Exhibit 10.16
WARRANT AGREEMENT, dated as of December 28, 2005 (the "Effective Date"), by
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and among Tierra del Sol Resort (Phase 1), Ltd., a Florida limited partnership
(the "Partnership"); American Leisure Holdings, Inc., a Nevada corporation
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("AMLH"); and Stanford International Bank Ltd., an Antiguan banking corporation
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("Stanford").
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RECITALS
A. The Partnership has been formed pursuant to the terms of a certain
Agreement of Limited Partnership dated as of December 28, 2005 (the "Partnership
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Agreement") by and among TDS Management LLC, Tierra Del Sol Resort, Inc.
("TDSR"), and Tierra Del Sol Resort (Phase 1), Ltd.
B. In consideration of Stanford's agreement to release its mortgage on the
Partnership's real property (the "Release Agreement"), the Partnership has
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agreed to issue to Stanford and its designees certain warrants (the "Warrants")
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to purchase limited partnership interests in the Partnership (the "Interests")
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entitled, in the aggregate, to a 2% Partnership Percentage (as defined in the
Partnership Agreement), subject to the terms and conditions of this Agreement.
C. Pursuant to the terms of the Release Agreement, AMLH has agreed to grant
to Stanford and its designees the right to exchange the Warrants for shares of
AMLH's Series E Preferred Stock, par value $.001 per share (the "Series E
Preferred"), subject to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the material promises set forth in this
Agreement and the Release Agreement, and other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereby agree as
follows:
1. ISSUANCE OF WARRANTS. The Partnership hereby issues the Warrants to
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Stanford and its designees, on the terms, and subject to the conditions, of this
Agreement. The Warrants shall be evidenced by one or more warrant certificates
(the "Warrant Certificates") in the form of Exhibit A to this Agreement. The
Partnership will deliver Warrant Certificates evidencing the Warrants to
Stanford and its designees upon the execution of this Agreement.
2. REGISTRATION. The Partnership shall maintain a register for the
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issuance, transfer and exchange of the Warrants at its principal executive
office. The Partnership shall be entitled to treat the registered holder of any
Warrant (the "Holder") as the owner of such Warrant for all purposes of this
Agreement, and the Partnership shall not be affected by any notice to the
contrary. The Warrants shall be registered initially in the name of Stanford
and/or one or more Permitted Transferees (as defined in Section 3) in such
denominations as Stanford may request.
3. TRANSFER AND EXCHANGE OF WARRANTS.
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3.1 Permitted Transferees. Stanford and any Permitted Transferee may
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transfer the Warrants in whole or in part, to the following persons (a
"Permitted Transferee"):
(i) to one or more of the officers, directors, employees or
shareholders of Stanford or its affiliates, or
(ii) any person who succeeds by operation of law to the interest
of Stanford or any Permitted Transferee.
3.2 Holders. The term "Holder" as used in this Agreement shall include
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any Permitted Transferee to whom the Warrants have been transferred in
accordance with the terms of this Agreement.
3.3 Procedurefor Transfer. The Partnership shall only be obligated to
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register the transfer of the Warrants upon delivery to the Partnership of
the corresponding Warrant Certificates, accompanied by a Form of Assignment
duly endorsed by the Holder and evidence that the proposed transferee is a
Permitted Transferee. Upon any registration of transfer, the Partnership
shall deliver a new Warrant Certificate evidencing the Warrants issued to
the transferee. A Warrant Certificate may also be exchanged, at the option
of any Holder, for another Warrant Certificate or Warrant Certificates of
different denominations, of like tenor and representing in the aggregate
the right to purchase an equivalent number of Warrant Shares upon delivery
to the Partnership of the Warrant Certificate to be exchanged.
Notwithstanding the foregoing, the Partnership shall have no obligation to
cause any Warrants to be transferred on its books to any person if, in the
opinion of counsel to the Partnership, such transfer does not comply with
the provisions of the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations thereunder.
