-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ShQevgObi1sS7nCNfrwVCPLyB4AAPifKKcNv4dHcbI4FlunlO49Boi7Uk8Y2/ePC Ursv2JSKlQSxtULSP1wLPw== 0001144204-04-011187.txt : 20040806 0001144204-04-011187.hdr.sgml : 20040806 20040806131234 ACCESSION NUMBER: 0001144204-04-011187 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20040617 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040806 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN LEISURE HOLDINGS INC CENTRAL INDEX KEY: 0001124197 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 752877111 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-48312 FILM NUMBER: 04957128 BUSINESS ADDRESS: STREET 1: PARK 80 PLAZA EAST STREET 2: NONE CITY: SADDLEBROOK STATE: NJ ZIP: 07663 BUSINESS PHONE: 2012262060 MAIL ADDRESS: STREET 1: PARK 80 PLAZA EAST STREET 2: NONE CITY: SADDLEBROOK STATE: NJ ZIP: 07663 FORMER COMPANY: FORMER CONFORMED NAME: FREEWILLPC COM INC DATE OF NAME CHANGE: 20000920 8-K/A 1 v05390_8ka.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 June 17, 2004 ------------------------------------------------ Date of Report AMERICAN LEISURE HOLDINGS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its Charter) Nevada 333-48312 75-2877111 - ------------------------ --------------------- ---------------------------- (State of Incorporation) (Commission File No.) (IRS Tax Identification No.) Park 80 Plaza East, Saddle Brook, NJ 07663 - ---------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) (210) 843-0820 ---------------------------- (Registrant's Telephone No.) 1 ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE New Credit Facilities On June 17, 2004, American Leisure Holdings, Inc. (the "Company") entered into two new credit facilities with Stanford Venture Capital Holdings, Inc. ("Stanford"). The terms of these facilities and certain related transactions are described below. A. $1,000,000 Credit Facility. The Company and Stanford have entered into a Credit Agreement dated as of June 17, 2004, pursuant to which the Company has borrowed $1,000,000 from Stanford. The proceeds of the loan will be used by the Company to fund operating and related costs of the Company's customer service and marketing center located in Antigua. This facility is owned by Caribbean Leisure Marketing Ltd. ("CLM"). CLM is 100% owned by Castlechart Limited, which in turn is 100% owned by the Company. The loan bears interest at 8% per annum, payable quarterly in arrears. All principal is due in one lump sum on April 27, 2007. The loan is secured by a lien on all shares of CLM and all of the shares of Castlechart Limited. Both liens are subordinated to existing liens previously granted to Stanford for an earlier loan. Under the credit agreement, the loan is non-recourse to the Company except in certain limited circumstances. The loan is convertible by Stanford at any time into shares of the common stock of the Company, at a conversion price of $10.00 per share. B. $3,000,000 Credit Facility. The Company and Stanford have entered into a Credit Agreement dated as of June 17, 2004, pursuant to which the Company may borrow up to $3,000,000 from Stanford. To date, the Company has received $2,514,000, and expects to receive the remaining $486,000 in August 2004. The proceeds of the loan will be used by the Company to support the Company's proposed acquisition of Around The World Travel, Inc. and to pay expenses of the Company's travel division. Certain of the company's travel division subsidiaries are co-borrowers. The loan bears interest at 8% per annum, payable quarterly in arrears. The principal balance is due in one lump sum on April 27, 2007. The loan is secured by the following: 2 (i) A lien on the stock owned by the Company in all of the co-borrowers except the Corporation; (ii) a collateral assignment of the Company's rights under a certain Option Agreement dated as of May 17, 2004, under which the Company has the right to acquire all of the membership interests in Around The World Holdings, LLC. This company owns a majority of the outstanding common stock of AWT. (iii) a collateral assignment of certain notes payable made by AWT which are held by the Company. These notes evidence loans in the outstanding principal amount of $19,200,000, and are secured by a first priority lien on substantially all of the assets of AWT. (iv) all of the other assets, property and rights of the Company's active travel division subsidiaries other than CLM and Castlechart. The loan is convertible at the option of Stanford at any time into shares of the Company's common stock, at a conversion price of $10.00 per share. C. Amendment of the Designation of the Series C Preferred Stock Terms In connection with the new credit facilities, the Company, with the consent of the holders of more than 75% of the issued and outstanding Series C Preferred Stock, amended the terms of the Company's Series C Preferred Stock to eliminate any obligation of the Company to redeem the Series C Preferred Stock. Stanford holds approximately 82% of the Series C shares. D. Modification of Certain Existing Warrants In connection with the new credit facilities, the Company agreed to modify the terms of certain warrants previously issued to Stanford and certain individuals affiliated with Stanford. These warrants, which were issued in December 2003, entitled the holders to purchase 1,350,000 shares of the Company's common stock at an exercise price of $2.96 per share. Under the terms of the amendment, the Company agreed to reduce the exercise price of warrants to $.001 per share. No other terms of these existing