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EXHIBIT 4(viii)
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of September ____ 1996, between Avalon
Community Services, Inc., a Nevada corporation, (the "Company") and American
Securities Transfer, Inc. of Denver, Colorado as warrant agent (the "Warrant
Agent").
W I T N E S S E T H:
WHEREAS, the Company issued without registration under the Securities
Act of 1933, as amended (the "Act") or the securities laws of any state, in
reliance upon Regulation D promulgated by the Securities and Exchange
Commission under the Act and on similar exemptions under applicable state laws
275,000 Redeemable Common Stock Purchase Warrants (the "Warrants"); and
WHEREAS, the Warrants and the shares of Common Stock to be issued upon
the exercise of the Warrants are being registered with the Securities and
Exchange Commission in an S-2 Registration Statement; and
WHEREAS, the Warrants shall be evidenced by separate warrant
certificates. Each definitive Warrant shall provide that the registered holder
thereof may exercise that Warrant, in whole or in part in the manner set forth
herein, to purchase, at the Exercise Price per share (as defined in Section 6
hereof), the number of shares of common stock set forth in the Warrant (both
the number of the shares and the Exercise Price subject to adjustment as set
forth in Section 12 hereof); and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, transfer, exchange, replacement and exercise of warrant certificates
and other matters as provided herein;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein set forth, and intending to be legally bound, the parties hereto agree
as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement and the Warrant Agent
hereby accepts that appointment.
SECTION 2. Form of Warrants. The definitive Warrants to be delivered
pursuant to this Agreement shall be substantially in the form set forth in
Exhibit A attached hereto.
SECTION 3. Execution of Warrants. (a) The Warrants in definitive
form shall be signed on behalf of the Company, manually or by facsimile
signature, by its Chairman of the Board or President, and by its Secretary or
an Assistant Secretary under its corporate seal, and shall be manually
countersigned by the Warrant Agent. A Warrant signed on behalf of the Company
as aforesaid by an incumbent in office at the time of signature shall be valid,
and may be countersigned and issued by the Warrant Agent, notwithstanding the
fact that at the time of countersignature and issuance by the Warrant Agent
such signatory shall have ceased to be the incumbent in such office. The seal
of the Company may be in the form of a facsimile thereof and may be impressed,
affixed, imprinted or otherwise reproduced on the Warrants. No Warrant shall
be valid for any purpose unless countersigned manually by the Warrant Agent.
(b) Warrants shall be dated the date of countersignature
by the Warrant Agent.
SECTION 4. Registered Owners. The Company and the Warrant Agent may
deem and treat the registered holder of a Warrant as the absolute owner thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for the purpose of any exercise thereof and any distribution to the
holder thereof and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
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SECTION 5. Registration of Warrants; Transfers and Exchanges. (a)
The Warrant Agent shall register the transfer, split-up, combination or
exchange of any outstanding Warrant upon the records to be maintained by it for
that purpose, upon surrender thereof accompanied by a written instrument or
instruments of transfer in form satisfactory to the Warrant Agent, duly
executed by the registered holder or holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney. Upon any
registration of transfer, a new Warrant shall be issued to the transferee and
the surrendered Warrant shall be canceled by the Warrant Agent. Canceled
Warrants shall thereafter be disposed of in a manner satisfactory to the
Company.
(b) Any Warrant may be split up, combined or otherwise
exchanged at the option of the holder thereof, upon surrender to the Warrant
Agent at its office or agency maintained for the purpose of exchanging,
transferring, exercising or converting the Warrants in Denver, Colorado (each
office being referred to as a "Warrant Agent Office"), for another Warrant or
other Warrants of like tenor and for the purchase, in the aggregate, of a like
number of Shares. Warrants so surrendered shall be canceled by the Warrant
Agent. Canceled Warrants shall then be disposed of by the Warrant Agent in a
manner satisfactory to the Company.
