
covering the Karlsson Shares shall also acknowledge that an aggregate of
69,394 of the Karlsson Shares (the "Option Shares") are subject to options
granted to various third parties (including the 11,250 Warrant Shares subject
to Berk's option described in Section 1.1 above), and shall permit the sale
of such Option Shares in the event any such third parties exercise their
respective options. Karlsson, Stanley Berk & Associates, Berk and Grayson
shall deliver copies of their respective lock-up agreements to the other
parties within ten (10) days following the closing of Scoop's initial public
offering. Karlsson agrees not to sell any Karlsson Shares other than the
50,000 shares referred to in clause (ii) above and any Option Shares
transferable upon the exercise of the third party options referred to above
prior to the time the 21,700 SB&A Shares referred to in clause (ii) above are
eligible for sale under Rule 144. Karlsson represents to the Berk Parties
that he neither has any beneficial interest in any shares of Scoop Common
Stock owned by his mother, nor will receive any proceeds from any sales of
such shares prior to the expiration of the lock-up agreements covering the
SB&A Shares and the Karlsson Shares.
1.4 Berk represents and warrants that all voting proxies held
by Berk with respect to shares of Scoop Common Stock expired or were revoked
on or before January 31, 1997. Berk acknowledges and agrees that such
expirations and/or revocations effected a termination of Berk's right to vote
all shares of Scoop Common Stock other than the SB&A Shares.
1.5 Berk and Grayson each acknowledges and agrees that,
following the Effective Date, he will neither render or purport to render any
services for or on behalf of Scoop nor be entitled to any compensation for
any such services unless Scoop, following the Effective Date, has entered
into a written agreement with him providing for such services and
compensation, if any. Berk and Grayson each further acknowledges and agrees
that without the prior written authorization of Scoop, he will not
affirmatively represent himself as, or otherwise affirmatively cause any
third party to believe he is, a consultant, agent or representative of Scoop
or affiliated in any way with Scoop or the Scoop Parties, except for any
affiliation as a stockholder of Scoop.
1.6 CONFIDENTIALITY.
(a) Except as may be required by law or permitted by
subparagraph (b) of this paragraph 1.6, following the Effective Date, no
party nor any attorney or agent of any party, shall disclose to anyone,
without the prior written consent of all other parties, any information
concerning the disputes relating to the documents attached hereto as
Exhibits "A" through "I" or the terms of this Settlement Agreement and General
Release except in accordance with the following terms:
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(i) Any party may disclose to its accountants,
attorneys and immediate family, to Scoop representatives and to public
agencies the terms of this Settlement Agreement and information concerning
the documents attached hereto as Exhibits "A" through "I": provided however,
that any disclosures to such accountants, attorneys and public agencies may
be made only to the extent necessary to permit such accountants, attorneys
and public agencies to perform necessary or required tax, accounting,
financial, legal or administrative tasks and services.
(ii) Before disclosing information pursuant to
subparagraph 1.6(a)(i) to an accountant or attorney, a party must instruct
the person(s) who will receive the information to maintain the information in
confidence.
(b) Without obtaining the prior written consent of the
Berk Parties, the Scoop Parties shall be entitled to make any disclosures
concerning the documents and information referred to in subparagraph (a) of
this paragraph 1.6 which the Scoop Parties determine, in their sole
discretion, are necessary or appropriate in connection with any public or
private offering of Scoop securities or pursuant to any disclosure or
reporting obligations to which the Scoop Parties may be subject, including
but not limited to, any such disclosures to the Securities and Exchange
Commission, state securities agencies, underwriters, prospective investors,
accountants and attorneys.