4. EXERCISE OF WARRANTS
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4.1 Exercise Price and Term. The Warrants shall entitle the Holders
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thereof to purchase from the Partnership the Interests at an aggregate
purchase price of $100 (the "Exercise Price"), payable in full at the time
of exercise of the Warrants. In the event that the Holders exercise less
than all of the Warrants, then the Exercise Price will reduced
proportionately. The Warrants may be exercised, in whole or in part, at any
time or from time to time after the Effective Date and ending at 5:00 p.m.,
New York City time on December 31, 2010 (the "Expiration Date"). After the
Expiration Date, any unexercised Warrants shall be void and all rights of
any Holder with respect thereto shall cease.
4.2 Payment of Exercise Price. Each Holder must pay the aggregate
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Exercise Price for any Warrants being exercised in cash at the time of
exercise.
4.3 Exercise Procedure. The Warrants may be exercised by delivery to
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the Partnership of the corresponding Warrant Certificate, accompanied by an
Election to Purchase duly executed by the Holder and the payment of the
aggregate Exercise Price for the Interests to be purchased. The Holder
shall pay the Exercise Price by delivery of a check payable to the order of
the Partnership. Promptly after the exercise of the Warrants, the
Partnership shall deliver to the Holder confirmation of the issuance of the
Interests to the Holder. All Interests shall be duly authorized, validly
issued, fully paid, non-assessable and free of preemptive rights, and free
from all liens and charges other than those created by the Holder.
5. REPLACEMENT WARRANTS. In case any Warrant Certificate shall be
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mutilated, lost, stolen or destroyed, the Partnership shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate or in lieu of and substitution for the lost, stolen or destroyed
Warrant Certificate, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrant Shares, but only upon receipt of evidence
reasonably satisfactory to the Partnership of such loss, theft or destruction of
such Warrant Certificate, together with an appropriate agreement regarding
indemnification of the Partnership relating to the issuance of a replacement
Warrant Certificate.
6. REPRESENTATIONS, WARRANTIESAND COVENANTSOF PARTNERSHIP.
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6.1 Representations and Warranties of Partnership. The Partnership
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hereby represents and warrants to Stanford as follows:
(a) The Partnership has delivered to Stanford a true and correct
copy of the Partnership Agreement as in effect on the date hereof, a
copy of which is attached hereto as Exhibit B.
(b) The Interests to be issued pursuant to the terms of the
Warrants will, in the aggregate, be entitled to a 2% Partnership
Percentage in the Partnership.
6.2 Covenants of the Partnership. The Partnership hereby covenants to
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Stanford that the Partnership will not take any of the following actions
prior to the exercise or expiration of all of the Warrants without the
prior written consent of Stanford:
(a) Amend or modify any of the provisions of the Partnership
Agreement.
(b) Issue any interests in the Partnership, other than the
Interests to be issued pursuant to the terms of the Warrants.
(c) Consolidate with or merge into any other person, or sell all
or substantially all of its assets.
6.3 Payment of Certain Amounts upon Exercise of Warrants. In the event
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that the Partnership makes any distributions to its Partners between the
Effective Date and the date on which any Holder exercises any Warrants,
then, at the time of exercise, the Partnership will pay to the Holder the
portion of such distributions which the Holder would have received had the
Holder exercised such Warrants as of the Effective Date.
7. CONSOLIDATION, MERGER, SALE OF ASSETS, REORGANIZATION,ETC. In the event
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that the Partnership, at any time after the Effective Date, (i) shall
consolidate with or merge into any other person and not be the continuing or
surviving person of such consolidation or merger, or (ii) shall permit any other
person to consolidate with or merge into the Partnership and the Partnership
shall be the continuing or surviving person but, in connection with such
consolidation or merger, the Interests or other securities then issuable upon
exercise of the Warrants shall be changed into or exchanged for cash, stock or
other securities or property, or (iii) shall transfer, directly or indirectly,
all or substantially all its properties and assets to any other person, then,
and in the case of each such transaction, the Partnership shall make proper
provision such that, upon the terms and in the manner provided in this
Agreement, the Holders of the Warrants, upon the exercise thereof at any time
after the consummation of such transaction, shall be entitled to receive, at the
Exercise Price, in lieu of the Interests issuable upon such exercise immediately
prior to such transaction, the amount of cash, stock or other securities or
property to which the Holders would have been entitled if the Warrants had been
exercised in full immediately prior to such transaction. In the event of a sale,
lease, or conveyance or other transfer of all or substantially all of the assets
of the Partnership as part of a plan of liquidation of the Partnership, all
rights to exercise the Warrants shall terminate twenty (20) days after the
Partnership gives written notice to the Holders that such sale or conveyance or
other transfer has been consummated, in which case, the Holders of the Warrants
so exercised shall receive such consideration (property, cash or securities, or
a combination thereof) for such exercised Warrants as if the Holders had been
partners of the Partnership as of the effective date of the liquidation.