warrants were changed. E. Issuance of New Warrants As additional consideration for the new credit facilities, the Company issued warrants to purchase common stock of the Company to Stanford and certain of its affiliates. These warrants allow the holders to purchase 500,000 shares at an exercise price of $5.00 per share. These warrants have a five year term. F. Grant of Registration Rights 3 In conjunction with the new credit facilities, the Company and Stanford entered into a Registration Rights Agreement pursuant to which the Company agreed to register the shares issuable to Stanford and its affiliates upon the conversion of the loans under the new credit facilities. The Company has agreed to file a registration statement for this purpose with the Securities and Exchange Commission on or before August 15, 2004. The Company is currently seeking to modify this agreement to extend the date for filing the registration statement until November 2004. G. Management Agreement with AWT. The Company has made an agreement with AWT, d/b/a TraveLeaders to manage the growth and expansion of its travel division. AWT will have access to the services of the Company's travel subsidiaries' staff and resources. Its duties include recommendations for structural change within the division, candidates for acquisition by the Company for the travel division and the integration of the existing subsidiaries into a cohesive and cutting edge services and distribution enterprise. H. Press Release. On August 3, 2003, the Company issued a press release relating to the new credit facilities. A copy of the press release is attached as an Exhibit 99.1. I. Letter to Shareholders and Creditors of AWT. On August 3, 2003, the Company issued a letter to the shareholders and creditors of AWT regarding the Company's plans for AWT. A copy of this letter is attached as Exhibit 99.2. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements: none (c) Exhibits: Exhibit No. Description - ----------- ----------- 3.1 Amended and Restated Certificate of Designation of Series and Determination of Rights and Preferences of Series C Preferred Stock 10.1 Credit Agreement dated as of June 17, 2004 by and between the Company and Stanford Venture Capital Holding Inc. and related $1,000,000 Note 10.2 Credit Agreement dated as of June 17, 2004 by and between the Company and Stanford Venture Capital Holding Inc. and related $3,000,000 Note 4 10.3 Instrument of Re-Pricing dated as of June 17, 2004 by and between the Company and Stanford Venture Capital Holding Inc. 10.4 Warrant Purchase Agreement dated as of June 17, 2004 by and between the Company and Stanford Venture Capital Holding Inc. 10.5 Registration Rights Agreement dated as of June 17, 2004 by and between the Company and Stanford Venture Capital Holding Inc. 99.1 Press Release dated August 3, 2004 99.2 Letter dated August 3, 2004 from the Company to the Shareholders and Creditors of AWT. Amended-8/6/04 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: August 3, 2004 AMERICAN LEISURE HOLDINGS, INC. l/s L. William Chiles - ---------------------- L. William Chiles Chairman of the Board l/s Malcolm J. Wright - ---------------------- Malcolm J. Wright Chief Financial Officer 5 EXHIBIT INDEX EXHIBIT NUMBER EXHIBIT - -------------- ------- 3.1 Amended and Restated Certificate of Designation of Series and Determination of Rights and Preferences of Series C Preferred Stock 10.1 Credit Agreement dated as of June 17, 2004 by and between the Company and Stanford Venture Capital Holding Inc. and related $1,000,000 Note 10.2 Credit Agreement dated as of June 17, 2004 by and between the Company and Stanford Venture Capital Holding Inc. and related $3,000,000 Note 10.3 Instrument of Re-Pricing dated as of June 17, 2004 by and between the Company and Stanford Venture Capital Holding Inc. 10.4 Warrant Purchase Agreement dated as of June 17, 2004 by and between the Company and Stanford Venture Capital Holding Inc. 10.5 Registration Rights Agreement dated as of June 17, 2004 by and between the Company and Stanford Venture Capital Holding Inc. 99.1 Press Release dated August 3, 2004 99.2 Letter dated August 3, 2004 from the Company to the Shareholders and Creditors of AWT. Amended-8/6/04 6 EX-3.1 2 v05390_ex3-1.txt AMENDED AND RESTATED CERTIFICATE OF DESIGNATION OF SERIES AND DETERMINATION OF RIGHTS AND PREFERENCES OF SERIES C PREFERRED STOCK OF AMERICAN LEISURE HOLDINGS, INC. American Leisure Holdings, Inc., a Nevada corporation (the "Company"), acting pursuant to Nevada Revised Statues Section 78.1955, does hereby submit the following Amended and Restated Certificate of Designation of Series and Determination of Rights and Preferences of its Series C Preferred Stock. FIRST: The name of the Company is American Leisure Holdings, Inc. SECOND: By unanimous consent of the Board of Directors of the Company and holders of at least 80% of the outstanding shares of Series C Preferred Stock, the following resolutions were duly adopted: WHEREAS the Board of Directors of the Company is authorized, subject to limitations prescribed by law and by the provisions of the Company's Articles of Incorporation to establish and fix the number of shares to be included in any series of Preferred Stock and the designation, rights, preferences, powers, restrictions and limitations of the shares of such series; WHEREAS it is the desire of the Board of Directors to amend and restate the Series C Preferred Stock; NOW, THEREFORE, BE IT RESOLVED that the Company hereby and restates in its entirety the Certificate of Designation for the Series C Preferred Stock