2. RELEASE BY THE BERK PARTIES.
2.1 The Berk Parties, on behalf of themselves and each of
them, and their past and present agents, employees, partners, principals,
representatives, attorneys, insurers, reinsurers, estates, executors,
administrators, heirs, successors and assigns, if any, do hereby fully,
finally and forever settle, release and discharge the Scoop Parties and each
of them, and each of their past, present and future parents and subsidiaries,
affiliates, agents, employees, officers, directors, partners, principals,
members, shareholders, representatives, attorneys, insurers, reinsurers, and
all persons acting by, through, under or in concert with the Scoop Parties,
and each of their respective successors and assigns (collectively, the "Scoop
Released Parties") of and from any and all claims, action or actions,
omissions, cause or causes of action, including but not limited to any and
all claims for relief at law or in equity, suits, disputes, debts, contracts,
agreements, promises, liability, demands, damages, loss, attorneys' fees,
cost or expense, of any nature whatsoever, known or unknown, suspected or
unsuspected, fixed or contingent (collectively, hereinafter "Claims"), which
any of the Berk Parties or their agents, employees, partners, principals,
representatives, attorneys, insurers, reinsurers, estates, heirs, executors,
administrators, successors and/or assigns may have had, now have or
hereinafter may have in the future by reason of any matter, cause, or thing
whatsoever or any action or omission of any of the Scoop Released Parties
from the beginning of time to the Effective Date, except for any Claims
arising out of or related to any breach of this Settlement Agreement by any
of the Scoop Parties. Notwithstanding the foregoing, the release set forth
in this paragraph 2.1 shall not affect Stanley Berk & Associates, Berk or
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Grayson's rights to and ownership of the SB&A Shares or Grayson's rights to
and ownership of the Grayson Shares.
2.2 Without in any way limiting the generality of the
foregoing, and subject to the last sentence of Section 2.1 above, it is
expressly understood and agreed that the Berk Parties' Claims released
pursuant to paragraph 2.1 above, specifically include any and all Claims
arising out of or related to (a) the October 24, 1995 Stock Purchase and
Option Agreement attached hereto as Exhibit "A"; (b) the October 24, 1995
Line of Credit Agreement attached hereto as Exhibit "B"; (c) the July 25,
1996 letter agreement attached hereto as Exhibit "C"; (d) the July 26, 1996
General Releases entered into by Berk and Stanley Berk & Associates attached
hereto as Exhibits "D" and "E," respectively; (e) the Grayson Letter
Agreement attached hereto as Exhibit "F"; (f) all purported oral agreements,
representations, omissions and conduct alleged in the draft complaint
attached hereto as Exhibit "G"; and (g) any alleged rights in oral or written
agreements to which any of the Berk Parties is not a named party (i.e.,
alleged third party beneficiary rights), whether such Claims, oral
agreements, and/or third party beneficiary rights are known or unknown to any
of the Berk Parties, or unsuspected by any of the Berk Parties, as of the
Effective Date of this Settlement Agreement.
2.3 No Claims by any of the Berk Parties shall survive the
release set forth in paragraph 2.1 above, except as provided in paragraph 2.1
above with respect to the SB&A Shares, the Grayson Shares and Claims arising
out of or relating to any breach of this Settlement Agreement.
2.4 The Berk Parties and the Scoop Parties agree that the
Scoop Parties' purportedly known or suspected acts, omissions,
representations or failures to disclose, whether willful, negligent or
otherwise, which pre-date the Effective Date are not actionable in any manner
or in any type of proceeding, legal, equitable or otherwise. The parties
further agree that evidence of such purported acts, omissions,
representations or failures to disclose, whether known or unknown, is not
admissible in any proceeding to show course of conduct, intent, bad faith or
the like.
2.5 The Berk Parties represent and warrant that they have not
assigned or otherwise transferred and, as of the Effective Date, they shall
not have assigned or otherwise transferred, any interest in any Claims which
are the subject matter of this Settlement Agreement. The Berk Parties agree,
jointly and severally, to indemnify and hold the Scoop Released Parties
harmless from any claims asserted against any of the Scoop Released Parties
as a result of any person asserting any such assignment or transfer. It is
the intention of the parties that this indemnity does not require payment as
a condition precedent to recovery by the Scoop Released Parties against the
Berk Parties under this indemnity.
