DATA CALL TECHNOLOGIES, INC. WARRANT AGREEMENT
Exhibit 10.17
DATA
CALL TECHNOLOGIES, INC.
Date:
January 2, 2007
To
Whom
It May Concern:
DATA
CALL TECHNOLOGIES, INC.
(the
“Company”), for value received, hereby agrees to issue common stock purchase
warrants entitling ▇▇▇▇▇
▇. ▇▇▇▇, or
his
assigns (“Holder”
or “Warrant Holder”) to purchase an aggregate of 1,000,000 shares of the
Company’s common stock (“Common Stock”). Such warrant is evidenced by a warrant
certificate in the form attached hereto as Schedule 1 (such instrument being
hereinafter referred to as a “Warrant,” and such Warrant and all instruments
hereafter issued in replacement, substitution, combination or subdivision
thereof being hereinafter collectively referred to as the “Warrant”). The
Warrant is issued to Holder in consideration for legal services rendered to
the
Company. The number of shares of Common Stock purchasable upon exercise of
the
Warrant is subject to adjustment as provided in Section 5 below. The Warrant
will be exercisable by the Warrant Holder (as defined below) as to all or any
lesser number of shares of Common Stock covered thereby, at an initial purchase
price of US $0.10 per share (the “Purchase Price”), subject to adjustment as
provided in Section 5 below, for the exercise period defined in Section 3(a)
below.
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1.
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Representations
and Warranties.
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The
Company represents and warrants to you as follows:
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(a)
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Corporate
and Other Action.
The Company has all requisite power and authority (corporate and
other),
and has taken all necessary corporate action, to authorize, execute,
deliver and perform this Warrant Agreement, to execute, issue, sell
and
deliver the Warrant and a certificate or certificates evidencing
the
Warrant, to authorize and reserve for issue and, upon payment from
time to
time of the Purchase Price, to issue, sell and deliver, the shares
of the
Common Stock issuable upon exercise of the Warrant (“Shares”), and to
perform all of its obligations under this Warrant Agreement and the
Warrant. The Shares, when issued in accordance with this Warrant
Agreement, will be duly authorized and validly issued and outstanding,
fully paid and nonassessable and free of all liens, claims, encumbrances
and preemptive rights. This Warrant Agreement and, when issued, each
Warrant issued pursuant hereto, has been or will be duly executed
and
delivered by the Company and is or will be a legal, valid and binding
agreement of the Company, enforceable in accordance with its terms.
No
authorization, approval, consent or other order of any governmental
entity, regulatory authority or other third party is required for
such
authorization, execution, delivery, performance, issue or
sale.
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(b)
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No
Violation.
The execution and delivery of this Warrant Agreement, the consummation
of
the transactions herein contemplated and the compliance with the
terms and
provisions of this Warrant Agreement and of the Warrant will not
conflict
with, or result in a breach of, or constitute a default or an event
permitting acceleration under, any statute, the Articles of Incorporation
or Bylaws of the Company or any indenture, mortgage, deed of trust,
note,
bank loan, credit agreement, franchise, license, lease, permit, or
any
other agreement, understanding, instrument, judgment, decree, order,
statute, rule or regulation to which the Company is a party or by
which it
is bound.
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2.
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Transfer.
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(a)
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Transferability
of Warrant.
The Warrant Holder agrees that the Warrant is being acquired as an
investment and not with a view to distribution thereof and that;
the
Warrant may not be transferred, sold, assigned or hypothecated except
as
provided herein. The Warrant Holder further acknowledges that the
Warrant
may not be transferred, sold, assigned or hypothecated unless pursuant
to
a registration statement that has become effective under the Securities
Act of 1933, as amended (the “Act”), setting forth the terms of such
offering and other pertinent data with respect thereto, or unless
the
Warrant Holder has provided the Company with an acceptable opinion
from
acceptable counsel that such registration is not required. Certificates
representing the Warrant shall bear an appropriate legend. Notwithstanding
the foregoing, any request to transfer the Warrant must be accompanied
by
the Form of Assignment and Transfer attached hereto as Schedule 2
executed
by the Warrant Holder.
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(b)
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Registration
of Shares.
