SUBSCRIPTION SUPPLEMENT AND REGISTRATION RIGHTS AGREEMENT
This Subscription Supplement and Registration Rights Agreement (the
"Subscription Supplement"), containing terms applicable to the Subscription
Document, has been incorporated by reference into the Subscription Document.
Each investor should therefore carefully review this Subscription Supplement
before signing the Subscription Document.
1. SUBSCRIPTION FOR UNITS. I subscribe for the number of Units (the
"Units") of Scoop, Inc. (the "Company") set forth in the Subscription Document,
priced at $100,000 per Unit, each Unit consisting of: (i) 33,333 shares of
Common Stock, priced at $2.99 per share, and (ii) 33,333 Cancellable Warrants,
priced at $0.01 per Cancellable Warrant, each Cancellable Warrant to purchase
one share of Common Stock at an exercise price of $3.00 per share.
2. REVIEW OF MEMORANDUM. I HAVE CAREFULLY REVIEWED THE CONFIDENTIAL
OFFERING MEMORANDUM IN CONNECTION WITH THE OFFERING OF UNITS, DATED MAY 24,
1996, AND ANY SUPPLEMENT(S) THERETO PROVIDED BY THE COMPANY (COLLECTIVELY THE
"MEMORANDUM"). I HAVE BEEN FURNISHED WITH AND HAVE CAREFULLY READ THE DOCUMENTS
REFERENCED IN THE MEMORANDUM, AND I AM A SUITABLE INVESTOR AS DESCRIBED IN THE
MEMORANDUM.
3. IRREVOCABILITY OF SUBSCRIPTION. I agree to pay for the Units in the
manner set forth in the Subscription Document. I agree that this subscription is
and shall be irrevocable, but my obligations hereunder will terminate if this
subscription is not accepted by the Company.
4. ILLIQUID INVESTMENT. I understand that investment in the Units is an
ILLIQUID INVESTMENT. In particular, I recognize that:
(a) I must bear the economic risk of investment in the Units for an
indefinite period of time, since neither the Units nor the underlying Common
Stock and Warrants have been registered under the Securities Act of 1933, as
amended (the "Act"), and therefore cannot be sold unless either they are
subsequently registered under the Act or an exemption from such registration is
available and a favorable opinion of counsel for the Company to that effect is
obtained (if requested by the Company);
(b) No established market will exist and it is probable that no
public market for the Common Stock and Warrants will develop as a result of the
offering contemplated by the Memorandum.
5. CONSENT TO LEGENDS. I consent to the affixing by the Company of such
legends on certificates representing the Common Stock and Warrants as any
applicable federal or state securities law may require from time to time.
6. SUBSCRIBER'S REPRESENTATIONS AND WARRANTIES. I represent and warrant
to the Company that:
(a) The financial information provided in the Subscription Document
is complete, true and correct;
(b) I and my investment advisors, if any, have CAREFULLY REVIEWED AND
UNDERSTAND the risks of, and other considerations relating to, a purchase of
Units, including, but not limited to, the risks set forth under "RISK FACTORS"
in the Memorandum;
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(c) I and my investment advisors, if any, have been afforded the
opportunity to obtain any information necessary to verify the accuracy of any
representations or information set forth in the Memorandum, have had all
inquiries to the Company answered and have been furnished all requested
materials, relating to the Company and the offering and sale of the Units and
anything else set forth in the Memorandum;
(d) Neither I nor my investment advisors, if any, have been furnished
any offering literature by the Company or any of its affiliates, associates or
agents other than the Memorandum, and the documents referenced therein;
(e) I am acquiring the Units and underlying securities for which I am
subscribing for my own account, as principal, for investment and not with a view
to the resale or distribution of all or any part of the Units or underlying
securities;
(f) The undersigned, if a corporation, partnership, trust or other
form of business entity: (i) is authorized and otherwise duly qualified to
purchase and hold the Units, (ii) has obtained such additional tax and other
advice that it has deemed necessary, (iii) has its principal place of business
at its residence address set forth in this Subscription Document, and (iv) has
not been formed for the specific purpose of acquiring the Units (although this
may not necessarily disqualify the subscriber as a purchaser). The persons
executing the Subscription Document, as well as all other documents related to
the offering, represent that they are duly authorized to execute all such
documents on behalf of the entity. (If the undersigned is one of the
aforementioned entities, it agrees to supply any additional written information
that may be required.);
(g) All of the information which I have furnished to the Company or
which is set forth in the Subscription Document (including this Subscription
Supplement) is correct and complete as of the date of the Subscription Document.