as follows: There is hereby established a series of Twenty Eight Thousand (28,000) shares of redeemable, convertible Preferred Stock of the Company (the "Series C Preferred Stock") to have the designation, rights, preferences, powers, restrictions and limitations as follows: 1. Dividends. The holders of the Series C Preferred Stock shall be entitled to receive, out of funds legally available therefor, cumulative dividends at the rate of $4.00 (subject to appropriate adjustments in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares) per share per annum, payable in preference and priority to any payment of any cash dividend on Common Stock or any other shares of capital stock of the Company junior in priority to the Series C Preferred Stock (such Common Stock and other inferior stock being collectively referred to as "Junior Stock"), when and as declared by the Board of Directors of the Company, provided, however, that such dividends to holders of the Series C Preferred Stock shall be pari passu with the holders of the Company's Series A Preferred Stock and Series B Preferred Stock (such Series A Preferred Stock and Series B Preferred Stock are collectively referred to herein as "Parity Preferred Stock"); but shall be junior in priority to any other class or series of stock ranking senior to the Series C Preferred Stock and Parity Preferred Stock ("Senior Stock") in respect of dividends that may be authorized from time to time, subject to approval of the holders of Series C Preferred Stock as provided herein. Such dividends shall accrue with respect to each share of Series C Preferred Stock from the date on which such share is issued and outstanding and thereafter shall be deemed to accrue from day to day whether or not earned or declared and whether or not there exists profits, surplus or other funds legally available for the payment of dividends, and shall be cumulative so that if such dividends on the Series C Preferred Stock shall not have been paid, or declared and set apart for payment, the deficiency shall be fully paid or declared and set apart for payment before any dividend shall be paid or declared or set apart for any Junior Stock and before any purchase or acquisition of any Junior Stock is made by the Company, except the repurchase of Junior Stock from employees of the Company upon termination of employment. At the earlier of: (1) the redemption of the Series C Preferred Stock; or (2) the liquidation, sale or merger of the Company, any accrued but undeclared dividends shall be paid to the holders of record of outstanding shares of Series C Preferred Stock. No accumulation of dividends on the Series C Preferred Stock shall bear interest. Each dividend shall be paid in cash and mailed to the holders of record of the Series C Preferred Stock as their names and addresses appear on the share register of the Company or at the office of the transfer agent on the corresponding dividend payment date. 2. Liquidation, Dissolution or Winding Up. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series C Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders on parity with the holders of the Parity Preferred Stock, after and subject to the payment in full of all amounts required to be distributed to the holders of any Senior Preferred Stock, but before any payment shall be made to the holders of Junior Stock by reason of their ownership thereof, an amount equal to $100.00 (the "Liquidation Value") per share of Series C Preferred Stock plus any accrued but unpaid dividends (whether or not declared). If upon any such liquidation, dissolution or winding up of the Company the remaining assets of the Company available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series C Preferred Stock the full amount to which they shall be entitled, the holders of shares of Series C Preferred Stock and any class or series of stock ranking on liquidation on a parity with the Series C Preferred Stock shall share ratably in any distribution of the remaining assets and funds of the Company in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. 3. Voting. (a) Each holder of outstanding shares of Series C Preferred Stock shall be entitled to the number of votes equal to the number of whole shares of Common Stock into which the shares of Series C Preferred Stock held by such holder are convertible (as adjusted from time to time pursuant to Section 4 hereof), at each meeting of stockholders of the Company (and written actions of stockholders in lieu of meetings) with respect to any and all matters presented to the stockholders of the Company for their action or consideration. Except as provided by law, by the provisions of Subsection 3(b) below, or by the provisions establishing any other series of Preferred Stock, holders of Series C Preferred Stock and of any other outstanding series of Preferred Stock shall vote together with the holders of Common Stock as a single class. (b) The Company shall not amend, alter or repeal preferences, rights, powers or other terms of the Series C Preferred Stock so as to affect adversely the Series C Preferred Stock, without the written consent or affirmative vote of the holders of at least eighty percent (80%) of the then outstanding shares of Series C Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class. For this purpose, without limiting the generality of the foregoing, the authorization or issuance of any series of Preferred Stock which is on a parity with or has preference or priority over the Series C Preferred Stock as to the right to receive either dividends or amounts distributable upon liquidation, dissolution or winding up of the Company shall be deemed to affect adversely the Series C Preferred Stock. 