You agree not to make any sale or other disposition of the Shares
except
pursuant to a registration statement which has become effective under
the
Act, setting forth the terms of such offering, the underwriting discount
and commissions and any other pertinent data with respect thereto,
unless
you have provided the Company with an acceptable opinion of counsel
acceptable to the Company that such registration is not required.
Certificates representing the Shares, which are not registered as
provided
in this Section 2, shall bear an appropriate legend and be subject
to a
“stop-transfer” order.
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3.
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Exercise
of Warrant, Partial Exercise.
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(a)
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Exercise
Period.
This Warrant shall expire and all rights hereunder shall be extinguished
three (3) years from the date first written above.
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(b)
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Exercise
in Full.
Subject to Section 3(a), a Warrant may be exercised in full by the
Warrant
Holder by surrender of the Warrant, with the Form of Subscription
attached
hereto as Schedule 3 executed by such Warrant Holder, to the Company,
accompanied by payment as determined by 3(d) below, in the amount
obtained
by multiplying the number of Shares represented by the respective
Warrant
by the Purchase Price per share (after giving effect to any adjustments
as
provided in Section 5 below).
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(c)
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Partial
Exercise.
Subject to Section 3(a), each Warrant may be exercised in part by
the
Warrant Holder by surrender of the Warrant, with the Form of Subscription
attached hereto as Schedule 3 at the end thereof duly executed by
such
Warrant Holder, in the manner and at the place provided in Section
3(b)
above, accompanied by payment as determined by 3(d) below, in amount
obtained by multiplying the number of Shares designated by the Warrant
Holder in the Form of Subscription attached hereto as Schedule 3
to the
Warrant by the Purchase Price per share (after giving effect to any
adjustments as provided in Section 5 below). Upon any such partial
exercise, the Company at its expense will forthwith issue and deliver
to
or upon the order of the Warrant Holder a new Warrant of like tenor,
in
the name of the Warrant Holder subject to Section 2(a), calling in
the
aggregate for the purchase of the number of Shares equal to the number
of
such Shares called for on the face of the respective Warrant (after
giving
effect to any adjustment herein as provided in Section 5 below) minus
the
number of such Shares designated by the Warrant Holder in the
aforementioned form of
subscription.
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(d)
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Payment
of Purchase Price.
The Purchase Price may be made by any of the following or a combination
thereof, at the election of the Warrant Holder:
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(i)
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In
cash; by wire transfer; by certified or cashier’s check, or money order;
or
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(ii)
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By
delivery to the Company of an exercise notice that requests the Company
to
issue to the Warrant Holder the
full number of shares as to which the Warrant is then
exercisable, less the number of shares that have
an aggregate Fair Market Value, as determined by the Board in
its sole
discretion at the time of exercise, equal to the aggregate
purchase price of the shares to which such exercise relates.
(This method of exercise allows the Warrant Holder to use a portion
of the shares issuable at the time of exercise as payment for the
shares to which the Warrant relates and is often referred to as a
"cashless exercise." For example, if the Warrant Holder elects to
exercise
1,000 shares at an exercise price of $0.25 and the current Fair
Market Value of the shares on the date of exercise is $1.00,
the Warrant Holder can use 250 of the 1,000 shares at $1.00 per share
to pay for the exercise of the entire Warrant (250 x $1.00 =
$250.00) and receive only the remaining 750
shares).
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For
purposes of this section, "Fair Market Value” shall be defined as the average
closing price of the Common Stock (if actual sales price information on any
trading day is not available, the closing bid price shall be used) for the
five
trading days prior to the date of exercise of this Warrant (the “Average Closing
Bid Price”), as reported by the National Association of Securities Dealers
Automated Quotation System (“NASDAQ”), or if the Common Stock is not traded on
NASDAQ, the Average Closing Bid Price in the over-the-counter market; provided,
however, that if the Common Stock is listed on a stock exchange, the Fair Market
Value shall be the Average Closing Bid Price on such exchange; and, provided
further, that if the Common Stock is not quoted or listed by any organization,
the fair value of the Common Stock, as determined by the Board of Directors
of
the Company, whose determination shall be conclusive, shall be used). In
no event shall the Fair Market Value of any share of Common Stock be less than
its par value.
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4.
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Delivery
of Stock Certificates on Exercise.
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Any
exercise of the Warrant pursuant to Section 3 shall be deemed to
have been
effected immediately prior to the close of business on the date on
which
the Warrant together with the Form of Subscription and the payment
for the
aggregate Purchase Price shall have been received by the Company.