(c) The Warrant Agent is hereby authorized to
countersign, in accordance with the provisions of Section 3 hereof, and deliver
any new Warrants required pursuant to the provisions of this Section 5.
SECTION 6. Duration and Exercise of Warrants. (a) The Warrants
shall expire at 5:00 p.m. E.S.T. on August 2, 2001 which is the fifth
anniversary of the issue date of the Warrants by the Company (such expiration
date hereafter referred to as the "Expiration Date"). The Company may, in its
sole discretion, extend the Expiration Date upon notice thereof to the Warrant
Agent. Each Warrant may be exercised on any business day prior to the close of
business on the Expiration Date by delivery of the Warrant to the Warrant Agent
no later than the Expiration Date and by satisfaction of the other terms and
conditions as set forth herein.
(b) No fractional shares shall be issued upon surrender
of a Warrant for exercise but, in lieu of fractional shares, the Company shall
pay to the registered holder of a surrendered Warrant, as soon as practicable
after the date of surrender, an amount in cash obtained by multiplying the
current market value of a share by the fraction of the share to which such
Warrant relates. The current market value of a share shall be (i) if the
common stock is listed on a national securities exchange or admitted to
unlisted trading privileges on such an exchange, the last reported sale price
of a share of common stock on such exchange on the last business day prior to
the date of the exercise of the Warrant or if no such sale is made on such day,
the average of the closing bid and asked prices of a share on such exchange;
(ii) if the common stock is included on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), the last sale price reported by
NASDAQ on the last business day prior to the date of exercise of the Warrant or
if last sale prices of the common stock are not so reported, the average of the
closing bid and asked prices of a share for such day reported by NASDAQ; (iii)
if the common stock is not listed or admitted to unlisted trading privileges on
an exchange, or included on NASDAQ, the average of the highest reported bid and
lowest reported asked prices of a share as furnished by the National Quotation
Bureau on the last business day prior to the date of exercise of the Warrant;
or (iv) in all other cases, an amount determined in such reasonable manner as
may be prescribed by the Board of Directors of the Company.
(c) Subject to the provisions of this Agreement,
including Section 6(e) and 12 hereof, the holder of a Warrant shall have the
right to purchase from the Company (and the Company shall issue and sell to
that holder) the number of fully paid and nonassessable shares set forth in the
Warrant at the exercise price of $5.12 per share (the "Exercise Price") (the
number of shares and Exercise Price being subject to adjustment as provided in
this Section 6(c) and in Section 12 hereof) upon the surrender of that Warrant
to the Warrant Agent on any business day prior to the close of business on the
Expiration Date, at the Warrant Agent's Office described in Paragraph 17, with
the form of election to purchase on the reserve thereof duly filled in and
signed, and payment of the Exercise Price in lawful money of the United States
of America by certified check payable to the Company. The Warrants shall be so
exercisable at any time prior to the close of business on the Expiration Date,
at the election of the registered holder thereof, either an entirety or from
time to time in part. In the event that fewer than all the shares purchasable
upon the exercise of a Warrant are purchased at any time prior to the close of
business on the Expiration Date, a new Warrant will be issued for the remaining
number of shares purchasable upon the
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exercise of the Warrant so surrendered. No adjustments shall be made for any
cash dividends on shares issuable on the exercise of a Warrant.
The Company may in its sole discretion, reduce the Exercise Price upon
notice thereof to the Warrant Agent.
(d) Subject to Section 8 hereof, upon surrender of a
Warrant and receipt of payment of the Exercise Price, the Warrant Agent shall
requisition from the transfer agent for the common stock, for issuance and
delivery to or upon the written order of the registered holder of that Warrant
and in such name or names as the registered holder may designate, the shares
issuable upon exercise. Shares shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become the
holder of record of those shares as of the date of the surrender of a Warrant
and payment of the appropriate Exercise Price. The Warrant Agent is hereby
authorized to countersign and deliver, in accordance with the provisions of
Section 3 hereof, any Warrant required pursuant to the provisions of this
Section 6.