2 4. Conversion. The holders of the Series C Preferred Stock shall have conversion rights as follows (the "Conversion Rights"): (a) Right to Convert. Each share of Series C Preferred Stock shall be convertible, at the option of the holder thereof, in amounts of not less than 950 share increments, into such number of paid and nonassessable shares of Common Stock (the "Conversion Rate") calculated by dividing the Liquidation Value by the Market Price (as defined herein) but such Conversion Rate shall not be greater than twenty (20) (the "High Conversion Rate") and not less than twelve and one-half (12.5) (the "Low Conversion Rate"). Such initial High and Low Conversion Rates shall be subject to adjustment as provided below. In the event of a liquidation of the Company, the Conversion Rights shall terminate at the close of business on the first full day preceding the date fixed for the payment of any amounts distributable on liquidation to the holders of Series C Preferred Stock. (b) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series C Preferred Stock. In lieu of fractional shares, the Company shall pay cash equal to such fraction multiplied by the quotient of the Liquidation Value divided by the Conversion Rate. (c) Mechanics of Conversion. (i) In order to at any time or from time to time to convert any or all of the shares of Series C Preferred Stock issued and outstanding into shares of Common Stock, the holders of the issued and outstanding Series C Preferred Stock shall give notice to the Company that such holders elect to convert any or all of the shares of Series C Preferred Stock issued and outstanding. The date of receipt of such certificates and notice by the transfer agent or the Company shall be the conversion date ("Conversion Date"). On the Conversion Date, the shares of Series C Preferred Stock surrendered for conversion shall be deemed converted without any other act by the holders thereof. If required by the Company, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or his or its attorney duly authorized in writing. The Company shall, as soon as practicable after the Conversion Date, issue and deliver at such office to such holders a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled, together with cash in lieu of any fraction of a share. (ii) The Company shall at all times during which the Series C Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series C Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series C Preferred Stock. Before taking any action which would cause an adjustment reducing the Conversion Rate below the then par value of the shares of Common Stock issuable upon conversion of the Series C Preferred Stock, the Company will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Conversion Rate. 3 (iii) Upon any such conversion, no adjustment to the Conversion Rate shall be made for any accrued and unpaid dividends on the Series C Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion; the holder, by converting, waives his right to the payment of cash for such accrued but unpaid dividends. In lieu of a cash dividend, the holder shall receive such number of shares of Common Stock equal to (A) the amount of accrued but unpaid dividends on such Series C Preferred Stock surrendered for conversion by such holder, divided by (B) the Market Value (as defined herein) of Common Stock on the Conversion Date. The term "Market Price" shall mean, with respect to a share of Common Stock on any date, either: (1) if there shall not then be a public market for the Common Stock, the fair market value per share of Common Stock as determined by the Board of Directors in good faith exercising its fiduciary duties; or (2) if there shall then be a public market for the Common Stock, the average of the Daily Market Prices (as defined below) for the ten (10) consecutive Trading Days immediately prior to the Conversion Date. The "Daily Market Price" for each such Trading Day shall be: (aa) the last sale price on such day on the principal stock exchange or the Nasdaq Stock Market, bulletin board or BBX Exchange ("Nasdaq") on which the Common Stock is then listed or admitted to trading; (bb) if no sale takes place on such day on any such exchange or Nasdaq, the average of the last reported closing bid and ask prices on such day as officially quoted on any such exchange or Nasdaq; (cc) if the Common Stock is not then listed or admitted to trading on any stock exchange or Nasdaq, the average of the last reported closing bid and ask prices on such day in the over-the-counter market as furnished by the Nasdaq or the National Quotation Bureau, Inc.; or (dd) if neither Nasdaq nor the National Quotation Bureau, Inc. is, at the time, engaged in the business of reporting bid and ask prices, as furnished by any similar firm then engaged in such business. "Trading Day" for this purpose means any day that the New York Stock Exchange is open for trading. (iv) All shares of Series C Preferred Stock, which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive dividends, notices and to vote, shall immediately cease and terminate on the Conversion Date, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor. Any shares of Series C Preferred Stock so converted shall be retired and cancelled and shall not be reissued, and the Company may from time to time take such appropriate action as may be necessary to reduce the number of shares of authorized Series C Preferred Stock accordingly. (d) Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after this Certificate of Designation is filed with the Nevada Secretary of State (the "Original Issue Date") effect a subdivision of the outstanding Common Stock, the High and Low Conversion Rates then in effect immediately before that subdivision shall be proportionately decreased. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the High and Low Conversion Rates then in effect immediately before the combination shall be proportionately increased. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective. 4 (e) Adjustment for Certain Dividends and Distributions. In the event the Company at any time, or from time to time after the Original Issue Date shall make or issue, a dividend or other distribution payable in shares of Common Stock without consideration, then and in each such event the High and Low Conversion Rates shall be decreased as of the time of such issuance, by multiplying the High and Low Conversion Rates by a fraction: (i) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance, and (ii) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance plus the number of shares of Common Stock issuable in payment of such dividend or distribution. (f) Adjustment for Reclassification, Exchange, or Substitution. If the Common Stock issuable upon the conversion of the Series C Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets for below), then and in each such event the holder of each share of Series C Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such shares of Series C Preferred Stock might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein. (g) Adjustment for Merger or Reorganization, etc. In case of any consolidation or merger of the Company with or into another corporation or the sale of all or substantially all of the assets of the Company to another corporation, then each share of Series C Preferred Stock shall thereafter be convertible into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Company deliverable upon conversion of such Series C Preferred Stock would have been entitled upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions in this Section 4 set forth with respect to the rights and interest thereafter of the holders of the Series C Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the High and Low Conversion Rates) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Series C Preferred Stock. (h) No Impairment. The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series C Preferred Stock against impairment. 5 (i) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the High and Low Conversion Rates pursuant to this Section 4, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder, if any, of Series C Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based and shall file a copy of such certificate with its corporate records. The Company shall, upon the written request at any time of any holder of Series C Preferred Stock, furnish or cause to be furnished to such holder a similar certificate setting forth (1) such adjustments and readjustments, (2) the High and Low Conversion Rates then in effect, and (3) the number of shares of Common Stock and the amount, if any, of other property which then would be received upon the conversion of Series C Preferred Stock. Despite such adjustment or readjustment, the form of each or all Series C Preferred Stock Certificates, if the same shall reflect the initial or any subsequent conversion price, need not be changed in order for the adjustments or readjustments to be valued in accordance with the provisions of this Certificate of Designation, which shall control. (j) Notice of Record Date. In the event: (A) that the Company declares a dividend (or any other distribution) on its Common Stock payable in Common Stock or other securities of the Company; (B) that the Company subdivides or combines its outstanding shares of Common Stock; (C) of any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding shares of Common Stock or a stock dividend or stock distribution thereon), or of any consolidation or merger of the Company into or with another corporation, or of the sale of all or substantially all of the assets of the Company; or (D) of the involuntary or voluntary dissolution, liquidation or winding up of the Company; then the Company shall cause to be filed at its principal office or at the office of the transfer agent of the Series C Preferred Stock, and shall cause to be mailed to the holders of the Series C Preferred Stock at their last addresses as shown on the records of the Company or such transfer agent, at least ten days prior to the record date specified in (A) below or twenty days before the date specified in (B) below, a notice stating: (A) the record date of such dividend, distribution, subdivision or combination, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, subdivision or combination are to be determined, or (B) the date on which such reclassification, consolidation, merger, sale, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, dissolution or winding up. 5. Company Redemption. (a) If, on or after the date five (5) years after the Original Issue Date, any shares of Series C Preferred Stock shall be then outstanding, the Company shall have the right to redeem (unless otherwise prevented by law) all (but not less than all) such outstanding shares at an amount per share equal to the Liquidation Value plus an amount equal to accrued but unpaid dividends, if any, to the date of redemption on such share. 