At such
time, the person or persons in whose name or names any certificate
or
certificates representing the Shares or Other Securities (as defined
below) shall be issuable upon such exercise shall be deemed to have
become
the holder or holders of record of the Shares or Other Securities
so
purchased. As soon as practicable after the exercise of any Warrant
in
full or in part, and in any event within Ten (10) business days
thereafter, the Company at its expense (including the payment by
it of any
applicable issue taxes) will cause to be issued in the name of, and
delivered to the purchasing Warrant Holder, a certificate or certificates
representing the number of fully paid and nonassessable shares of
Common
Stock or Other Securities to which such Warrant Holder shall be entitled
upon such exercise, plus in lieu of any fractional share to which
such
Warrant Holder would otherwise be entitled, cash in an amount determined
pursuant to Section 5(e). The term “Other Securities” refers to any stock
(other than Common Stock), other securities or assets (including
cash) of
the Company or any other person (corporate or otherwise) which the
Warrant
Holder at any time shall be entitled to receive, or shall have received,
upon the exercise of the 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 5 below or otherwise.
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5.
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Adjustment
of Purchase Price and Number of Shares
Purchasable.
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The
Purchase Price and the number of Shares are subject to adjustment from time
to
time as set forth in this Section 5.
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(a)
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In
case the Company shall at any time after the date of this Warrant
Agreement (i) declare a dividend on the Common Stock in shares of
its
capital stock, (ii) subdivide the outstanding Common Stock, (iii)
combine
the outstanding Common Stock into a smaller number of Common Stock,
or
(iv) issue any shares of its capital stock by reclassification of
the
Common Stock (including any such reclassification in connection with
a
consolidation or merger in which the Company is the continuing
corporation), then in each case the Purchase Price, and the number
and
kind of Shares receivable upon exercise, in effect at the time of
the
record date for such dividend or of the effective date
of
such subdivision, combination, or reclassification shall be
proportionately adjusted so that the holder of any Warrant exercised
after
such time shall be entitled to receive the aggregate number and
kind of
Shares which, if such Warrant had been exercised immediately prior
to such
record date, he would have owned upon such exercise and been entitled
to
receive by virtue of such dividend, subdivision, combination, or
reclassification. Such adjustment shall be made successively whenever
any
event listed above shall
occur.
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(b)
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No
adjustment in the Purchase Price shall be required if such adjustment
is
less than US $0.01; provided,
however,
that any adjustments which by reason of this subsection (b) are not
required to be made shall be carried forward and taken into account
in any
subsequent adjustment. All calculations under this Section 5 shall
be made
to the nearest cent or to the nearest one-thousandth of a share,
as the
case may be.
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(c)
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Upon
each adjustment of the Purchase Price as a result of the calculations
made
in subsection (a) of this Section 5, the Warrant outstanding prior
to the
making of the adjustment in the Purchase Price shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number
of
Shares (calculated to the nearest thousandth) obtained by (i) multiplying
the number of Shares purchasable upon exercise of the Warrant immediately
prior to adjustment of the number of Shares by the Purchase Price
in
effect prior to adjustment of the Purchase Price and (ii) dividing
the
product so obtained by the Purchase Price in effect immediately after
such
adjustment of the Purchase Price.
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6.
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Further
Covenants of the Company.
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(a)
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Dilution
or Impairments.
The Company will not, by amendment of its certificate of incorporation
or
through any reorganization, transfer of assets, consolidation, merger
or
dissolution, avoid or seek to avoid the observance or performance
of any
of the terms of the Warrant or of this Warrant Agreement, but will
at all
times in good faith assist in the carrying out of all such terms
and in
the taking of all such action as may be necessary or appropriate
in order
to protect the rights of the Warrant Holder against dilution or other
impairment. Without limiting the generality of the foregoing, the
Company:
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(i)
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shall
at all times reserve and keep available, solely for issuance and
delivery
upon the exercise of the Warrant, all shares of Common Stock (or
Other
Securities) from time to time issuable upon the exercise of the Warrant
and shall take all necessary actions to ensure that the par value
per
share, if any, of the Common Stock (or Other Securities) is at all
times
equal to or less than the then effective Purchase Price per share;
and
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(ii)
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will
take all such action as may be necessary or appropriate in order
that the
Company may validly and legally issue fully paid and nonassessable
shares
of
Common
Stock or Other Securities upon the exercise of the Warrant from
time to
time outstanding.