(e) The Company represents and warrants to the Warrant
Agent that from and after the Registration Date (A) so long as any unexpired
warrants remain outstanding the Company will (i) file such post-effective
amendments to the Registration Statement, and provide such supplements to the
Memorandum included in the Registration Statement, as may be necessary to keep
the Registration Statement in effect and to permit it to deliver to each person
exercising a Warrant a Memorandum meeting the requirements of Section 10(a) of
the Act and otherwise complying therewith, and will deliver such a Memorandum
to each such persons, and (ii) take such other action in each state in which
the Warrants were publicly offered for sale by the Company as from time to time
may be required under the securities laws of such state to permit the Shares
issuable upon exercise of the Warrants to be lawfully issued and sold in such
state upon exercise of the Warrants; and (B) it will furnish to the Warrant
Agent, upon request, an opinion of counsel to the effect that the Registration
Statement is then in effect and that the Memorandum complies as to form in all
material respects (except as to financial statements as to which such counsel
need express no opinion) with the requirements of the act and the rules and
regulations of the SEC thereunder. The Company may authorize the Warrant Agent
to suspend the exercise of any of the Warrants during such period as is
necessary to obtain or keep effective any registration, qualification, or other
governmental approval under federal and applicable state securities laws
required in connection with the exercise of the Warrants. The exercise of any
Warrant for which an election exercise is received by the Warrant Agent prior
to the Expiration Date during the period of such a suspension shall be
effective immediately upon notice to the Warrant Agent of the removal of such
suspension, notwithstanding that the removal of the suspension occurs after the
Effective Date.
SECTION 7. Redemption of Warrants. (a) The Company may redeem the
outstanding Warrants, in whole or in part, upon not less than 30 days' prior
notice (the "Notice of Redemption"), at a price of $0.01 per Warrant (the
"Redemption Price"), provided that (a) the closing bid price of the Shares on
the NASDAQ System or NASDAQ National Market System, as applicable for 30
consecutive trading days ending on the date of the Notice of Redemption, equals
or exceeds $6.00 per Share and (b) a Registration Statement of the Company
covering the Warrants and the Shares issuable upon the exercise of the Warrants
is current at all times during the 30 days immediately preceding and following
the Notice of Redemption. If the Company shall determine so to redeem less
than all of the Warrants then outstanding, then the Warrant Agent shall
determine the Warrants to be redeemed by such manner or method as it shall deem
fair and appropriate, whether by lot or otherwise,
(b) The Company shall give notice to the Warrant Agent of
any redemption in sufficient time so that the Warrant Agent shall give the
Notice of Redemption to all Holders of Warrant Certificates to be redeemed at
least 30 days prior to the date established for such redemption (the
"Redemption Date"). Each Notice of Redemption shall: (a) specify the
Redemption Date and the Redemption Price; (b) state that payment of the
Redemption Price will be made by the Warrant Agent upon presentation and
surrender, to the Warrant Agent at the Warrant Agent's Office, of the Warrant
Certificates representing the Warrants being redeemed; (c) state that the
rights to exercise the Warrants shall terminate at 5:00 p.m. New York time, on
the Redemption date; and (d) if less than all of the Warrants then outstanding
are being redeemed, specify the serial numbers or portions of the Warrants to
be redeemed. The Company shall also make prompt public announcement of such
redemption by publication in The Wall Street Journal at the time of the Warrant
Agent's mailing of the Notice of Redemption.
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(c) On or prior to the opening of business on the
Redemption Date, the Company shall deposit with the Warrant Agent cash or an
irrevocable letter of credit issued by a national or state bank and in form
reasonably satisfactory to the Warrant agent, sufficient in amount to purchase
all of the Warrants stated in the Notice of Redemption to be redeemed. Payment
of the Redemption Price shall be made by the Warrant Agent upon presentation
and surrender of the Warrant Certificates representing such Warrants to the
Warrant Agent at the Warrant Agent's Office. If the Notice of Redemption shall
have been duly given and if the Company shall have duly deposited with the
Warrant Agent the cash or irrevocable letter of credit required by this Section
7(c), then any Warrants not exercised by 5:00 p.m., New York time, on the
Redemption Date shall no longer be deemed to be outstanding, and all rights
with respect to such Warrants shall from and after such time and date cease and
terminate, except only for the right of the Holders thereof to receive the
Redemption Price, without interest.