6 (b) Sixty days' prior notice by the Company of the exercise of the redemption option pursuant to Section 5(a) shall be sent by first-class certified mail, postage prepaid and return receipt requested, by the Company to the holders of the shares of Series C Preferred Stock to be redeemed at their respective addresses as the same shall appear on the books of the Company. (c) Cancellation of Redeemed Stock. Any shares of Series C Preferred Stock redeemed pursuant to this Section or Section 6 or otherwise acquired by the Company in any manner whatsoever shall be canceled and shall not under any circumstances be reissued; the Company may from time to time take such appropriate corporate action as may be necessary to reduce accordingly the number of authorized shares of the Company's capital stock. (d) Anything contained in this Section 5 to the contrary notwithstanding, the holders of shares of Series C Preferred Stock to be redeemed in accordance with this Section shall have the right, exercisable at any time up to the close of business on the applicable redemption date (unless the Company is legally prohibited from redeeming such shares on such date, in which event such right shall be exercisable until the removal of such legal disability), to convert all or any part of such shares to be redeemed as herein provided into shares of Common Stock pursuant to Section 4 hereof. 6. Reservation of Common Stock. The Company shall at all times during which the Series C Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series C Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series C Preferred Stock. 7. Amendment. This Certificate of Designation constitutes an agreement between the Company and the holders of the Series C Preferred Stock. It may be amended by vote of the Board of Directors of the Company and the holders of at least eighty percent (80%) of the outstanding shares of Series C Preferred Stock. IN WITNESS WHEREOF, the Company has caused this Amended and Restated Certificate to be executed by its Vice President this ___ day of June, 2004. By: L/S ---------------------------------- L. William Chiles Chairman of the Board 7 EX-10.1 3 v05390_ex10-1.txt Credit Agreement $1,000,000 Credit Facility by and among AMERICAN LEISURE HOLDINGS, INC., a Nevada corporation CARIBBEAN LEISURE MARKETING LIMITED, an Antiguan limited company CASTLECHART LIMITED, a United Kingdom private limited company collectively, "Borrowers" and STANFORD VENTURE CAPITAL HOLDINGS, INC. "Lender" Dated as of June 17, 2004 CREDIT AGREEMENT THIS CREDIT AGREEMENT(the "Agreement"), dated as of June __, 2004, the "Effective Date" (defined herein), is made by and among CARIBBEAN LEISURE MARKETING LIMITED, an Antiguan limited company ("CLM"), CASTLECHART LIMITED, a United Kingdom private limited company ("CC"), and AMERICAN LEISURE HOLDINGS, INC., a Nevada corporation ( "ALHI") ALHI, together with CLM and CC collectively referred to herein as the "Borrowers" and individually as a "Borrower") and STANFORD VENTURE CAPITAL HOLDINGS, INC. (the "Lender"). W I T N E S S E T H WHEREAS, the Borrowers desire to obtain a commitment from the Lender to make credit loans to the Borrowers; and WHEREAS, the Lender is willing to extend the commitment to the Borrowers on the terms and subject to the conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, and other good and valuable consideration exchanged between the parties, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I - DEFINITIONS Section 1.1 Definitions. In addition to terms defined elsewhere in this Agreement, the following terms have the meanings indicated which meanings shall be equally applicable to both the singular and the plural forms of such terms: 1.1.1 "Additional Stock Pledge Agreement" shall mean that certain pledge agreement of even date herewith executed by CC pledging all of the issued and outstanding stock of CLM. 1.1.2 "Affiliate" shall mean any Person (other than a Subsidiary) which directly or indirectly through one or more intermediaries controls, or is controlled by or is under common control, with a Borrower, or five percent (5%) or more of the equity interest of which is held beneficially or of record by any of the Borrowers or a Subsidiary. The term "control" means the possession, directly of indirectly, of the power to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. 1.1.3 "Agreement" means this Credit Agreement, as the same may from time to time be amended. 1.1.4 "Availability" shall mean the following aggregate amounts (including all advances previously made) on the following dates: Effective Date $362,820.51 June 21, 2004 $421,794.87 June 24, 2004 $480,769.23 June 28, 2004 $529,487.18 July 1, 2004 $650,000.00 July 5, 2004 $698,717.95 July 8, 2004 $773,076.92 July 12, 2004 $821,794.87 July 15, 2004 $880,769.23 July 22, 2004 $929,487.18 July 29, 2004 $1,000,000.00 1.1.5 "Borrowers" has the meaning assigned to that term in the introduction to this Agreement. 1.1.6 "Borrowing" shall mean the drawing down by a Borrower of a loan or loans from the Lender on any given Borrowing Date. 1.1.7 "Borrowing Date" shall mean the date as of which a Borrowing is consummated. 1.1.8 "Business Day" shall mean a day on which commercial banks are open for business in the state of Florida. 1.1.9 "Code" shall mean the Internal Revenue Code of 1986 as amended from time to time, and the regulations and published interpretations thereof. 1.1.10 "Commencement Date" shall mean the date of execution by the Borrowers of this Agreement. 1.1.11 "Commission" shall mean the Securities and Exchange Commission. 1.1.12 "Conversion Notice" shall have the meaning ascribed to such term as in Section 2.8.1 of this Agreement. 