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(b)
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Title
to Stock.
All Shares delivered upon the exercise of the Warrant shall be validly
issued, fully paid and nonassessable; each Warrant Holder shall,
upon such
delivery, receive good and marketable title to the Shares, free and
clear
of all voting and other trust arrangements, liens, encumbrances,
equities
and claims whatsoever; and the Company shall have paid all taxes,
if any,
in respect of the issuance thereof.
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(c)
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Exchange
of Warrant.
Subject to Section 2(a) hereof, upon surrender for exchange of any
Warrant
to the Company, the Company at its expense will promptly issue and
deliver
to or upon the order of the holder thereof a new Warrant or like
tenor, in
the name of such holder, calling in the aggregate for the purchase
of the
number of Shares called for on the face of the Warrant surrendered.
The
Warrant and all rights thereunder are not transferable in whole or
in part
upon the books of the Company.
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(d)
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Replacement
of Warrant.
Upon receipt of evidence reasonably satisfactory to the Company of
the
loss, theft, destruction or mutilation of any Warrant and, in the
case of
any such loss, theft or destruction, upon delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company
or, in
the case of any such mutilation, upon surrender and cancellation
of such
Warrant, the Company, at the expense of the Warrant Holder, will
execute
and deliver, in lieu thereof, a new Warrant of like
tenor.
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(e)
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Fractional
Shares.
No fractional Shares are to be issued upon the exercise of any Warrant,
but the Company shall round any fraction of a share to the nearest
whole
Share.
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7.
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Miscellaneous.
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All
notices, certificates and other communications from or at the request of the
Company to any Warrant Holder shall be mailed by first class, registered or
certified mail, postage prepaid, to such address as may have been furnished
to
the Company in writing by such Warrant Holder, or, until an address is so
furnished, to the address of the last holder of such Warrant who has so
furnished an address to the Company, except as otherwise provided herein. This
Warrant Agreement 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. This
Warrant Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Texas. The headings in this Warrant
Agreement are for purposes of reference only and shall not limit or otherwise
affect any of the terms hereof. This Warrant Agreement, together with the forms
of instruments annexed hereto as schedules, constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof.
For
purposes of this Warrant Agreement, a faxed signature shall constitute an
original signature.
IN
WITNESS WHEREOF, the Company has caused this Warrant Agreement to be executed
on
this 2nd day of January 2007, in Houston, Texas, by its proper corporate
officers, thereunto duly authorized.
DATA
CALL TECHNOLOGIES, INC.
By
/s/
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇,
Chief
Executive Officer
SCHEDULE 1
WARRANT
THIS
WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), IN
RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN SECTIONS 3 AND 4
OF
SUCH ACT AND REGULATION S PROMULGATED THEREUNDER; OR (B) ANY STATE SECURITIES
LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THIS WARRANT MAY NOT
BE
EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE ACT
OR
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS WARRANT MUST BE ACQUIRED
FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR, AND NEITHER THE WARRANT
NOR
THE UNDERLYING STOCK MAY BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE PROVISIONS
OF REGULATION S AND OTHER LAWS OR PURSUANT TO REGISTRATION UNDER THE ACT OR
AN
AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS INVOLVING THIS
WARRANT OR THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE ACT.
To
Purchase 1,000,000 Shares
of
Common
Stock
DATA
CALL TECHNOLOGIES, INC.
This
certifies that, for value received, the hereafter named registered owner is
entitled, subject to the terms and conditions of this Warrant, until the
expiration date, to purchase the number of shares (the “Shares”) set forth above
of the common stock (“Common Stock”), of DATA CALL TECHNOLOGIES, INC. (the
“Company”) from the Company at the purchase price per share hereafter set forth
below, on delivery of this Warrant to the Company with the exercise form duly
executed and payment of the purchase price (in cash or by certified or bank
cashier’s check payable to the order of the Company) for each Share purchased.
