AMERICAN LEISURE HOLDINGS, INC. WARRANT AGREEMENT
Exhibit 10.6
Date:
April 30, 2007
Effective
Date: April 20, 2007
To
Whom
It May Concern:
AMERCIAN
LEISURE HOLDINGS, INC. (“Company”), for value received, hereby agrees to issue
common stock purchase warrants entitling Xxxxxxx X. Xxxxxx (“Holder”) and his
assigns to purchase an aggregate of 747,000 shares of the Company’s common stock
(“Common Stock”). Such warrants will be evidenced by a warrant certificate in
the form attached hereto as Schedule 1 (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 in consideration for
Holder’s personal guaranty of certain of the Company’s and the Company’s wholly
owned subsidiaries’ debts in connection with a $24,900,000 loan made to the
Company and its wholly owned subsidiaries by Xxxxxxx Funding, Inc. as agent
for
certain lenders (the “Personal Guarantee”), in connection with the Amended Debt
Guarantor Agreement entered into between Xx. Xxxxxx and the Company on January
9, 2006, the terms of which are incorporated herein. 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 $1.02 per share (the
“Purchase Price”), subject to adjustment as provided in Section 5 below, for the
exercise period defined in Section 3(a) below. The term “Warrant Holder” refers
to the person whose name appears on the signature page of this Warrant Agreement
and any transferee or transferees of any of them permitted by Section 2(a)
below. The “Effective Date” of this warrant shall be the original date that the
Company agreed to such Warrant grant, which was April 20, 2007, which grant
is
evidenced and memorialized by this Warrant Agreement, entered into on April
30,
2007.
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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,
as amended, 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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Xxxxxxx
X. Xxxxxx in connection with the Guaranty
of
the
April 2007 Xxxxxxx Funding
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2.
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Transfer.
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(a)
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Transferability
of Warrant.
You agree 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
Holder agrees that the Warrant may only be transferred, subject to
the
next paragraph, by will or by the laws of descent and distribution
or for
the benefit of one or more of the following members of the Holder’s
immediate family: any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law (including, without
limitation, to a trust for the benefit of the Holder and/or one or
more of
the foregoing members of the Holder’s immediate family or a corporation,
partnership or limited liability company established and controlled
by the
Holder and/or one or more of the foregoing members of the Holder’s
immediate family). You further acknowledge 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 you have
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
and Transfer 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.
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3.
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Vesting
and Exercise of Warrant, Partial Exercise.
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(a)
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Vesting
and Exercise Period.
This Warrant shall vest to the Holder as of the Effective Date of
the
Warrant and shall expire and all rights hereunder shall be extinguished
five (5) years from the date which Xxxxxxx X. Xxxxxx is released
or
otherwise is no longer obligated to provide the Personal Guarantee
(as
defined 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
c/o
The Loev Law Firm, PC, 0000 Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxx
00000, 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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Warrant
Agreement
Xxxxxxx
X. Xxxxxx in connection with the Guaranty
of
the
April 2007 Xxxxxxx Funding
|
(d)
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Payment
of Purchase Price.
Payment of 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) In
cash,
by wire transfer, by certified or cashier’s check, or by money order;
or
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(ii)
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In
the event that the Shares have not been registered under the Act,
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 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 $1.02 (or an aggregate
Purchase Price of $1,020.00) and the current Fair Market Value of the
shares on the date of exercise is $1.50, the Warrant Holder can use
680 of
the 1,000 shares at $1.50 per share to pay for the exercise of
such portion of the Warrant (680 x $1.50 = $1,020.00) and receive
only the remaining 320 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
(5) 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.
[Remainder
of page left intentionally blank.]
Warrant
Agreement
Xxxxxxx
X. Xxxxxx in connection with the Guaranty
of
the
April 2007 Xxxxxxx Funding
4. Delivery
of Stock Certificates on Exercise.
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
6(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 $.05; 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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Warrant
Agreement
Xxxxxxx
X. Xxxxxx in connection with the Guaranty
of
the
April 2007 Xxxxxxx Funding
6.
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 or as such holder (upon payment by such Warrant
holder of any applicable transfer taxes) may direct, 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
transferable in whole or in part upon the books of the Company by
the
registered holder thereof, subject to the provisions of Section 2(a),
in
person or by duly authorized attorney, upon surrender of the Warrant,
duly
endorsed, at the principal office 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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Other
Warrant Holders: Holders of Shares.