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2.6 The Berk Parties agree that if any of the Berk Parties
hereafter commence or join in any proceeding against, or in any manner directly
assert against or seek relief from, any of the Scoop Released Parties arising
out of, based upon or relating to any of the Claims released by the Berk Parties
hereunder, then such action shall constitute a breach of this Settlement
Agreement by the Berk Parties and the Berk Parties, jointly and severally, shall
pay to the Scoop Released Parties, in addition to any other damages caused to
the Scoop Released Parties thereby, all expenses and fees (including those of
attorneys, experts and other professionals) incurred by the Scoop Released
Parties in defending or otherwise responding to said suit or claims and
Liquidated Damages as provided in paragraph 3 below.
2.7 The Berk Parties agree, represent and warrant that, with
respect to the subject matter of the foregoing paragraphs, the Berk Parties have
been advised by their legal counsel and are familiar with the provisions, rights
and benefits of Section 1542 of the California Civil Code, which statute
provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR
and any and all provisions, rights and benefits of any similar statute or common
law principles of California or of any other jurisdiction. The Berk Parties do
hereby expressly waive and relinquish, to the fullest extent permitted by law,
the provisions of said Code Section and any similar provisions of law. The Berk
Parties further acknowledge that they are aware that they may hereafter discover
facts in addition to or different from those which they now know or believe to
be true with respect to the subject matter of this Settlement Agreement, but
that they intend to, and do hereby, fully, finally and forever settle, release
and discharge, all Claims released pursuant to paragraph 2.1 above, without
regard to the subsequent discovery or existence of different or additional
facts.
3. LIQUIDATED DAMAGES. The Berk Parties and the Scoop Parties agree
that, in the event any of the Berk Parties commences or joins in any proceeding
against, or in any manner directly asserts against or seeks relief from, any
Scoop Released Parties arising out of, based upon or relating to any of the
Claims released hereunder, the actual damages which would result therefrom,
including but not limited to (i) hampering or preventing Scoop from completing
its impending initial public offering or other future financing transactions,
(ii) damaging the reputation of the Scoop Parties and (iii) diverting the
attention of the officers of Scoop from their management responsibilities, are
uncertain and extremely difficult or impracticable to ascertain. Therefore, in
the event of such a breach of this Settlement Agreement by any of the Berk
Parties, the Scoop Parties shall be entitled to receive from the Berk Parties as
Liquidated Damages, in addition to any other damages, expenses and fees which
the Berk Parties have agreed to pay to the Scoop Released Parties pursuant to
this
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Settlement Agreement, $200,000 cash as of the date any of the Berk Parties
commences or joins in any proceeding against, or in any manner directly asserts
against or seeks relief from any Scoop Released Parties arising out of, based
upon or relating to any of the Claims released hereunder. The Berk Parties and
the Scoop Parties agree that the aforesaid sum is a reasonable amount for
Liquidated Damages for such a default under the circumstances existing at the
time this Settlement Agreement is entered into.
4. RELEASE BY THE SCOOP PARTIES.
4.1 Subject to paragraph 4.3 below, the Scoop Parties, on behalf
of themselves and each of them, and their past and present agents, employees,
partners, principals, representatives, attorneys, insurers, reinsurers, estates,
executors, administrators, heirs, successors and assigns, if any, do hereby
fully, finally and forever settle, release and discharge the Berk Parties and
each of them, and each of their past, present and future parents and
subsidiaries, affiliates, agents, employees, officers, directors, partners,
principals, members, shareholders, representatives, attorneys, insurers,
reinsurers, and all persons acting by, through, under or in concert with the
Berk Parties, and each of their respective successors and assigns (collectively,
the "Berk Released Parties") of and from any and all Claims which any of the
Scoop Parties or their agents, employees, partners, principals, representatives,
attorneys, insurers, reinsurers, estates, heirs, executors, administrators,
successors and/or assigns may have had, now have or hereinafter may have in the
future by reason of any matter, cause, or thing whatsoever or any action or
omission of any of the Berk Released Parties from the beginning of time to the
Effective Date, except for any Claims arising out of or related to any breach of
this Settlement Agreement by any of the Berk Parties.