This Warrant is subject to the terms of the Warrant Agreement between the
parties thereto dated as of January 2, 2007, the terms of which are hereby
incorporated herein. Reference is hereby made to such Warrant Agreement for
a
further statement of the rights of the holder of this Warrant, including, but
not limited to the expiration dates of this Warrant as described in Section
3 of
the Warrant Agreement.
Registered
Owner: ▇▇▇▇▇
▇. ▇▇▇▇
Date:
January
2, 2007
Purchase
Price
Per
Share:
US
$0.10
Expiration
Date:
January
2, 2010, 5:00 p.m. Central Standard Time.
WITNESS
the signature of the Company’s authorized officer:
DATA
CALL TECHNOLOGIES, INC.
By
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇,
Chief Executive Officer
SCHEDULE 2
FORM
OF ASSIGNMENT AND TRANSFER
For
value
received, the undersigned hereby sells, assigns and transfers unto
__________________________________ the right represented by the enclosed Warrant
to purchase _________________ shares of Common Stock of DATA CALL TECHNOLOGIES,
INC. to which the enclosed Warrant relates, and appoints
Attorney
to transfer such right on the books of DATA CALL TECHNOLOGIES, INC. with full
power of substitution in the premises.
The
undersigned represents and warrants that the transfer of the enclosed Warrant
is
permitted by the terms of the Warrant Agreement pursuant to which the enclosed
Warrant has been issued, and the transferee hereof, by his, her or its
acceptance of this Agreement, represents and warrants that he, she or it is
familiar with the terms of said Warrant Agreement and agrees to be bound by
the
terms thereof with the same force and effect as if a signatory
thereto.
Dated:______________
____________________________________________
(Signature
must conform in all respects to name of holder
as
specified on the face of the enclosed Warrant)
____________________________________________
(Printed
Name)
____________________________________________
(Address)
Signed
in
the presence of:
____________________________________
SCHEDULE
3
FORM
OF SUBSCRIPTION
(To
be
signed only upon exercise of Warrant)
To
DATA
CALL TECHNOLOGIES, INC.:
The
undersigned, the holder of the enclosed Warrant, hereby irrevocably elects
to
exercise the purchase right represented by such Warrant for, and to purchase
thereunder, ______________ *
shares
of Common Stock of DATA CALL TECHNOLOGIES, INC. and herewith makes payment
of US
$_______________(or elects to pay for the exercise in shares of common stock
pursuant to Section 3(d)(ii) of the Warrant Agreement as evidenced by the
calculation below by checking this box o),
and
requests that the certificate or certificates for such shares be issued in
the
name of and delivered to the undersigned.
Dated:______________
____________________________________________
(Signature
must conform in all respects to name of holder
as
specified on the face of the enclosed Warrant)
____________________________________________
(Printed
Name)
____________________________________________
(Address)
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(*)
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Insert
here the number of shares called for on the face of the Warrant or,
in the
case of a partial exercise, the portion thereof as to which the Warrant
is
being exercised, in either case without making any adjustment for
additional Common Stock or any other stock or other securities or
property
which, pursuant to the adjustment provisions of the Warrant Agreement
pursuant to which the Warrant was granted, may be delivered upon
exercise.
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Calculation
pursuant to Section 3(d)(ii) of the Warrant Agreement
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________________
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Total
Shares Exercised
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________________
=
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Purchase
Price (as
defined and adjusted in the Warrant Agreement)
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________________
=
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Fair
Market Value
-
the
average closing price of the Common Stock (if actual sales price
information on any trading day is not available, the closing bid
price
shall be used) for the five trading days prior to the date of exercise
of
this Warrant (the “Average Closing Bid Price”), as reported by the
National Association of Securities Dealers Automated Quotation System
(“NASDAQ”), or if the Common Stock is not traded on NASDAQ, the Average
Closing Bid Price in the over-the-counter market; provided, however,
that
if the Common Stock is listed on a stock exchange, the Fair Market
Value
shall be the Average Closing Bid Price on such exchange; and, provided
further, that if the Common Stock is not quoted or listed by any
organization, the fair value of the Common Stock, as determined by
the
Board of Directors of the Company, whose determination shall be
conclusive, shall be used). In no event shall the Fair Market Value
of any share of Common Stock be less than its par
value.
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Total
Shares Exercised x Purchase Price
_____________
= Shares to be Issued
= Total Shares
Exercised
--------------------------------------------------
Fair Market Value