SECTION 8. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of shares upon the exercise of
a Warrant prior to the close of business on the Expiration Date; provided,
however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue of any Warrant
or any certificates for shares in a name other than that of the registered
holder of the Warrant surrendered upon the exercise of a Warrant, and neither
the Company nor the Warrant Agent shall be required to issue or deliver such
Warrant or stock certificates 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.
SECTION 9. Mutilated or Missing Warrant Certificates. In case a
Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue,
and the Warrant Agent shall countersign and deliver, in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of shares, but only upon
receipt of evidence satisfactory to the Company and the Warrant Agent of loss,
theft or destruction of that Warrant, and an indemnity bond, if requested,
satisfactory to the Company and the Warrant Agent, the expense of which shall
be borne by the Warrantholder. A Warrantholder requesting a substitute Warrant
shall so comply with all other reasonable regulations and pay all other
reasonable charges as the Company or the Warrant Agent may prescribe.
SECTION 10. Reservation of Shares. (a) The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued common stock, for the purpose of
enabling it to satisfy any obligation to issue shares upon exercise of
Warrants, through the close of business on the Expiration Date, the number of
shares deliverable upon the exercise of all outstanding Warrants, and the
transfer agent for the common stock is hereby irrevocably authorized and
directed at all times to reserve that number of authorized and unissued shares
of common stock as shall be required for that purpose. The Company will keep a
copy of this Agreement on file with that transfer agent. The Warrant Agent is
hereby irrevocably authorized to requisition from time to time from the
transfer agent certificates for shares issuable upon exercise of outstanding
Warrants, and the Company will supply such transfer agent with duly executed
stock certificates for such purpose.
(b) Before taking any action which would cause an
adjustment to Section 12 hereof reducing the Exercise Price below the then par
value (if any) of the shares issuable upon exercise of the Warrants the Company
will take any corporate action which may, in the opinion of counsel (which may
be counsel employed by the Company), be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares at the Exercise
Price as so adjusted.
(c) The Company covenants that all shares issued upon
exercise of the Warrants will, upon issuance in accordance with the terms of
this Agreement, be fully paid and nonassessable and free from all liens,
charges and security interests created by the Company with respect to the
issuance thereof.
SECTION 11. Obtaining of Governmental Approvals. The Company from
time to time will use its best efforts to obtain and keep effective any and all
permits, consents and approvals of governmental agencies and authorities and to
make securities acts filings under federal and state laws, which may be or
become requisite in connection with the issuance, sale, transfer, delivery or
exercise of the Warrants.
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SECTION 12. Adjustment of Exercise Price and Number of Shares
Purchasable Hereunder. The Exercise Price and the number of Warrant shares
purchasable upon the exercise of the Warrants are subject to adjustment from
time to time upon the occurrence of the events enumerated in this Section 12.
