NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE TRANSFERRED, SOLD, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS
TO THE COMPANY AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY
TO THE COMPANY, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE EFFECT
THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT
REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY"
LAWS.
SCOOP, INC.
COMMON STOCK PURCHASE WARRANT
DATED: FEBRUARY 24, 1997
THIS WARRANT is issued pursuant to that certain Settlement Agreement and
General Release (the "Settlement Agreement") of even date herewith by and
between Stanley Berk, Stephen P. Grayson, individually and on behalf of the
Stephen P. Grayson Profit Sharing Plan (collectively, Grayson"), and Stanley
Berk & Associates (collectively, the "Berk Parties"), on the one hand, and Karl-
Magnus S. Karlsson and Scoop, Inc., a California corporation (the "Company"), on
the other hand.
This certifies that Stephen P. Grayson is the holder (the "Holder") of
this Warrant to purchase, subject to adjustment, 11,250 shares of Common Stock
of the Company, at a per share exercise price, subject to adjustment, equal to
120% of the initial public offering price of the Company's Common Stock (the
"Exercise Price"), subject to the terms and conditions set forth herein. In the
event the Company does not complete an initial public offering of its Common
Stock ("IPO") by June 30, 1997, the Exercise Price shall be $7.20 per share.
1. DEFINITIONS. As used herein the following terms, unless the
context otherwise requires, shall have for all purposes hereof the following
respective meanings:
(a) "Fair Market Value" of a share of Common Stock as of a
given date shall be: (i) the closing price of a share of the Company's Common
Stock on the principal exchange on which shares of the Company's Common Stock
are then trading, if any, on the trading day previous to such date, or, if
shares were not traded on the trading day previous to such date, then on the
next preceding trading day during which a sale occurred; or (ii) if such Common
Stock is not traded on an exchange but is quoted on Nasdaq or a successor
quotation system, (1) the last sales price of the Company's Common Stock on the
last trading day previous to such date that shares of the Common Stock were
traded (if the Company's Common Stock is then listed as a National Market Issue
under the Nasdaq National Market System) or (2) the mean between the closing
representative bid and ask prices (in all other cases) for the Company's Common
Stock on the last trading day previous to
such date that shares of the Common Stock were traded as reported by Nasdaq
or such successor quotation system; or (iii) if such Common Stock is not
publicly traded, the fair market value established by the Company's Board of
Directors or a designated committee thereof acting in good faith.
(b) "Holder," when used with respect to this Warrant or the
Warrant Shares, shall mean the person registered on the books and records of the
Company as being the holder of record of this Warrant or the Warrant Shares, as
the case may be.
(c) "Other Securities" shall mean any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holders of this Warrant at any time shall be entitled to
receive, or shall have received, upon the exercise of this Warrant, in lieu of
or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 3 below or otherwise.
(d) "Warrant Shares" shall mean the shares of Common Stock (or
Other Securities) issued or issuable pursuant to the exercise, in whole or in
part, of this Warrant.
2. EXERCISE OF WARRANT.
(a) EXERCISE OF WARRANT. This Warrant may be exercised in
full or in part by the Holder by surrender of this Warrant, with the form of
Election to Purchase attached hereto (the "Election to Purchase") duly executed
by the Holder, to the Company at its offices at 2540 Red Hill Avenue, Suite 100,
Santa Ana, California 92705 or at such other office or agency as the Company may
designate in writing to the Holder, accompanied by payment in cash or by
certified or bank cashier's check payable to the order of the Company in the
amount obtained by multiplying the number of Warrant Shares designated by the
Holder in the Election to Purchase by the Exercise Price per share; PROVIDED,
HOWEVER, that the Company shall issue Warrant Shares to a Holder upon exercise
of any Warrant only if such issuance is in compliance with Section 4 hereof.
Upon any partial exercise of this Warrant, the Company at its expense will
forthwith issue and deliver to the Holder a new Warrant of like tenor, in the
name of the Holder on the face of this Warrant for the number of Warrant Shares
equal to the number of such shares called for on the face of the surrendered
Warrant (after giving effect to any adjustment therein as provided in Section 3
below) minus the number of such Warrant Shares (after giving effect to such
adjustment) designated by the Holder in the aforementioned Election to Purchase.
(b) EXERCISE PERIOD. This Warrant may be exercised by the
Holder as to all or any lesser number of Warrant Shares at any time and from
time to time during the period (the "Exercise Period") from and after 6:30 a.m.
Pacific Standard time on the earlier of the date the IPO is consummated or July
1, 1997, and until 5:00 p.m. Pacific Standard time on February 23, 2000 (the
"Expiration Date"); provided, however, that the Exercise Period shall expire and
this Warrant shall terminate immediately in the event any of the Berk Parties
commits the breach described in paragraph 2.6 of the Settlement Agreement or
materially breaches paragraph 1.5, paragraph 1.6 or any other term, provision or
covenant of the Settlement Agreement; and provided further, that this
2
Warrant shall be exercisable in multiples of 2,500 Warrant Shares unless all
of the Warrant Shares covered by the Warrant are being exercised.