4.2 Without in any way limiting the generality of the foregoing,
it is expressly understood and agreed that the Scoop Parties' Claims released
pursuant to paragraph 4.1 above, specifically include any and all Claims arising
out of or related to (a) the October 24, 1995 Stock Purchase and Option
Agreement attached hereto as Exhibit "A"; (b) the October 24, 1995 Line of
Credit Agreement attached hereto as Exhibit "B"; (c) the July 25, 1996 letter
agreement attached hereto as Exhibit "C"; (d) the July 26, 1996 General Releases
entered into by Berk and Stanley Berk & Associates attached hereto as Exhibits
"D" and "E," respectively; (e) the Grayson Letter Agreement attached hereto as
Exhibit "F"; (f) all purported oral agreements, representations, omissions and
conduct alleged in the draft complaint attached hereto as Exhibit "G"; and (g)
any alleged rights in oral or written agreements to which any of the Scoop
Parties is not a named party (i.e., alleged third party beneficiary rights),
whether such Claims, oral agreements, and/or third party beneficiary rights are
known or unknown to any of the Scoop Parties, or unsuspected by any of the Scoop
Parties, as of the Effective Date of this Settlement Agreement.
4.3 No Claims by any of the Scoop Parties shall survive the
release set forth in paragraph 4.1 above, except as provided in paragraph 4.1
above with respect to Claims arising out of or relating to any breach of this
Settlement Agreement and as provided in
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the following sentence of this paragraph 4.3. It is expressly understood and
agreed that in the event any of the Berk Parties, commits the breach
described in paragraph 2.6 above or materially breaches paragraph 1.5,
paragraph 1.6 or any other term, provision or covenant contained in this
Settlement Agreement, then without affecting the continued validity or
enforceability of any other provision of this Settlement Agreement: (a) the
release by the Scoop Parties provided in paragraph 4.1 (including, without
limitation, the release of all Claims referred to in paragraph 4.2) and the
provisions of paragraphs 4.4, 4.6 and 4.7 hereof shall immediately terminate
and be of no further force or effect, and (b) the applicable limitations
period for claims arising from or related to the conduct and documents
discussed in paragraphs 4.1, 4.2, 4.4, 4.6 and 4.7 hereof shall be tolled as
of the Effective Date of this Settlement Agreement.
4.4 Subject to paragraph 4.3 above, the Berk Parties and the
Scoop Parties agree that (a) the Berk Parties' purportedly known or suspected
acts, omissions, representations or failures to disclose, whether willful,
negligent or otherwise, which pre-date the Effective Date are not actionable in
any manner or in any type of proceeding, legal, equitable or otherwise, and (b)
evidence of such purported acts, omissions, representations or failures to
disclose, whether known or unknown, is not admissible in any proceeding to show
course of conduct, intent, bad faith or the like.
4.5 The Scoop Parties represent and warrant that they have not
assigned or otherwise transferred and, as of the Effective Date, they shall not
have assigned or otherwise transferred, any interest in any Claims which are the
subject matter of this Settlement Agreement. The Scoop Parties agree, jointly
and severally, to indemnify and hold the Berk Released Parties harmless from any
claims asserted against any of the Berk Released Parties as a result of any
person asserting any such assignment or transfer. It is the intention of the
parties that this indemnity does not require payment as a condition precedent to
recovery by the Berk Released Parties against the Scoop Parties under this
indemnity.