8. RESTRICTION ON DISPOSITIONS. The issuance of the Warrants and the
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Interests to be issued upon the exercise of the Warrants has not been registered
under the Act pursuant to any registration statement. Stanford acknowledges that
the Warrants and the Interests may not be transferred except pursuant to (i) an
effective registration statement under the Act, or (ii) an exemption from
registration under the Act permitting the disposition of such securities and
upon delivery to the Partnership of an opinion of counsel, reasonably
satisfactory to counsel for the Partnership, that such exemption from
registration is available. Stanford agrees that any certificates representing
the Warrants and Interests shall bear an appropriate restrictive legend to such
effect.
9. OPTION TO EXCHANGE WARRANTS.
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9.1 Option to Exchange Warrants for Series E Preferred. Each Holder
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may, at any time prior to the expiration or exercise of the Warrants held
by the Holder, elect to exchange the Warrants held by the Holder for the
right to receive shares of Series E Preferred from AMLH. Each Holder may
exercise this right by delivering written notice of such election (the
Election Notice") to the Partnership and to AMLH. Upon the delivery of such
notice, the Warrants covered by such Election Notice shall be deemed to be
cancelled and of no further force and effect.
9.2 Number of Shares to be Received. The number of shares of Series E
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Preferred to be received by any Holder following the delivery of an
Election Notice shall be equal to: (i) the "After Tax Amount," (as
calculated below), divided by (ii) $15 per share (which amount will be
subject to adjustment in the event of any stock split, stock dividend or
similar transaction undertaken by AMLH). For purposes of this Section, the
"After Tax amount" shall mean the amount of distributions which would have
been received by such Holder from the Partnership if the Holder had
exercised the cancelled Warrants, reduced, in the case of any Holder which
is taxable as a corporation by 28% and reduced, the case of any Holder
which is an individual or any other entity, by 36%.
9.3 Date of Issuance of Shares. AMLH will issue the Series E Preferred
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to any Holder which has elected to cancel Warrants within 10 days of the
date of any distributions by the Partnership which the Holder would have
received had the Holder exercised such Warrants. At such time, AMLH will
issue the number of shares to which the Holder is entitled with respect to
such distribution pursuant to the formula set forth in Section 9.2.
10. NOTICES. Any notice which is given by any Holder to the Partnership
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shall be sufficiently given upon delivery by fax or three days after being sent
by registered or certified mail, postage prepaid as follows:
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Any notice which is given by the Partnership to any Holder shall be sufficiently
given, or made, whether or not such Holder receives the notice, if sent by fax
or three days after being sent by registered or certified mail, postage prepaid,
addressed to such Holder at its last address as shown on the books of the
Partnership.
11. GOVERNING LAW. The validity, interpretation and performance of this
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Warrant Agreement and each Warrant shall be governed by the laws of the State of
Florida without giving effect to its principles of conflicts of law.
12. COUNTERPARTS. This Warrant Agreement may be executed in two or more
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counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute but one and the same instrument.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Warrant Agreement as of
the date first set forth above.
TIERRA DEL SOL RESORT (PHASE 1), LTD.,
A FLORIDA LIMITED PARTNERSHIP
BY: TDS MANAGEMENT LLC, ITS GENERAL PARTNER
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, MANAGING MEMBER
AMERICAN LEISURE HOLDINGS, INC.,
A NEVADA CORPORATION
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ITS PRESIDENT
STANFORD INTERNATIONAL BANK, LTD.,
AN ANTIGUAN BANKING CORPORATION
BY: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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NAME: ▇▇▇▇▇ ▇. ▇▇▇▇▇
ITS: CFO
NEITHER THE WARRANTS REPRESENTED HEREBY NOR THE SECURITIES ISSUABLE UPON
EXERCISE THEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). NONE OF SUCH SECURITIES MAY BE OFFERED OR SOLD EXCEPT
PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR (II) AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES AND UPON DELIVERY TO THE PARTNERSHIP OF AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO COUNSEL FOR THE PARTNERSHIP, THAT SUCH EXEMPTION FROM
REGISTRATION UNDER THE ACT IS AVAILABLE. IN ADDITION, THE WARRANTS REPRESENTED
HEREBY MAY NOT BE TRANSFERRED OR EXERCISED EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF THE WARRANT AGREEMENT DATED AS OF , 2005 BETWEEN
AND .