If any material change in this information should occur prior to my subscription
being accepted, I will immediately furnish the revised or corrected information;
(h) I further agree to be bound by all of the terms and conditions of
the offering described in the Memorandum; and
(i) I am the only person with a direct or indirect interest in the
Units subscribed for by this Subscription Agreement.
7. CERTIFICATION OF INFORMATION. I certify, to the best of my
information and belief, that the above information that I have supplied is true
and correct in all material respects.
8. INDEMNIFICATION OF COMPANY. I agree to indemnify and hold harmless
the Company and its officers, directors and affiliates from and against all
damages, losses, costs and expenses (including reasonable attorneys' fees and
costs) that they may incur by reason of my failure to fulfill any of the terms
or conditions of the Subscription Document (including this Subscription
Supplement), or by reason of any breach of the representations and warranties
made by the undersigned in the Subscription Document (including this
Subscription Supplement), or in any other document provided by the undersigned
to the Company.
9. NONTRANSFERABILITY OF SUBSCRIPTION. This subscription is not
transferable or assignable by me without the written consent of the Company.
10. SUBSCRIBERS' JOINT AND SEVERAL LIABILITY. If more than one person is
executing the Subscription Document, the obligations of each shall be joint and
several and the representations and warranties contained in this Subscription
Supplement shall be deemed to be made by, and be binding upon, each of these
persons and his or her heirs, executors, administrators, successors and assigns.
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11. SUCCESSORS AND ASSIGNS. This subscription, upon acceptance by the
Company, shall be binding upon my heirs, executors, administrators, successors
and assigns.
12. GOVERNING LAW. This Subscription Supplement shall be construed in
accordance with and governed in all respects by the laws of the State of
California.
13. REGISTRATION RIGHTS. I acknowledge and agree that I will have the
following registration rights with respect to the shares of Common Stock
purchased by me pursuant to the Memorandum and the shares of Common Stock
issuable upon my exercise of the Cancellable Warrants (unless the Cancellable
Warrants become null and void as provided therein) purchased by me pursuant to
the Memorandum:
(a) If at any time the Company proposes to register any of its shares
of Common Stock under the Act (other than in connection with a merger,
acquisition or exchange offer or pursuant to Form S-8 or successor form) it will
give written notice by registered mail, at least 20 days prior to the filing of
each such registration statement to all holders of Registrable Securities (as
defined in subparagraph (g) below) of its intention to do so. Upon the written
request of any holder of Registrable Securities given within 10 days after
receipt of any such notice of his, her or its desire to include any Registrable
Securities in such proposed registration statement, the Company shall afford
such holders of Registrable Securities the opportunity to have such holder's
Registrable Securities registered under such registration (subject to the
underwriter's approval thereof). The "piggyback" registration rights described
in this Paragraph 13(a) shall terminate at such time as the Registrable
Securities are saleable in one or more transactions pursuant to Rule 144 of the
Act. Any sales of Registrable Securities pursuant to such registration
statement shall be effected through the underwriter of such registered offering,
if any, and the holders thereof shall compensate the underwriter in accordance
with its customary compensation practices.
Notwithstanding anything to the contrary contained in the provisions
of this Paragraph 13(a), the Company shall have the right at any time after it
shall have given written notice pursuant to this Paragraph 13(a) (irrespective
of whether a written request for inclusion of any such Registrable Securities
shall have been made) to elect not to file any such proposed registration
statement, or to withdraw the same after the filing but prior to the effective
date thereof.