4.6 Subject to paragraph 4.3 above, the Scoop Parties agree that
if they hereafter commence or join in any proceeding against, or in any manner
directly assert against or seek relief from, any of the Berk Released Parties
arising out of, based upon or relating to any of the Claims released by the
Scoop Parties hereunder, then the Scoop Parties, jointly and severally, shall
pay to the Berk Released Parties, in addition to any other damages caused to the
Berk Released Parties thereby, all expenses and fees (including those of
attorneys, experts and other professionals) incurred by the Berk Released
Parties in defending or otherwise responding to said suit or claims.
4.7 The Scoop Parties agree, represent and warrant that, with
respect to the subject matter of the foregoing paragraphs, the Scoop Parties
have been advised by their legal counsel and are familiar with the provisions,
rights and benefits of Section 1542 of the California Civil Code, which statute
provides:
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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR
and any and all provisions, rights and benefits of any similar statute or common
law principles of California or of any other jurisdiction. The Scoop Parties do
hereby expressly waive and relinquish, to the fullest extent permitted by law,
the provisions of said Code Section and any similar provisions of law. The
Scoop Parties further acknowledge that they are aware that they may hereafter
discover facts in addition to or different from those which they now know or
believe to be true with respect to the subject matter of this Settlement
Agreement, but that they intend to and, subject to paragraph 4.3 above, do
hereby, fully, finally and forever settle, release and discharge, all Claims
released pursuant to paragraph 4.1 above without regard to the subsequent
discovery or existence of different or additional facts.
5. REGISTRATION RIGHTS.
(a) DEMAND RIGHTS. Commencing one year following the closing of
Scoop's initial public offering of Common Stock, and provided that Scoop is
eligible to register Warrant Shares on Form S-3 under the Act, or any successor
form thereto, Berk and Grayson (each a "Holder" for purposes of this Section 5)
shall have the right, exercisable by written notice to Scoop, to have Scoop
prepare, file and use its best efforts to have declared effective by the
Securities and Exchange Commission, a registration statement covering Warrant
Shares owned and held of record by Holder at the time of exercise of such
registration rights. Notwithstanding the foregoing, Scoop shall not be obligated
to effect a registration pursuant to this Section 5(a): (i) after Scoop has
effected one (1) registration of Warrant Shares for Holder pursuant to this
Section 5(a); (ii) during the period starting with the date sixty (60) days
prior to Scoop's good faith estimate of the date of filing of, and ending on a
date one hundred eighty (180) days following the effective date of, a
registration statement pertaining to a firmly underwritten offering of
securities by Scoop, provided that Scoop is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective;
(iii) if Scoop shall furnish Holder a certificate signed by the President of
Scoop stating that in the good faith judgment of the Board of Directors of Scoop
it would be seriously detrimental to Scoop or its stockholders for a
registration statement to be filed at that time, in which case Scoop's
obligations to use its best efforts to file a registration statement shall be
deferred for a period not to exceed ninety (90) days; provided, however, that
Scoop shall not obtain such a deferral more than once in any twelve (12) month
period; or (iv) with respect to any Warrant Shares which may be sold or
transferred by Holder pursuant to Rule 144 of the Act (or any successor rule
thereto) either without volume limitations or in compliance with any applicable
volume limitations.