(a) In case the Company shall at any time after the date
of this Agreement (i) declare a dividend on its capital stock payable in shares
of its capital stock (whether shares of common stock or of capital stock of any
other class), (ii) subdivide the outstanding common stock, (iii) combine the
outstanding common stock into a smaller number of shares, (iv) issue any shares
of its capital stock (other than (a) issuances of restricted securities in
connection with acquisitions by the Company; (b) the grant of stock options to
persons covered by incentive stock option plans, provided that no more than the
greater of 250,000 shares of Common Stock be issued pursuant to such plans
until the expiration or redemption of the Warrants; (c) warrants to accommodate
lines of credit or creditors, provided that no registration or registration
rights shall be afforded such warrants or the underlying Shares at any time
within one year after the Registration Date; (d) Class B Common Stock voting
shares and up to 750,000 warrants, exercisable for one share of common stock
each, at an exercise price of $1.50 to be issued to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or his
designee solely upon ▇▇. ▇▇▇▇▇'▇ guarantee of corporate obligations. The
Company may authorize one warrant for each one dollar of corporate obligations
guaranteed by ▇▇▇▇▇ upon to the maximum amount. For this exception to the
anti-dilution provisions to apply, the corporate debt must first be approved by
the Board of Directors, be bona fide, and the guarantee must be reasonably
required by the creditor), or (v) engage in any other recapitalization, the
Exercise Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination, reclassification, issuance
or recapitalization, shall be proportionately adjusted so that the holder of
the Warrant exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Warrant had
been exercised immediately prior to such date, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination, reclassification, issuance or recapitalization. These
anti-dilution provisions shall remain in full force and effect until redemption
of all Warrants then outstanding or expiration of the Warrants. These
anti-dilution provisions may be terminated by the Company provided: (i) that
the bid price of the Company's common stock shall have been $4.00 or more for
sixty (60) consecutive trading days; (ii) the Company presents to Westminster
Securities Corporation, as placement agent for the Warrants ("Westminster") a
bona fide offer, agreement, term sheet, or Underwriting Agreement by a duly
licensed broker-dealer proposing to place, on a firm or best efforts basis,
securities of the Company; and (iii) effecting the agreement would trigger
application of the anti-dilution provisions. If these conditions are met, the
Company shall notify Westminster and afford Westminster ten (10) business days
in which to match the terms offered to the Company. At the expiration of the
ten (10) day period, the Company may terminate the anti-dilution provisions by
appropriate corporate action, if Westminster has not matched the offering.
Such adjustment shall be made successively whenever any event listed above
shall occur and notice of same shall be promptly provided by the Company to the
Warrant Agent accompanied by the appropriately converted numbers of Warrants
and Shares. Westminster shall have the authority, on behalf of all of the
Warrantholders, to waive the requirement for adjustments in the event of
issuance of shares of capital stock by the Company.
(b) In case the Company shall issue rights or warrants to
all holder of common stock entitling them to subscribe for or purchase common
stock (or securities convertible into common stock) at a price per share of
common stock (or having a conversion price per share of common stock, if a
security convertible into common stock) less than the current market price per
share of common stock (as defined in Section 12(d)) on the record date
mentioned below, the Exercise Price to be in effect after such record date
shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, of which the numerator shall be the
number of shares of common stock outstanding on such record date plus the
number of shares of common stock which the aggregate offering price of the
total number of shares of common stock so to be offered (or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price and of which the denominator shall be the
number of shares of common stock outstanding on such record date plus the
number of additional shares of common stock to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid in
consideration, part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined by the Board of Directors of
the Company, whose determination shall be conclusive, Shares of common stock
owned by or held for the account of the Company or any majority-owned
subsidiary shall not be deemed
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outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued the Exercise Price shall again be
adjusted to be the Exercise Price which would then be in effect if such record
date had not been fixed, but such subsequent adjustment shall not affect the
number of Warrant shares issued upon any exercise of a Warrant prior to the
date such adjustment is made,
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of common stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends payable in common stock) or
subscription rights or warrants (excluding those referred to in Section 12(b)),
the Exercise Price to be in effect after such record date shall be determined
by multiplying the Exercise Price in effect immediately prior to such record
date by a fraction of which (i) the numerator shall be the current market price
per share of common stock (as defined in Section 12(d)), on such record date,
less the fair market value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive) of the portion of the assets
or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one share of common stock, and of which (ii)
the denominator shall be such current market price per share of common stock.
Such adjustment shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Exercise
Price shall again be adjusted to be the Exercise Price which would then be in
effect if such record date had not been fixed but such subsequent adjustment
shall not affect the number of Warrant shares issued upon any exercise of a
Warrant prior to the date such adjustment is made.