(b) At any time after the date which is 18 months after the initial
closing of the offering which is the subject of the Memorandum and expiring
three (3) years thereafter, holders representing a "Majority of the Registrable
Securities" (as defined in subparagraph (h) below) shall have the right (which
right is in addition to the registration rights under Paragraph 13(a) hereof),
exercisable by written notice to the Company, to have the Company prepare, file
and use its best efforts to have declared effective by the Securities and
Exchange Commission (the "Commission"), on one occasion, a registration
statement and such other documents, including a prospectus, as may be necessary
in the opinion of both counsel for the Company and counsel for the holders of
the Registrable Securities, if any, in order to comply with the provisions of
the Act, so as to permit a public offering and sale of their respective
Registrable Securities for 12 consecutive months thereafter by such holders and
any other holders of Registrable Securities who notify the Company within 10
days after receiving notice from the Company of such registration request of
their desire to include their Registrable Securities in such registration.
The Company covenants and agrees to give written notice of any
registration request under this Paragraph 13(b) by any holders of Registrable
Securities to all other registered holders of Registrable Securities within 10
days from the date of the receipt of any such registration request.
(c) Notwithstanding anything to the contrary contained in this
Subscription Supplement: (1) the Company shall not be obligated to effect a
registration pursuant to this Paragraph 13 during the period starting with the
date 90 days prior to the Company's estimated date of filing of, and ending on a
date 90 days following the effective date of, a registration statement
pertaining to a
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public offering; provided that the Company is actively employing in good faith
all reasonable efforts to cause such registration statement to become effective
and that the Company's estimate of the date of filing such registration
statement is made in good faith; and (2) if the Company shall furnish the
holders of Registrable Securities a certificate signed by the President of the
Company stating that, in the good faith judgment of the Company's Board of
Directors, it would be seriously detrimental to the Company or its shareholders
for a registration statement to be filed in the near future, then the Company's
obligations to use its best efforts to file a registration statement on demand
pursuant to the provisions of Paragraph 13(b) hereof shall be deferred for a
period not to exceed 90 days; provided, however, that the Company shall not
obtain such a deferral more than once in any 12-month period.
(d) The Company shall indemnify and hold harmless the holders of
Registrable Securities from and against any and all losses, claims, damages and
liabilities caused by any untrue statement of a material fact contained in any
registration statement filed by the Company under the Act by reason of this
Paragraph 13, any post-effective amendment to such registration statement, or
any prospectus included therein, or caused by any omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission based upon
information furnished or required to be furnished in writing to the Company by a
holder of Registrable Securities (or the authorized representatives or agents of
such holder of Registrable Securities) expressly for use therein, which
indemnification shall include each person, if any, who controls such holder of
Registrable Securities within the meaning of the Act and each officer, director,
employee and agent of such holder of Registrable Securities; provided, however,
that the indemnification in this Paragraph 13(d) with respect to any prospectus
shall not inure to the benefit of a holder of Registrable Securities, (or to the
benefit of any person controlling such holder of Registrable Securities) on
account of any such loss, claim, damage or liability arising from the sale of
Registrable Securities by such holder, if a copy of a subsequent prospectus
correcting the untrue statement or omission in such earlier prospectus was
provided to such holder of Registrable Securities by the Company prior to the
subject sale and the subsequent prospectus was not delivered or sent by such
holder of Registrable Securities to the purchaser of such Registrable Securities
prior to such sale; and provided further, that the Company shall not be
obligated to so indemnify such holder of Registrable Securities or any other
person referred to above unless such holder of the Registrable Securities or
other person, as the case may be, shall at the same time indemnify the Company,
its directors, each officer signing the registration statement and each person,
if any, who controls the Company within the meaning of the Act, from and against
any and all losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in any registration statement or any
prospectus required to be filed or furnished in connection with such public
offering or caused by any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
insofar as such losses, claims, damages or liabilities are caused by any untrue
statement or omission based upon information furnished in writing to the Company
by such holder of Registrable Securities expressly for use therein.