1.1.13 "Credit Loan" shall mean the aggregate principal amount advanced by the Lender as a Loan to the Borrowers under Article 2 hereof, or, where the context requires, the amount thereof then outstanding. 1.1.14 "Default" means any event which, with the lapse of time, the giving of notice, or both, would become an Event of Default. 1.1.15 "Default Rate" shall mean fifteen percent (15%) per annum. 1.1.16 "Director" shall mean any member of the Board of Directors of ALHI. 2 1.1.17 "Effective Date" means that the date all parties hereto have executed this Agreement and the Loan Documents and Borrower has complied with all conditions precedent thereto. 1.1.18 "Entity Authorizations" shall mean (i) If any Borrower is a corporation, certified copies of Borrower(s)' and/or articles of incorporation and bylaws and current certificates of good standing and certified resolutions or authorizations as may be required to establish the power and authority of each Borrower to execute, deliver and perform its respective obligations under, as the case may be, the Loan Documents. (ii) If any Borrower is a limited liability company, certified copies of Borrower(s)' articles of organization and operating agreement and current certificates of good standing and certified resolutions or authorizations as may be required to establish the power and authority of each Borrower to execute, deliver and perform its respective obligations under, as the case may be, the Loan Documents. (iii) If any Borrower is a general partnership, a certified copy of the partnership agreement with all modifications and amendments thereto in recordable form, or a Memorandum of the partnership agreement, in recordable form, together with certifications from the Partnership: (a) identifying the full names of all partners, (b) confirming the fact that the partnership is in full force and effect, (c) addressing the authority of the partner(s) to execute the Loan Documents, and (d) acknowledging that the within transaction is in the usual course of the business of the partnership. If any Borrower is a limited partnership, a certified copy of the certificate of limited partnership (as filed with the Secretary of State of the state of its formation), a certificate of good standing (from the state of its formation and from the State of Florida) and a certified copy of the partnership agreement, with all modifications and amendments thereto. (iv) If any Borrower is a trust, a certified copy of the trust agreement with all modifications and amendments thereto, together with a certificate (certifying the authenticity of such trust agreement) and resolutions as may be required to establish the power and authority of the Trustee to execute, deliver and perform its obligations under the Loan Documents. In addition to the foregoing, Borrower must deliver or cause to be delivered such other documents as may be reasonably required by Lender or Lender's counsel. (v) Borrowers must deliver or cause to be delivered such other documents as may be reasonably required by Lender or Lender's counsel. 1.1.19 "Event of Default" has the meaning assigned to that term in Section 7.1 hereof. 3 1.1.20 "Exchange Act" shall mean the Securities and Exchange Act of 1934, as amended. 1.1.21 "Governmental Authority" shall mean any court, board, agency, commission, office or authority of any nature whatsoever or any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or here-after in existence. 1.1.22 "Indebtedness" of any Person shall mean (i) all indebtedness or liability for borrowed money or for the deferred purchase price of any property (including accounts payable to trade creditors under customary trade credit terms) or services for which the Person is liable as principal, (ii) all indebtedness (excluding unaccrued finance charges) secured by a Lien on property owned or being purchased by the Person, whether or not such indebtedness shall have been assumed by the Person, (iii) any arrangement (commonly described as a sale-and-leaseback transaction) with any financial institution or other lender or investor providing for the leasing to the Person of property which at the time has been or is to be sold or transferred by the Person to the lender or investor, or which has been or is being acquired from another Person, and (iv) all obligations of partnerships or joint ventures in respect of which the Person is primarily or secondarily liable as a partner or joint venturer or otherwise (provided that in any event for purposes of determining the amount of the Indebtedness, the full amount of such obligations, without giving effect to the contingent liability or contributions of other participants in the partnership or joint venture, shall be included). 1.1.23 "Inside Director" shall mean any Director who is not an Outside Director. 1.1.24 "Inventory" shall mean any and all goods, supplies, wares, merchandise, and other tangible personal property, including raw materials, work in process, supplies and components, and finished goods, whether held for sale or otherwise or to be furnished under any contract for service, and also including any products of and accessions to inventory, packing and shipping materials, and all documents of title, whether negotiable or non-negotiable, representing any of the foregoing, and the insurance proceeds from any of the foregoing. 1.1.25 "Investments" shall mean, with respect to any Person, all advances, loans or extensions of credit to any other Person, all purchases or commitments to purchase any stock, bonds, notes, debentures or other securities of any other Person, and any investment in other Persons, including partnerships or joint ventures. 