(c) DELIVERY OF STOCK CERTIFICATES ON EXERCISE. Subject to
Section 4 hereof, as soon as practicable after the exercise of this Warrant in
full or in part, and in any event within ten (10) business days thereafter, the
Company will issue in the name of and deliver to the Holder hereof a certificate
or certificates for the number of fully paid and nonassessable Warrant Shares to
which such Holder shall be entitled upon such exercise, plus cash, in lieu of
any fractional share to which such Holder would otherwise be entitled, as
provided in subsection (d) below, together with any Other Securities and
property (including cash, where applicable) to which such Holder is entitled
upon such exercise pursuant to Section 3 below or otherwise. Certificates
representing the Warrant Shares shall be subject to a stop transfer order and
shall bear the following legend if the Company is advised by counsel that such
legend is necessary at the time of such exercise:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE COMPANY
AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY, IN FORM AND SUBSTANCE
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE PROPOSED
SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT
REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
(d) FRACTIONAL SHARES. The Company will not issue a
fractional share of Common Stock upon exercise of this Warrant. Instead, the
Company will deliver an amount, in cash, equal to the product of (x) the Fair
Market Value of a full share of the Common Stock as of the last trading day
prior to the exercise date times (y) the fractional amount, and rounded to the
nearest whole cent.
3. ADJUSTMENTS. This Warrant is subject to the following terms and
conditions during the term thereof:
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If, after the
date of issuance, the Company: (i) pays a dividend or makes a distribution on
its Common Stock in shares of its capital stock (including Common Stock), (ii)
subdivides its outstanding shares of Common Stock into a greater number of
shares, (iii) combines its outstanding shares of Common Stock into a smaller
number of shares, or issues by reclassification of its Common Stock any shares
of its capital stock or Other Securities (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
corporation), then in each such case, an appropriate and proportionate
adjustment shall be made in the number of Warrant Shares or Other Securities
covered by this Warrant so that the upon exercising this Warrant immediately
after such action, the Holder would be entitled to receive the number of Warrant
Shares or Other Securities that such
3
Holder would have owned immediately following such action if such Holder had
exercised this Warrant immediately prior to such action. The adjustment
shall become effective immediately after (x) the distribution date in the
case of a dividend or distribution and (y) the effective date in the case of
a subdivision, combination or reclassification.
Whenever the number of Warrant Shares purchasable upon the exercise of
this Warrant is adjusted, as herein provided, the per share Exercise Price shall
be adjusted by multiplying such Exercise Price immediately prior to such
adjustment by a fraction, the numerator of which shall be the number of Warrant
Shares purchasable upon the exercise of this Warrant immediately prior to such
adjustment, and the denominator of which shall be the number of Warrant Shares
so purchasable immediately thereafter.
(b) OTHER SECURITIES. If at any time, as a result of an
adjustment made pursuant to this Section 3, the Holder becomes entitled to
purchase Other Securities of the Company or the stock or Other Securities of any
other person, corporate or otherwise, thereafter the number of such Other
Securities so purchasable upon exercise of this Warrant and the Exercise Price
of such securities shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the Warrant Shares contained in this Section 3, and the provisions of this
Warrant with respect to the Warrant Shares, shall apply on like terms to any
such other shares, capital stock or Other Securities.
(c) CONSOLIDATIONS, MERGERS AND OTHER TRANSACTIONS. In case
of any consolidation of the Company with or merger of the Company into another
corporation or other entity, or in case of any sale or conveyance to another
corporation or other entity of the property of the Company as an entirety or
substantially as an entirety, proper provision shall be made so that the Holder
shall have the right thereafter upon payment of the Exercise Price in effect
immediately prior to such action to purchase upon exercise of this Warrant the
kind and amount of Other Securities and property which the Holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had this Warrant been exercised
immediately prior to such action. The Company shall give notice to each Holder
of such provision. Such provision shall provide for adjustments, which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 3.
(d) NOTICE OF ADJUSTMENTS. Whenever the Exercise Price or the
kind or amount of securities purchasable upon the exercise of this Warrant shall
be adjusted pursuant to any of the provisions of this Warrant, the Company shall
thereafter cause to be sent to the Holder a certificate setting forth the
adjustments in the Exercise Price and/or in said number of shares, and also
setting forth in detail the facts requiring such adjustments.
(e) NOTICE OF CERTAIN EVENTS. In the event of (i) any taking
by the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than any regular quarterly dividend paid by the Company) or
other distribution, or any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any Other Securities or property, or to
receive any other right, or (ii) any capital reorganization of the Company, or
any reclassification or recapitalization of the capital
4
stock of the Company, or any transfer of all or substantially all of the
assets of the Company to, or consolidation or merger of the Company with or
into, any other person, or (iii) any voluntary or involuntary dissolution or
liquidation of the Company, then and in each such event the Company will mail
or cause to be mailed to the Holder a notice specifying: (a) the date on
which any such record is to be taken for the purpose of such dividend,
distribution or right and stating the amount and character of such dividend,
distribution or right, or (b) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if
any, as of which the holders of record of Common Stock (or Other Securities)
shall be entitled to exchange their shares of Common Stock (or Other
Securities) for securities or other property deliverable upon such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up. Such notice shall be mailed
at least ten (10) days prior to the proposed record date or the proposed
closing date, as applicable, therein specified.