If for any reason the indemnification provided for in the
preceding subparagraph is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, claim, damage,
liability or expense referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by the indemnified party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the indemnifying party,
but also the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations.
(e) All expenses, filing fees and other costs incurred by the Company
in connection with any registration of securities pursuant to this Paragraph 13
(exclusive of underwriting discounts and selling commissions applicable to any
sale of registered securities) shall be borne by the Company.
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In the case of each registration effected by the Company pursuant
to the provisions of this Paragraph 13, the Company will: (i) furnish to the
holders of Registrable Securities such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as such holders may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them, and (ii)
notify each holder of Registrable Securities covered by such registration
statement at any time when a prospectus relating thereto is required to be
delivered under the Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
(f) Notwithstanding anything to the contrary contained herein, the
holders of Registrable Securities acknowledge and agree that, with the exception
of private sales or transfers which are not effected through a broker-dealer,
neither the holders of Registrable Securities nor any affiliate of the holders
of Registrable Securities or any transferees or assignees of the holders of
Registrable Securities or any affiliate of the holders of Registrable Securities
will sell, pledge, assign or otherwise transfer or hypothecate any Registrable
Securities through any person or other entity other than such entity which is or
shall be the Company's underwriter in a public offering, in which event such
underwriter is to be compensated by the holders of the Registrable Securities,
an affiliate of the holders of the Registrable Securities or such transferee or
assignee of the Registrable Securities in accordance with the underwriter's
customary compensation practices.
(g) For purposes hereof, the term "Registrable Securities" means:
(i) the shares of Common Stock and the shares of Common Stock underlying the
Cancellable Warrants (unless the Cancellable Warrants become null and void as
provided therein) issued by the Company in the offering which is the subject of
the Memorandum; and (ii) the shares of Common Stock and shares of Common Stock
underlying the cancellable warrants issued in the May 1996 Offering (as defined
in the Memorandum).
(h) For purposes hereof, the term "Majority of the Registrable
Securities" means holders of in excess of fifty percent (50%) of the then
outstanding or Registrable Securities that: (i) are not held by the Company, an
affiliate, officer, employee or agent thereof or any of their respective
affiliates, members of their families, or persons acting as nominees or in
conjunction therewith; or (ii) have not been previously resold to the public
pursuant to a registration statement filed with the Commission under the Act.
14. LOCK-UP BY UNDERWRITER. Notwithstanding anything to the contrary
contained in the Memorandum or in Paragraph 13 hereof, I acknowledge and agree
that, in the event of an initial public offering by the Company, I will not
sell, pledge, assign or otherwise transfer or hypothecate the Units (including
any shares of Common Stock, Cancellable Warrants or shares of Common Stock
underlying the Cancellable Warrants comprising the Units) during the 12-month
period following the effective date of such initial public offering without the
prior written consent of the underwriter of such initial public offering. Any
sales of Units (including any shares of Common Stock, Cancellable Warrants or
shares of Common Stock underlying the Cancellable Warrants) consented to by such
underwriter during such lock-up period shall be effected through such
underwriter and the holders thereof shall compensate such underwriter in
accordance with its customary practices.