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(b) PIGGYBACK RIGHTS. Commencing one year following the date of
Scoop's initial public offering of Common Stock, and for the duration of the
exercise periods of the warrant and option referred to in Section 1.1 above,
each time Scoop proposes to file a registration statement under the Act (other
than a registration statement relating to the issuance of securities of Scoop
pursuant to employee benefit plans or the distribution of securities of Scoop in
connection with a merger, acquisition or exchange offer) covering the proposed
sale for cash of shares of its Common Stock on a form that would also permit the
registration of Warrant Shares, Scoop shall give written notice thereof to
Holder. Upon the written request of Holder given within twenty (20) days after
such written notice from Scoop, Scoop shall use its best efforts to cause the
number of Warrant Shares requested by the Holder to be included in the
registration statement. If the managing underwriter or underwriters of such
public offering determine, in their sole discretion, that marketing factors
require a limitation of the number of shares to be underwritten or that the
inclusion of any or all of the Warrant Shares in the registration could
jeopardize the success of the offering by Scoop, the Warrant Shares requested by
the Holder to be registered shall be reduced or excluded from the offering as
determined by the underwriters, in their sole discretion; provided that if any
other holders of Common Stock of Scoop with registration rights have also
requested registration, the number of Warrant Shares and all such other stock
shall be reduced proportionately based upon the number of shares of registrable
stock then held by each of the holders of such registration rights,
respectively. Scoop shall have the right to terminate or withdraw any
registration initiated by it under this Section 5(b) prior to the effectiveness
of such registration whether or not Holder has elected to include Warrant Shares
in such registration. Any sales of Warrant Shares pursuant to a registration
pursuant to this Section 5(b) shall be effected through the underwriter of such
registered offering. The registration rights described in this Section 5(b)
shall terminate prior to the period described above in this Section 5(b) if, and
as of such time, all of the Warrant Shares may be sold or transferred by Holder
in one or more transactions pursuant to Rule 144 under the Act (or any success
or rule thereto) either without volume limitations or in compliance with any
applicable volume limitations.
(c) FURTHER ACTIONS. In connection with any registration of Warrant
Shares pursuant to this Section 5, Scoop agrees to take all reasonable action
necessary to facilitate the sale of the registered Warrant Shares, including
furnishing to Holder such number of prospectuses reasonably required by Holder
to dispose of the Warrant Shares, using its best efforts to register or qualify
the Warrant Shares under the Act and applicable blue sky laws (such action being
herein called a "Filing" or the "Filing") and delivering underwriting agreements
and other documents customarily delivered by issuers in connection with public
offerings. Scoop shall not be required to ensure the availability of a
prospectus meeting the requirements of the Act in connection with any Filings
made pursuant to this Section 5 for a period greater than is required to
complete the marketing arrangements with respect to the securities in such
Filings, and in no event for a period greater than 90 days (or such greater
period as may be required by law for the delivery of such a prospectus).
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(d) EXPENSES. All expenses, filing fees and other costs incurred by
Scoop in connection with any registration of Warrant Shares pursuant to this
Section 5 shall be borne by Scoop; provided, however, that Holder shall pay the
underwriting discounts and commissions applicable to the sale of Warrant Shares
in accordance with the underwriter's customary compensation practices, and shall
pay any fees and disbursements of counsel retained by Holder (other than counsel
also retained by Scoop).
6. MISCELLANEOUS PROVISIONS.
6.1 ENTIRE AGREEMENT. This Settlement Agreement constitutes an
integrated contract expressing the entire agreement of the parties relative to
the subject matter discussed herein. No covenants, agreements or
representations of any kind have been made by any party to any other party,
except as specifically set forth herein. All prior discussions, negotiations
and agreements are superseded by the Settlement Agreement. The Settlement
Agreement shall not be modified, amended or supplemented, and no provision of
the Settlement Agreement shall be waived, except by an agreement in writing
signed by a duly authorized representative of each party.
6.2 ASSISTANCE OF COUNSEL. In executing the Settlement
Agreement, the parties acknowledge that they have consulted with, and have been
advised by, counsel with regard to the provisions of the Settlement Agreement,
have discussed with their counsel the meaning and effect of the Settlement
Agreement and have read and understand the scope and effect of each provision of
the Settlement Agreement.
6.3 NO PARTY DEEMED DRAFTER. The parties acknowledge that the
terms of the Settlement Agreement are contractual and are the result of
negotiations between the parties and their counsel. Each party and their
counsel cooperated in the drafting and preparation of the Settlement Agreement.
In any construction to be made of the Settlement Agreement, the same shall not
be construed against any party and the canon of contract interpretation set
forth in California Civil Code Section 1654 shall not be applied.