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No.
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VOID AFTER 5:00 P.M. NEW YORK CITY TIME
ON , 2010
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TIERRA DEL SOL RESORT (PHASE 1) LTD.
WARRANT CERTIFICATE
FOR
WARRANTS TO ACQUIRE LIMITED PARTNERSHIP INTERESTS
ENTITLED TO A % PARTNERSHIP PERCENTAGE
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THIS WARRANT CERTIFICATE CERTIFIES THAT, for value received,
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is the holder (the "Holder") of Warrants entitling the Holder to purchase at any
time after , 2005 and prior to 5:00 p.m., New York City time, on
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December 31, 2010 (the "Expiration Date"), limited partnership interests (the
"Interests") entitled to a % Partnership Percentage in Tierra Del Sol Resort
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(Phase 1) Ltd., a Florida limited partnership (the "Partnership"), at a purchase
price (the "Exercise Price") of $50.00 per Partnership Percentage point, upon
presentation and surrender of this Warrant Certificate, a duly executed Form of
Election to Purchase (attached hereto), and payment of the Exercise Price.
This Warrant Certificate is subject to, and entitled to the benefits of,
all of the terms, provisions and conditions of the Warrant Agreement dated as
of , 2005 (the "Warrant Agreement") among the Partnership, American
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Leisure Holdings, Inc. and Stanford International Bank, Ltd., which Warrant
Agreement is hereby incorporated herein by reference and made a part hereof and
to which reference is hereby made for a full description of the rights,
limitations of rights, duties and immunities of the Partnership and the Holder
of this Warrant Certificate. A copy of the Warrant Agreement is on file at the
principal office of the Partnership.
All capitalized terms utilized in this Warrant Certificate, unless defined
in this Warrant Certificate, have the meanings set forth in the Warrant
Agreement.
The Holder of this Warrant Certificate in its capacity as the Holder of
Warrants shall not shall be entitled to any rights as a limited partner of the
Partnership.
IN WITNESS WHEREOF, the Partnership has duly executed this Warrant
Certificate as of the date set forth below.
DATED: TIERRA DEL SOL RESORT (PHASE 1),
------------------- LTD., A FLORIDA LIMITED PARTNERSHIP
BY:
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NAME:
ITS:
FORM OF ASSIGNMENT
(To be executed by the Holder if such Holder desires to transfer this Warrant
Certificate).
TO: Tierra del Sol Resort (Phase 1), Ltd. (the "Partnership")
FOR VALUE RECEIVED, hereby sells assigns and
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transfers unto (the "Transferee") Warrants to acquire
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limited partnership interests (the "Interests") entitled to a % Partnership
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Percentage, as evidenced by this Warrant Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and
appoint to transfer such Warrants on the books of Tierra del
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Sol Resort (Phase 1), Ltd., with full power of substitution.
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(NAME OF HOLDER)
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(SIGNATURE)
NOTICE:
The signature on the foregoing assignment must correspond to the names
written upon the face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if Holder desires to exercise the Warrants evidenced by this
Warrant Certificate).
TO: Tierra del Sol Resort (Phase 1), Ltd. (the "Partnership")
The undersigned hereby (1) irrevocably elects to acquire limited
partnership interests (the "Interests") entitled to a % Partnership Percentage
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by exercise of the Warrants represented by this Warrant Certificate, (2) makes
payment in full of the aggregate Exercise Price for such Warrant's by enclosure
of a check therefor , and (3) agrees to be bound by the terms of the Agreement
of Limited Partnership dated December , 2005 of the Partnership.
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(Please print name and address)
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DATED: (NAME OF HOLDER)
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(SIGNATURE)
NOTICE:
The signature on the foregoing election to purchase must correspond to the
name as written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.