(d) For the purpose of any computation under Section
12(b) or (c) the current market price per share of common stock on any date
shall be deemed to be the average of the daily closing prices for the 30
consecutive trading days immediately preceding the date of determination. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, on the principal national securities exchange on
which the common stock is listed or admitted to trading, of if the common stock
is not listed or admitted to trading on any national securities exchange, the
average of the highest reported bid and lowest reported asked prices as
furnished by the National Association of Securities Dealers ("NASD") or similar
organization if the NASD is no longer reporting such information, or, if not so
available, the fair market price as determined by the Board of Directors of the
Company.
(e) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least five
cents ($.05) in such price; provided, however, that any adjustments which by
reason of this Section 12(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 12 shall be made to the nearest cent or to the nearest one-
hundredth of a share, as the case may be.
(f) In the event that at any time, as a result of an
adjustment made pursuant to Section 12(a) the holder of the Warrant thereafter
exercised shall become entitled to receive any shares of capital stock of the
Company other than shares of common stock, thereafter the number of such other
shares so receivable upon exercise of the Warrant 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 common stock purchasable
pursuant to this Warrant as determined by the Company.
(g) Upon each adjustment of the Exercise Price as a
result of the calculations made in Section 12(a), (b) or (c), the Warrant
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Exercise Price, that number of
Warrant shares (calculated to the nearest hundredth) obtained by (i)
multiplying the number of Warrant shares purchasable upon exercise of the
Warrant immediately prior to such adjustment of the number of Warrant shares by
the Exercise Price in effect immediately prior to such adjustment of the
Exercise Price and (ii) dividing the product so obtained by the Exercise Price
in effect immediately after such adjustment of the Exercise Price.
(h) In case of any capital reorganization of the Company,
or of any reclassification of the common stock (other than a change in par
value, or from par value to no par value, or from no par value to par
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value, or as a result of subdivision or combination), or in case of the
consolidation of the Company with or the merger of the Company with any other
corporation or association (other than a consolidation or merger in which (i)
the Company is the continuing corporation and (ii) the holders of the Company'
common stock immediately prior to such merger or consolidation continue as
holders of common stock after such merger or consolidation) or of the sale of
the properties and assets of the Company as, or substantially as, an entirety
to any other corporation or association, the Warrant shall after such
reorganization, reclassification, consolidation, merger or sale be exercisable,
upon the terms and conditions specified in this Agreement, for the number of
shares of stock or other securities or property to which a holder of the number
of Warrant shares purchasable (at the time of such reorganization,
reclassification consolidation, merger or sale) upon exercise of such Warrant
would have been entitled upon such reorganization, reclassification
consolidation, merger or sale; and in any such case, if necessary, the
provisions set forth in this Section 12 with respect to the rights and
interests thereafter of the holder of the Warrant shall be appropriately
adjusted by the Company so as to be applicable, as nearly as may reasonably be,
to any shares of stock or other securities or property thereafter deliverable
on the exercise of the Warrant. The subdivision or combination of shares of
common stock at any time outstanding into a greater or lesser number of shares
shall not be deemed to be a reclassification of the common stock for the
purposes of this Section 12(h). The Company shall not effect any such
consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof the successor corporation or association (if other than
the Company) resulting from such consolidation or merger or the entity
purchasing such assets or other appropriate entity shall assume, by written
instrument executed and delivered to the Company, the obligation to deliver to
the holder of the Warrant such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase and the other obligations under this Agreement.
SECTION 13. Merger, Consolidation or Change of Name of Warrant Agent.