6.4 SEVERABILITY. If any provision of the Settlement Agreement
is declared by any court to be illegal or invalid, the validity of the remaining
portions shall not be affected thereby, and the illegal or invalid portions
shall be deemed not a part of the Settlement Agreement.
6.5 AUTHORITY TO EXECUTE. Each party represents and warrants to
the other party that the signatories to the Settlement Agreement have been duly
authorized to execute the Settlement Agreement on behalf of the entities or
individuals identified below or elsewhere in the Settlement Agreement.
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6.6 COUNTERPARTS; FAX SIGNATURES. The Settlement Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original and all of which, taken together, shall constitute one and the same
instrument. Any counterpart signed by a party and delivered to the other
parties by facsimile shall be deemed an original counterpart and duly delivered.
6.7 FURTHER ACTIONS. The parties hereto shall, without further
consideration, execute and deliver such other documents and take such other
action as may be necessary to consummate effectively the subject matter of the
Settlement Agreement.
6.8 CHOICE OF LAW. The Settlement Agreement shall be construed
in accordance with, and all disputes arising thereunder shall be governed by,
the internal laws of the State of California.
6.9 NO THIRD PARTY BENEFICIARIES. No third party beneficiaries,
other than the Scoop Released Parties and the Berk Released Parties, are created
or intended to be created by the provisions of this Settlement Agreement, and
any such intention is expressly disclaimed by the parties.
6.10 JOINT AND SEVERAL LIABILITY. The liabilities and
obligations of the Berk Parties set forth herein shall be joint and several
liabilities and obligations.
6.11 ATTORNEYS' FEES. If any action or proceeding is brought by
any party or parties against any other party or parties pertaining to or arising
out of this Settlement Agreement, the prevailing party or parties shall be
entitled to recover all costs and expenses, including reasonable attorneys'
fees, incurred in connection with such action or proceeding.
7. NOTICES.
7.1 GENERAL. All notices, requests, demands and other
communications which may be given under or concerning this Settlement
Agreement shall be in writing and shall be deemed to have been given as of
the day they are received either by messenger, delivery service, facsimile or
other means, or three business days after the same is sent via United States
of America mails, postage prepaid, certified or registered, return receipt
requested, and addressed as set forth below:
If to the Berk Parties, addressed to:
Mr. Stephen P. Grayson
10850 Wilshire Boulevard, Suite 400
Los Angeles, CA 90024
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If to the Scoop Parties, addressed to:
Scoop, Inc.
2540 Red Hill Avenue, Suite 100
Santa Ana, CA 92705
Attn: Daniel L. Pelekoudas, General Counsel
or to such other place as the parties may designate as to themselves by written
notice to the others.
7.2 NOTICE OF BREACHES. In the event any of the Berk Parties,
on the one hand, or any of the Scoop Parties, on the other hand, become aware
that a breach of this Settlement Agreement has been committed by any of the
other parties, then the parties with such knowledge shall give notice of such
breach or alleged breach to the other parties within thirty (30) days of
obtaining knowledge of such breach or alleged breach.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this Settlement
Agreement effective as of the first date written above.
STANLEY I. BERK
/s/ STANLEY I. BERK
------------------------------
STEPHEN P. GRAYSON,
individually and on behalf of
the Stephen P. Grayson Profit
Sharing Plan
/s/ STEPHEN P. GRAYSON
------------------------------
STANLEY BERK & ASSOCIATES
By: /s/ STANLEY I. BERK
---------------------------
Stanley I. Berk
General Partner
By: /s/ STEPHEN P. GRAYSON
---------------------------
Stephen P. Grayson
General Partner
Approved as to content and form:
/s/ STEPHEN P. GRAYSON
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KARL-MAGNUS S. KARLSSON
/s/ KARL-MAGNUS S. KARLSSON
---------------------------
SCOOP, INC.
By: /s/ MARK A. DAVIDSON
----------------------------
Mark A. Davidson
President and CFO
Approved as to content and form:
/s/ DANIEL L. PELEKOUDAS
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