Exhibit 10.27
WARRANT AGREEMENT dated as of April 24, 2000 (the "Agreement") between
netcruise.com, inc., a New Jersey corporation (the "Company"), whose principal
place of business is 2401 Morris Avenue, Union, NJ 07083 and Brian Shuster
("Shuster"), with his principal place of business at 1990 Westwood Boulevard,
Suite P, Los Angeles, CA 90025 (the "Holder").
W I T N E S S E T H:
- - - - - - - - - -
4
<PAGE>
WHEREAS, the Company proposes to issue to the Holder warrants (the
"Series V Warrant") to purchase up to an aggregate of 100,000 shares of the
Company's common stock, $.0001 par value, (the "Common Stock").
NOW, THEREFORE, in consideration of the premises, the agreements herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Grant. The Company hereby agrees to issue to the Holder the warrants
described in Section 1.1 below.
1.1 Series V Warrant. The Series V Warrant grants to the Holder the
right to purchase, at any time from April 24, 2000 until 5:00 P.M., New York
time, on April 23, 2005, up to an aggregate of 100,000 shares (subject to
adjustment as provided in Section 8 hereof) of Common Stock (the "Shares") at an
initial exercise price (subject to adjustment as provided in Section 8 hereof)
of $1.00 per share subject to the terms and conditions of this Agreement. Except
as set forth herein, the shares issuable upon exercise of the Series V Warrant
are in all respects identical to the shares of Common Stock held by all of the
Company's other shareholders.
2. Warrant Certificate. The warrant certificate (the "Warrant
Certificate") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Warrant. The purchase rights represented by the Warrant
Certificate are exercisable from time to time at the option of the Holder in
whole or part (but not as to fractional shares of the Common Stock). In the case
of the purchase of less than all Common Stock purchasable under a Warrant
Certificate, the Company shall cancel that Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Common Stock purchasable thereunder. Upon
surrender of a Warrant Certificate with the annexed Form of Election to Purchase
duly executed, together with payment of the Exercise Price (as hereinafter
defined in Section 6) for the Common Stock purchased at the Company's principal
offices (presently located at 2401 Morris Avenue, Union, NJ 07083) the Holder
shall be entitled to receive a certificate or certificate for the shares of
Common Stock so purchased.
1
<PAGE>
3.1 Method of Exercise. Payment of the Exercise Price shall at the option of the
Holder be by any one or more of the following three methods:
(a) by payment to the Company of the Exercise Price in cash by delivery to the
Company of an electronic transfer or certified or official bank check in good
funds;
(b) by surrender to the Company of the number of shares of
Common Stock held of record by the Holder which, when valued at the Market Price
(as hereinafter defined in Section 3.2), have an aggregate value equal to the
Exercise Price for the Shares to be issued upon exercise of the Series V
Warrant; or
(c) by delivering to the Company written instructions signed
by the Holder to issue that number of Shares issuable upon the exercise of a
Series V Warrant determined by multiplying the number of Shares in respect of
which the Series V Warrant is being exercised by a fraction, the numerator of
which shall be the Exercise Price on the date of exercise and the denominator of
which shall be the Market Price on the date of exercise.