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The
Warrant is issued upon the following terms, to all of which each Warrant Holder
by the taking thereof consents and agrees: (a) any person who shall become
a
transferee, within the limitations on transfer imposed by Section 2(a) hereof,
of a Warrant properly endorsed shall take such Warrant subject to the provisions
of Section 2(a) hereof and thereupon shall be authorized to represent himself,
herself or itself as absolute owner thereof and, subject to the restrictions
contained in this Warrant Agreement, shall be empowered to transfer absolute
title by endorsement and delivery thereof to a permitted bona
fide purchaser
for value; (b) any person who shall become a holder or owner of Shares shall
take such shares subject to the provisions of Section 2(b) hereof; (c) each
prior taker or owner waives and renounces all of his, her or its equities or
rights in such Warrant in favor of each such permitted bona
fide purchaser,
and each such permitted bona
fide purchaser
shall acquire absolute title thereto and to all rights presented thereby; and
(d) until such time as the respective Warrant is transferred on the books of
the
Company, the Company may treat the registered holder thereof as the absolute
owner thereof for all purposes, notwithstanding any notice to the
contrary.
Warrant
Agreement
Xxxxxxx
X. Xxxxxx in connection with the Guaranty
of
the
April 2007 Xxxxxxx Funding
|
8.
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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 Florida. 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 30th day of April , 2007, to be effective as of the Effective Date
disclosed above, by a duly authorized representative of the
Company.
By:
_______________________
Name:
Xxxxxxxxx Xxxxxx
Title:
President
XXXXXXX
X. XXXXXX
__________________________
Xxxxxxx
X. Xxxxxx
Warrant
Agreement
Xxxxxxx
X. Xxxxxx in connection with the Guaranty
of
the
April 2007 Xxxxxxx Funding
SCHEDULE 1
WARRANT
THIS
WARRANT AND THE SHARES OF COMMON STOCK UNDELYING THIS WARRANT (COLLECTIVELY,
THE
“SECURITIES”) HAVE NOT BEEN REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933, AS
AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN SECTIONS
3 AND 4 OF SUCH ACT AND REGULATION D PROMULGATED THEREUNDER; OR (B) ANY STATE
SECURITIES LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THESE
SECURITIES MUST BE ACQUIRED FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR,
AND NEITHER THE WARRANT NOR THE UNDERLYING COMMON STOCK MAY BE TRANSFERRED
OR,
IN THE CASE OF THE WARRANT, EXERCISED EXCEPT IN COMPLIANCE WITH ALL APPLICABLE
SECURITIES AND OTHER LAWS.
To
Purchase 747,000 Shares
of
Common
Stock
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 AMERICAN LEISURE HOLDINGS, 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, by certified or bank
cashier’s check payable to the order of the Company or by wire transfer) for
each Share purchased. This Warrant is subject to the terms of the Warrant
Agreement between the parties thereto dated as of April 30, 2007, with an
effective date of April 20, 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.
Registered
Owner: Xxxxxxx X. Xxxxxx
Date:
April 30, 2007
Effective
Date: Xxxxx 00, 0000
Xxxxxxxx
Price
Per
Share:
$1.02
Expiration
Date: As
provided in Section 3(a) of the Warrant Agreement, 5:00 p.m. Eastern
Time.
WITNESS
the signature of the Company’s duly authorized representative:
AMERICAN
LEISURE HOLDINGS, INC.
By:
__________________________________
Name:
Xxxxxxxxx Xxxxxx
Title:
President
XXXXXXX
X. XXXXXX
_____________________________________
Xxxxxxx
X. Xxxxxx
Warrant
Agreement
American
Leisure Holdings, Inc.
Xxxxxxx
X. Xxxxxx in connection with the Guaranty
of
the
April 2007 Xxxxxxx Funding
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 AMERICAN LEISURE HOLDINGS, INC. to which the enclosed Warrant
relates, and appoints
Attorney
to transfer such right on the books of AMERICAN LEISURE HOLDINGS, 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 be an original signature (no photocopied or faxed signatures) and must
conform in all respects to name and signature of holder as specified on the
face
of the enclosed Warrant)
____________________________________________
(Address)
Signed
in
the presence of:
____________________________________
Warrant
Agreement
American
Leisure Holdings, Inc.
Xxxxxxx
X. Xxxxxx in connection with the Guaranty
of
the
April 2007 Xxxxxxx Funding
SCHEDULE
3
FORM
OF SUBSCRIPTION
(To
be
signed only upon exercise of Warrant)
To
AMERICAN LEISURE HOLDINGS, 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 AMERICAN LEISURE HOLDINGS, 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)
|
(*)
|
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.
|
Calculation
pursuant to Section 3(d)(ii) of the Warrant Agreement
| ________________ = | Total Shares Exercised |
| ________________ = | Purchase Price (as defined and adjusted in the Warrant Agreement) |
| ________________ = | 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. |
Total
Shares Exercised x Purchase Price
________________= Shares
to be Issued = [ Total Shares Exercised — { ------------------------------------------------------------
}]
Fair Market Value