4. TRANSFERABILITY. The Holder acknowledges that this Warrant is
being acquired in a transaction not involving any public offering within the
meaning of the Act and that neither the Warrants or the Warrant Shares issuable
upon exercise of the Warrants have been registered under the Act. The Holder
shall not offer, sell, transfer or otherwise dispose of the Warrants or any
Warrant Shares in the absence of registration under the Act unless the Holder
delivers to the Company an opinion of counsel reasonably satisfactory to the
Company, in form and substance satisfactory to the Company, to the effect that
the proposed sale, transfer or other disposition may be effected without
registration under the Act and under applicable state securities or blue sky
laws.
5. FURTHER COVENANTS OF THE COMPANY.
(a) RESERVATION OF STOCK. The Company shall at all times
reserve and keep available, solely for issuance and delivery upon the exercise
of this Warrant, all Warrant Shares from time to time issuable upon the exercise
of this Warrant.
(b) TITLE TO STOCK. All of the Warrant Shares delivered upon
the exercise of this Warrant shall be validly issued, fully paid and
nonassessable.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction, upon delivery of an indemnity agreement by the Holder reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, upon surrender by the Holder and cancellation of this Warrant, the
company at the expense of the Holder will execute and deliver, in lieu thereof,
a new Warrant of like tenor.
6. REPRESENTATIONS OF HOLDER. Holder, by accepting this Warrant (i)
represents that the Warrant is acquired for Holder's own account, for investment
purposes only, and that Holder has no present intention of distributing, selling
or otherwise disposing of the Warrant or any Warrant Shares in violation of
applicable securities laws and (ii) acknowledges that as a condition to the
exercise of this Warrant the Company may require the Holder to make such
investment
5
representations with respect to the Warrant Shares issuable upon such
exercise as the Company deems advisable for purposes of complying with
applicable securities laws.
7. NO RIGHTS AS STOCKHOLDER. This Warrant shall not entitle the
Holder to any voting rights or other rights as a stockholder of the Company
unless and except to the extent that Warrant Shares are purchased by the Holder
hereunder.
MISCELLANEOUS. All notices, certificates and other communications
from or at the request of the Company to the Holder of this Warrant shall be
mailed by first class, registered or certified mail, postage prepaid, to such
Holder at the address for such Holder as it appears in the Company's records, or
such other address as such Holder may have furnished to the Company in writing.
This Warrant and any of the terms hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. The
headings in this Warrant are for purposes of reference only and shall not limit
or otherwise affect any of the terms hereof.
9. GOVERNING LAW. This Warrant shall be governed by, and construed
in accordance with, the laws of the State of California applicable to agreements
entered into and to be performed entirely within California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed effective as of the date first set forth above.
SCOOP, INC.
By:/s/ MARK A. DAVIDSON
-------------------------
Mark A. Davidson
Chief Financial Officer
Acknowledged, accepted and
agreed to:
/s/ STEPHEN P. GRAYSON
- ------------------------
STEPHEN P. GRAYSON
6
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise this Warrant to
purchase ______ shares of Common Stock of Scoop, Inc. at the Exercise Price, and
requests that Certificates for such shares be issued and delivered as follows:
ISSUE TO:
---------------------------------------------
(Name)
---------------------------------------------
(Address, including Zip Code)
---------------------------------------------
Social Security or Tax Identification Number)
DELIVER TO:
---------------------------------------------
(Name)
---------------------------------------------
(Address, Including Zip Code)
In full payment of the aggregate purchase price with respect to the
number of shares being purchased upon exercise of this Warrant, the undersigned
hereby tenders payment of $_______________ by certified or bank cashier's check
payable to the order of Scoop, Inc. (the "Company"). If the Warrant is
exercised hereby so as to purchase fewer than all the shares of Common Stock
that may be purchased pursuant to the Warrant, then a new Warrant representing
the number of full shares for which the Warrant has not been exercised should be
issued and delivered as set forth below.
Name of Warrantholder or Assignee:
----------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature Dated:
----------------------------------------- ---------------------
(Signature must conform in all respects to name of holder as
specified on the face of the Warrant)
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
the Assignee named below all of the undersigned's right, title and interest in
and to the within Warrant, with respect to the number of shares of Common Stock
of Scoop, Inc. set forth below:
Name of Assignee Address Number of Social Security
- -------------------- ----------------- Shares of or Taxpayer
Common Stock Identification Number
------------ ---------------------
and does hereby irrevocably authorize the Company to make such transfer on
the Warrant Register maintained at the principal office of the Company.
Dated:
----------------, ------ ---------------------------------------
Signature
(Signature must conform in all respect to
name of holder as specified on the face of
the Warrant).