15. PUT OPTION. I acknowledge and agree that I will have the following
right to have the Company redeem all of the Units purchased by me pursuant to
the Memorandum:
(a) If the Company does not complete an initial public offering of
its shares of Common Stock and have such shares of Common Stock quoted for
trading on a national securities exchange or NASDAQ within a period of 24 months
after the date of the initial closing of the offering which is the subject of
the Memorandum, record holders of at least a Majority of the Redeemable
Securities (as defined in subparagraph (f) below) shall have the right, in lieu
of exercising their demand
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registration rights described in Paragraph 13 (b) hereof, to elect to have the
Company redeem, exercisable upon written notice to the Company, all of the
Redeemable Securities (as defined in subparagraph (e) below), whether or not the
holders of the Redeemable Securities are part of the Majority of the Redeemable
Securities electing such redemption, and, subject to the provisions of Paragraph
16 hereof, the Company agrees that it shall be obligated to redeem all of the
Redeemable Securities at a cash price equal to the greater of: (i) $100,000 per
Redeemable Security plus a return of 10% per annum thereon (compounded
annually); or (ii) the fair market value of the Redeemable Securities, as
determined by a nationally recognized business valuation firm which is mutually
acceptable to the Company and The Boston Group, L.P., which fair market value
shall be determined assuming that the Company is then a public reporting company
under the Securities Exchange Act of 1934, as amended, and assuming that the
Redeemable Securities are then freely trading on NASDAQ.
(b) The Company covenants and agrees to give written notice of its
receipt of notice from holders of a Majority of the Redeemable Securities of the
exercise of the redemption rights provided by this Section 15 to all other
registered owners of Redeemable Securities within 10 days from the date of the
receipt of such notice from holders of a Majority of the Redeemable Securities.
The Company further covenants and agrees to redeem all of the Redeemable
Securities that it may lawfully redeem within 10 days after the fair market
value of the Redeemable Securities shall have been determined pursuant to the
provisions of this Paragraph 15.
(c) If the Company is not able to redeem all of such Redeemable
Securities because of the provisions of Paragraph 16 hereof, the Company shall
nevertheless be obligated to redeem that number of Redeemable Securities that it
shall then be entitled to redeem ratably from the holders of such Redeemable
Securities and shall further be obligated to redeem the remainder of the
Redeemable Securities as soon as funds are legally available therefor and to pay
interest on the deferred portion of the redemption price for such unredeemed
Redeemable Securities at the maximum rate of interest then permitted by
California law.
(d) So long as the Company has not redeemed all of the Redeemable
Securities pursuant to the provisions of this Paragraph 15, the undersigned
shareholders of the Company hereby covenant and agree that they shall vote all
of their shares of Common Stock of the Company such that the holders of the
Redeemable Securities shall be entitled to elect a majority of the Company's
Board of Directors. Such undersigned shareholders of the Company hereby further
covenant and agree they will not, without the prior written consent of holders
of a Majority of the Redeemable Securities, cause the Company to issue shares of
its Common Stock or other voting securities such that they, together with all
holders of the Redeemable Securities, will not at all times be entitled to elect
at least a majority of the Company's Board of Directors.
(e) For purposes hereof, the term "Redeemable Securities" means:
(i) all Units issued by the Company in the offering which is the subject of the
Memorandum; and (ii) all units issued by the Company in the May 1996 Offering.
(f) For purposes, the term "Majority of the Redeemable Securities"
means holders of in excess of fifty percent (50%) of the then outstanding
Redeemable Securities that are not held by the Company, an affiliate, officer,
employee or agent thereof or any of their respective affiliates, members of
their facilities, or persons acting as nominees or in conjunction therewith.
16. RESTRICTIONS ON REDEMPTION OF UNITS. The obligation of the Company to
redeem all of the Units pursuant to the provisions of Paragraph 15 hereof shall
be subject to the provisions of: (i) Section 500 ET SEQ. of the California
General Corporation Law, or any similar provisions hereinafter enacted,
restricting generally the right of a corporation to repurchase and redeem its
equity securities; and (ii) any provisions in any loan documents heretofore or
hereafter executed by the Company in favor of its institutional or other lenders
prohibiting and/or limiting the Company's ability to repurchase and redeem
shares of its Common Stock and/or its other equity securities.
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UNDERTAKING BY CERTAIN SHAREHOLDERS OF COMPANY
Each of the undersigned hereby agrees to be bound by the provisions of
Xxxxxxxxx 00 (x) hereof.
/S/ XXXX-XXXXXX X. XXXXXXXX
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