Any corporation or entity into which the Warrant Agent may be merged or
converted or with which it may be consolidated, or any corporation or entity
resulting from any merger, conversion or consolidation to which the Warrant
Agent shall be a party, or any corporation or entity succeeding to the
corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further action on the part of any of the parties hereto, provided that such
corporation or entity would be eligible for appointment as a successor Warrant
Agent under the provisions of Section 16 hereof. In case at the time the
successor to the Warrant Agent shall succeed under this Agreement any Warrants
shall have been countersigned but not delivered, the successor to the Warrant
Agent may adopt the countersignature of the original Warrant Agent, and in case
at that time any Warrants shall not have been countersigned, any successor to
the Warrant Agent may countersign such Warrants either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent; and in
all the foregoing cases Warrants shall have the full force provided in the
Warrant certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrants shall have been countersigned but not
delivered, the Warrant Agent whose name has changed may adopt the
countersignature under its prior name, and in case at that time any Warrants
shall not have been countersigned, the Warrant Agent may countersign such
Warrants either in its prior name or in its changed name, and in all such cases
such Warrants shall have the full force provided in the Warrants and in this
Agreement.
SECTION 14. Warrant Agent. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants by their
acceptance thereof, shall be bound:
(a) the statements contained herein and in the Warrants
shall be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as described
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the execution, delivery or
distribution of the Warrants except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any
failure of the Company to comply with any of the covenants contained in this
Agreement or in the Warrants to be complied with by the Company nor shall it at
any time be under any duty or responsibility to any holder of a Warrant to make
or cause to be made any adjustment in the Exercise Price or in the number of
shares issuable (except as instructed in writing by the
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Company), or to determine whether any facts exist which may require any
adjustments, or with respect to the nature or extent of or method employed in
making any adjustments when made, or to verify the accuracy of any
representation made to it by the Company as to a change in the Exercise Price
or the amount of shares which may be purchased with a warrant.
(c) The Warrant Agent may consult at any time with
counsel satisfactory to it (who may be counsel for the Company or an employee
of the Warrant Agent) and the Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of any Warrant in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or
responsibility to the Company or to any Warrantholder for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate or
other paper, document or instrument believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.
(e) The Company shall pay to the Warrant Agent for its
services under this Agreement such compensation as they shall agree upon, to
reimburse the Warrant Agent upon demand for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of its duties under this Agreement and to
indemnify the Warrant Agent and hold it harmless against any and all losses,
liability and expenses, including, but not limited to any judgments, costs and
counsel fees, or anything done or omitted by the Warrant Agent arising out of
or in connection with this Agreement except as a result of its gross negligence
or bad faith.
(f) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceedings or to take any other action
likely to involve expenses unless the Company or one or more registered holders
of Warrants shall furnish the Warrant Agent with reasonable security and
indemnify the Warrant Agent for any costs and expenses which may be incurred
and promptly pay such costs as they are incurred. All rights of action under
this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any Warrants or the production thereof at any
trial or other proceeding relative thereto, and any action, suit or proceeding
instituted by the Warrant Agent shall be brought in its name as Warrant Agent,
and any recovery of judgment shall be for the ratable benefit of the registered
holders of the Warrants, as their respective rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director,
officer or employee thereof, may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other legal
entity.
(h) The Warrant Agent shall act hereunder solely as agent
for the Company, and its duties shall be determined solely by the provisions
hereof. The Warrant Agent shall not be liable for anything which it may do or
refrain from doing in connection with this Agreement except for its own gross
negligence or bad faith.
(i) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all further and other acts, instruments and assurances as may
reasonably be required by the Warrant Agent for the carrying out or performing
of the provisions of this Agreement.
(j) The Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Warrant Agent) or
in respect of the validity or execution of any Warrant (except its
countersignature thereof; nor shall the Warrant Agent by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of the Shares to be issued pursuant to this Agreement or any
Warrant or as to whether the Shares will when validly issued, fully paid and
nonassessable or as to the Exercise Price or the number of Shares issuable upon
the exercise of any Warrant.