3.2 Definition of Market Price. As used herein, the phrase "Market Price" at any
date shall be deemed to be the price of the Common Stock determined as follows:
(a) If the Common Stock is listed, or admitted to unlisted
trading privileges on the New York Stock Exchange ("NYSE") or the American Stock
Exchange ("AMEX"), or is traded on the Nasdaq National Market System ("NSM"),
the Market Price shall be the closing sale price of the Common Stock at the end
of the regular trading session on the last business day prior to the date of
exercise of the Series V Warrant on whichever of such exchanges or NSM had the
highest average daily trading volume for the Common Stock on such day; or
(b) If the Common Stock is not listed or admitted to unlisted
trading privileges, on either the NYSE or the AMEX and is not traded on NSM, but
is quoted or reported on Nasdaq, the Market Price shall be the closing price (or
the last sale price, if then reported by Nasdaq) of the Common Stock at the end
of the regular trading session on the last business day prior to the date of
exercise of the Series V Warrant as quoted or reported on Nasdaq; or
(c) If the Common Stock is not listed, or admitted to unlisted
trading privileges, on either of the NYSE or the AMEX, and is not traded on NSM
or quoted or reported on Nasdaq, but is listed or admitted to unlisted trading
privileges on the Boston Stock Exchange ("BSE") or another national securities
exchange (other than the NYSE or the AMEX), the Market Price shall be the
closing price of the Common Stock at the end of the regular trading session on
the last business day prior to the date of exercise of the Series V Warrant on
whichever of such exchanges has the highest average daily trading volume for the
Common Stock on such day; or
2
<PAGE>
(d) If the Common Stock is not listed or admitted to unlisted
trading privileges on any national securities exchange, or listed for trading on
NSM or quoted or reported on Nasdaq, but is traded in the over-the-counter
market, the Market Price shall be the average of the last reported bid and asked
prices of the Common Stock reported by the Nasdaq Bulletin Board or the National
Quotation Bureau, Inc. on the last business day prior to the date of exercise of
the Series V Warrant, whichever is highest; or
(e) If the Common Stock is not listed or admitted to unlisted
trading privileges on any national securities exchange, or listed for trading on
NSM or quoted or reported on Nasdaq, and bid and asked prices of the Common
Stock are not reported by the Nasdaq Bulletin Board or National Quotation
Bureau, Inc., the Market Price shall be the book value thereof as of the end of
the most recently completed fiscal quarter of the Company ending prior to the
date of exercise, determined in accordance with generally acceptable accounting
principles, consistently applied.
4. Issuance of Certificate. Upon the exercise of a Series V Warrant,
the issuance of certificate for shares of Common Stock shall be made forthwith
(and in any event within five (5) business days thereafter) without charge to
the Holder thereof including, without limitation, any tax which may be payable
in respect of the issuance thereof, and such certificate shall (subject to the
provisions of Section 5 hereof) be issued in the name of, or in such names as
may be directed by, the Holder thereof; 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 issuance and delivery of any such certificate in a name
other than that of the Holder and the Company shall not be required to issue or
deliver such certificate 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 satisfaction of the Company that such tax has been paid.
The Warrant Certificate and the certificate representing the Shares
shall be executed on behalf of the Company by the manual or facsimile signature
of the then present Chairman or Vice Chairman of the Board of Directors or
President or Vice President of the Company under its corporate seal reproduced
thereon, attested to by the manual or facsimile signature of the then present
Secretary or Assistant Secretary of the Company. The Warrant Certificate shall
be dated the date of execution by the Company upon initial issuance, division,
exchange, substitution or transfer.
5. Restriction On Transfer of Warrants. The Holder of a Warrant Certificate, by
acceptance thereof, covenants and agrees that the Series V Warrant is being
acquired as an investment
3
<PAGE>
and not with a view to the distribution thereof. The Series V Warrant and the
securities issuable upon exercise thereof may not be offered or sold except
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Act") or, to the extent applicable, Rule 144 under such
Act (or any similar rule under such Act relating to the disposition of
securities), or an opinion of counsel, if such opinion shall be reasonably
satisfactory to counsel for the Company, that an exemption from registration
under such Act is available.
6. Initial and Adjusted Exercise Price. Except as otherwise provided in
Section 8 hereof, the "Exercise Price" of the Series V Warrant to purchase
Common Stock shall be equal to the initial exercise price set forth in Section
1.1 above, subject to the adjustments which shall result from time to time from
in accordance with the provisions of Section 8 hereof.
7. No Right To Registration. The Holder does not have any right to require that
the Company register the Series V Warrant, or the shares of Common Stock
underlying the Series V Warrant, under the Act or under any other law, rule or
regulation of any jurisdiction.
8. Adjustments to Exercise Price and Number of Securities.
8.1 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
8.2 Adjustment in Number of Securities. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 8, the number of
shares of Common Stock issuable upon the exercise at the adjusted exercise price
of the Series V Warrant shall be adjusted to the nearest full amount. The
adjustment shall be determined by multiplying a number equal to the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock issuable upon exercise of the Series V Warrant immediately prior to
such adjustment and dividing the product so obtained by the adjusted Exercise
Price.
