DATA CALL TECHNOLOGIES,
INC.
WARRANT
AGREEMENT
DATA
CALL TECHNOLOGIES, INC. (the “Company”), for value received,
hereby agrees to issue common stock purchase warrants entitling
DAVID M. LOEV, 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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Representations and
Warranties .
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The Company represents and warrants to you as
follows:
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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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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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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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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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Exercise of Warrant, Partial
Exercise .
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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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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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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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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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In cash;
by wire transfer; by certified or cashier’s check, or money
order; or
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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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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 t
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