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(k) The Warrant Agent is hereby authorized and directed
to accept instructions with respect the performance of its duties hereunder
from the Chairman of the Board, the President, the Secretary or an Assistant
Secretary of the Company, and to apply to those officers for advice or
instructions in connection with its duties, and shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instruments of any of those officers or in good faith reliance upon any
statement signed by any one of those officers of the Company with respect to
any fact or matter (unless other evidence in respect thereof is herein
specifically prescribed) which may be deemed to be conclusively proved and
established by such signed statement.
SECTION 15. Disposition of Proceeds from Exercise of Warrants. The
Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all moneys received by the
Warrant Agent on the purchase of the Shares through the exercise of Warrants.
SECTION 16. Change of Warrant Agent. If the Warrant Agent shall
resign (such resignation to become effective not earlier than 30 days after the
giving of written notice thereof to the Company and the registered holders of
Warrant certificates) or shall become incapable of acting as Warrant Agent, the
Company shall appoint a successor. If the Company shall fail to make that
appointment within a period of 30 days after it has been so notified in writing
by the Warrant Agent or by the registered holder of a Warrant (in the case of
incapacity), then the registered holder of any Warrant may apply to any court
of competent jurisdiction for the appointment of a successor to the Warrant
Agent. Pending appointment of a successor to the Warrant Agent, either by the
Company or by such a court, the duties of Warrant Agent shall be carried out by
the Company. Any successor Warrant Agent whether appointed by the Company or
by a court, shall be a bank, trust company or transfer agent, in good standing,
incorporated under the laws of the State of Oklahoma, New York or of the United
States of America, and must have at the time of its appointment as Warrant
Agent. After appointment the successor Warrant Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Warrant Agent without further act or deed; but the former Warrant
Agent shall deliver and transfer to the successor Warrant Agent any property at
the time held by it hereunder and execute and deliver, at the expense of the
Company, any further assurance, conveyance, act or deed necessary for the
purpose. Failure to give any notice provided for in this Section 16, however,
or any defect therein shall not affect the legality or validity of the removal
of the Warrant Agent or the appointment of a successor Warrant Agent as the
case may be.
SECTION 17. Notices to Company and Warrant Agent. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by the registered holder of any Warrant to or on the Company shall be
sufficiently given or made if sent by mail, first class or registered, postage
prepaid, addressed (until another address is filed in writing by the Company
with the Warrant Agent) as follows:
Avalon Community Services, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇
Copy to: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
In case the Company shall fail to maintain that office or agency or
shall fail to give notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
Warrant Agent's Office.
Any notice pursuant to this Agreement to be given by the Company or by
the registered holder of any Warrant to the Warrant Agent shall be sufficiently
given if sent by first class mail, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent of the Company) to the Warrant
Agent as follows:
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American Securities Transfer, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
SECTION 18. Supplements and Amendments. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
consent or concurrence of any holders of Warrants in order to cure the
ambiguity, manifest error or other mistake in this Agreement, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and which shall
not adversely affect, alter or change the interest of the holders of Warrants.
SECTION 19. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company and of the Warrant Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 20. Termination. This Agreement shall terminate at the close
of business within a reasonable time, after the Expiration Date.
Notwithstanding the foregoing, this Agreement will terminate on any earlier
date if all Warrants have been exercised. The provisions of Section 14 hereof
shall survive the termination.
SECTION 21. Governing Law. This Agreement and each Warrant issued
hereunder shall be deemed to be a contract made under the laws of the State of
Oklahoma and for all purposes shall be construed in accordance with the laws of
said State.
SECTION 22. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the registered holders of the Warrants any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Warrant Agent and the
registered holders of the Warrants.
SECTION 23. Counterparts. This Agreement may be executed in any
number of counterparts and each of the counterparts shall for all purposes be
deemed to be an original, and all the 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 fist above written.
AVALON COMMUNITY SERVICES, INC.
By:
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Attest:
---------------------------------
[Corporate Seal]
AMERICAN SECURITIES TRANSFER, INC.
By:
-------------------------------------
Attest:
---------------------------------
[Corporate Seal]
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