8.3 Definition of Common Stock. For the purpose of this Agreement, the
term "Common Stock" shall mean (i) the class of stock designated as Common
Shares in the Certificate of Incorporation of the Company as amended as of the
date hereof, or (ii) any other class of stock resulting from successive changes
or reclassifications of such Common Stock.
8.4 Merger or Consolidation. In case of any consolidation of the Company with,
or merger of the Company with, or merger of the Company into, another
corporation (other than a
4
<PAGE>
consolidation or merger which does not result in any reclassification or change
of the outstanding Common Stock), the corporation formed by such consolidation
or merger shall execute and deliver to the Holder a supplemental warrant
agreement providing that the holder of the Series V Warrant then outstanding or
to be outstanding shall have the right thereafter (until the expiration of such
Series V Warrant) to receive, upon exercise of such warrant, the kind and amount
of shares of stock and other securities and property receivable upon such
consolidation or merger, by a holder of the number of shares of Common Stock of
the Company for which such Series V Warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 8. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
8.5 No Adjustment of Exercise Price in Certain Cases. No adjustment of the
Exercise Price shall be made:
(a) upon the issuance or sale of a Series V Warrant or the shares of Common
Stock issuable upon the exercise of a Series V Warrant;
(b) the issuance of any other class of stock resulting from successive changes
or reclassifications of such Common Stock consisting solely of changes in par
value, or
(b) if the amount of said adjustment shall be less than two
(2) cents per share of Common Stock, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to at least two (2) cents per share of Common Stock.
9. Exchange and Replacement of Warrant Certificate. The Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Common Stock in such denominations as shall
be designed by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of a Series V Warrant,
5
<PAGE>
if mutilated, the Company will make and deliver a new Warrant Certificate of
like tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be
required to issue fractional shares of Common Stock upon the exercise of a
Series V Warrant. Warrants may only be exercised in such multiples as are
required to permit the issuance by the Company of one or more whole shares of
Common Stock. If one or more Series V Warrant shall be presented for exercise in
full at the same time by the same Holder, the number of whole shares of Common
Stock which shall be issuable upon such exercise thereof shall be computed on
the basis of the aggregate number of shares of Common Stock purchasable on
exercise of the Series V Warrants so presented. If any fraction of a share of
Common Stock would, except for the provisions provided herein, be issuable on
the exercise of any Series V Warrant (or specified portion thereof), the Company
shall pay an amount in cash equal to such fraction multiplied by the then Market
Price determined as set forth in Section 3.2 above.
11. Reservation of Securities. The Company shall at all times reserve
and keep available out of its authorized shares of Common Stock, solely for the
purpose of issuance upon the exercise of a Series V Warrant such number of
shares of Common Stock or other securities, properties or rights as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of a Series V Warrant and payment of the Exercise Price therefor, all
shares of Common Stock and other Securities issuable upon such exercise shall be
duly and validly issued, fully paid, non- assessable and not subject to the
preemptive rights of any stockholder.
12. Notices to Warrant Holder. Nothing contained in this Agreement
shall be construed as conferring upon the Holder the right to vote or to consent
or to receive notice as a stockholder in respect of any meetings of stockholders
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Series V Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the Holder of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution payable other than in cash, or a cash dividend or distribution;
or
(b) the Company shall offer to all the Holder of its Common
Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefor; or
6
<PAGE>
(c) a merger or consolidation, dissolution, liquidation or
winding up of the Company, or a sale of all or substantially all of its
property, assets and business as an entirety shall be proposed; then, in any one
or more of said events, the Company shall give written notice of such event at
least thirty (30) days prior to the date fixed as a record date or the date of
closing the transfer books for the determination of the stockholders entitled to
such dividend, distribution, convertible or exchangeable securities or
subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record date or
the date of closing the transfer book, as the case may be.
13. Notice.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made and sent when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of a Series V Warrant, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3
hereof or to such other address as the Company may designate by notice to the
Holder.
14. Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holder and their
respective successors and assigns hereunder.
15. Termination. This Agreement shall terminate at the close of business on
April 23, 2005.
16. Governing Law; Legal Expenses. This Agreement and the Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New Jersey and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
The Company and the Holder agree that the prevailing party in any
action or proceeding filed in connection with this Agreement shall be entitled
to recover from the other party all of its costs and expenses relating to such
action or proceeding and incurred in connection with the preparation therefor,
including but not limited to reasonable legal fees.
7
<PAGE>
17. Entire Agreement; Modification. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.
18. Severability. If any provision of this Agreement shall be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
19. Captions. The caption headings of the Sections of this Agreement are for
convenience of reference only and are not intended, nor should they be construed
as, a part of this Agreement and shall be given no substantive effect.
20. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Holder any legal or equitable right, remedy or claim under this Agreement; and
this Agreement shall be for the sole benefit of the Company and the Holder.
21. Counterparts. This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
netcruise.com, inc.
By: ________________________
Name: Lawrence E. Burk
Title: Chief Executive Officer
-----------------------
Brian Shuster
8
<PAGE>
EXHIBIT A
[FORM OF SERIES V WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, April 23, 2005
No. V-1 Series V Warrants to Purchase
100,000 Shares of Common Stock
SERIES V WARRANT CERTIFICATE
This Warrant Certificate certifies that Brian Shuster, or registered
assigns, is the registered holder of One Hundred Thousand (100,000) Warrants to
purchase initially, at any time from April 24, 2000 until 5:00 p.m. New York
time on April 23, 2005 ("Expiration Date"), up to One Hundred Thousand (100,000)
fully-paid and non-assessable shares of common stock, $.0001 par value ("Common
Stock") of netcruise.com, inc., a New Jersey corporation (the "Company"), at the
initial exercise price, subject to adjustment in certain events (the "Exercise
Price"), equal to $1.00 per share upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the Warrant Agreement dated as of
April 24, 2000 between the Company and Brian Shuster (the "Warrant Agreement").
Payment of the Exercise Price shall be made in accordance with the provisions of
Section 3.1 of the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holder (the word "holder" meaning the registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and the type and number of the Company's securities
issuable thereupon may, subject to certain
1
<PAGE>
conditions, be adjusted. In such event, the Company will, at the request of the
holder, issue a new Warrant Certificate evidencing the adjustment in the
Exercise Price and the number and type of securities issuable upon the exercise
of the Warrants; provided, however, that the failure of the Company to issue
such new Warrant Certificate shall not in any way change, alter, or otherwise
impair, the rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate of
like tenor and evidencing in the aggregate a like number of Warrants shall be
issued to the transferee(s) in exchange for this Warrant Certificate, subject to
the limitations provided herein and in the Warrant Agreement, without any charge
except for any tax or other governmental charge imposed in connection with such
transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder hereof as the
absolute owner of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of April 24, 2000
Attest: netcruise.com, inc.
_/s/ John H. Wasko By: /s/ Lawrence E. Burk
----------------- --------------------
Name: John H. Wasko Name: Lawrence E. Burk
Title: Secretary Title: Chief Executive Officer
[FORM OF ASSIGNMENT]
2
<PAGE>
(To be executed by the registered holder if such
holder desires to transfer the Warrant
Certificate.)
FOR VALUE RECEIVED, hereby sells, assigns and unto
--------------------------------------------
(Please print name and address of transferee
this Warrant Certificate, together with all right, title and interest therein,
and does hereby reasonably constitute and appoint ___________________________,
as Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Date: Signature:
------------------------------
(Signature must
conform in all
respects to name
of holder as
specified on the
face of the
Warrant
Certificate.)
(Insert Social Security or Other Identifying Number of Assignee)
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
3
<PAGE>
Shares
Series V Warrants
and herewith tenders payment for such securities, in accordance with the
provisions of Section 3.1 of the Warrant Agreement dated April 24, 2000 between
the undersigned and netcruise.com, inc., in the amount of $__________. The
undersigned requests that a certificate for such securities be registered in the
name of whose address is and that such Certificate be delivered to whose address
is .
Signature
(Signature must
conform in all
respects to name
of holder as
specified on the
face of the
Warrant
Certificate.)
(Insert Social Security or Other Identifying Number of Holder)
4