1.1.26 "Lender" has the meaning assigned to that term in the introduction to this Agreement. 1.1.27 "Lien" shall mean a mortgage, pledge, lien, hypothecation, assignment, security interest or other charge or encumbrance or any segregation of assets or revenues or other preferential arrangement (whether or not constituting a security interest) with respect to any present or future assets, including fixtures, revenues or rights to the receipt of income of the Person referred to in the context in which the term is used. 4 1.1.28 "Loan" shall mean the aggregate principal amount advanced by the Lender as a loan or loans to the Borrowers under Article 2 and Article 6 hereof, or, where the context so requires, subject to Availability. 1.1.29 "Loan Documents" shall mean those documents executed or submitted in connection with the Loan, including, without limitation, (i) the Note; (ii) this Credit Agreement; (iii) the Additional Pledge Agreements; and (iv) all other documents and instruments executed by any Borrower in connection with the Loan and/or as may be required by Lender or Lender's counsel, including those referred to in Section 6 hereof. 1.1.30 "Loan Funding Period" shall mean the period between the Effective Date and the Maturity Date. 1.1.31 "Maturity Date" shall mean April 22, 2007. 1.1.32 "Maximum Loan Commitment" means the obligation of the Lender, subject to the Availability, to make the Credit Loan pursuant to Section 2.1 hereof in the aggregate principal amount of up to One Million Dollars ($1,000,000.00). 1.1.33 "Note" shall mean the Convertible Promissory Note described in Section 2.5 hereof, in the principal amount of One Million Dollars ($1,000,000.00) dated the initial Borrowing Date and payable to the order of the Lender, substantially in the form of Exhibit "A" attached hereto and made a part hereof, and any modifications, renewals, replacements or substitutions therefor made from time to time hereafter, and to the extent applicable. 1.1.34 "Obligations" shall mean the Maximum Loan Commitment and any and all liabilities, obligations, covenants, duties and debts, owing by the Borrower to the Lender, arising under this Agreement, any other Loan Document, including without limitation, all interest, charges, indemnities, expenses, fees, attorneys' fees, filing fees and any other sums chargeable to the Borrowers hereunder or under any other Loan Document, or any other contractual agreement between the Lender and the Borrowers. 1.1.35 "Outside Director" shall mean a Director who meets those the requirements set forth for a "Non-Employee Director" under Rule 16b-3(3) of the Securities Exchange Act of 1934. 1.1.36 "Permitted Liens" shall mean a mortgage, pledge, lien security interest or other charge or encumbrance or any segregation of assets or revenues or other preferential arrangement (whether or not constituting a security interest) with respect to any present or future assets, including fixtures, revenues or rights to the receipt of income of the Person referred to in the context in which the term is used which are permitted to exist under this Agreement. 1.1.37 "Person" shall mean any natural person, corporation, unincorporated organization, trust, joint-stock company, joint venture, association, company, partnership or government, or any agency or political subdivision of any government, or other entity of whatever nature. 5 1.1.38 "Securities Act" shall mean the Securities Act of 1933, as amended and the rules promulgated thereunder. 1.1.39 "Subsidiary" shall mean any Person in which any Borrower or a Wholly-Owned Subsidiary may own, directly or indirectly, an equity interest of more than fifty percent (50%), or which may effectively be controlled by any Borrower or a Wholly-Owned Subsidiary, during the term of this Agreement, as well as all Subsidiaries and other Persons from time to time included in the consolidated financial statements of the Borrowers. 1.1.40 "Wholly-Owned Subsidiary" shall mean any Subsidiary, one hundred percent (100%) of the outstanding capital stock of all classes of which is owned by the Borrowers and/or one or more Wholly-Owned Subsidiaries. Section 1.2 Accounting Terms. Accounting terms not specifically defined in this Agreement shall have the meaning given to them under accounting principles and practices generally accepted in the United States, applied on a consistent basis with the financial statements referred to in Section 4.9 hereof, and shall be determined both as to classification of items and amounts in accordance therewith. All Subsidiaries shall be consolidated to the fullest extent permitted by such principles and practices, and any accounting terms, financial covenants and financial statements referred to herein shall be determined and prepared on the basis of such consolidation. Section 1.3 Other Definitional Provisions. The words "hereof," "herein," and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Subsection and Exhibit references are to this Agreement unless otherwise specified. ARTICLE II - CREDIT LOAN Section 2.1 Commitment. The Lender agrees, on the terms, conditions and limitations of this Agreement, to make Credit Loans in United States Dollars to the Borrowers, from time to time, during the Loan Funding Period, in an aggregate amount not to exceed at any one time outstanding the Maximum Loan Commitment, subject to compliance with the Availability. The Credit Loan shall bear interest as set out in the Note. Section 2.2 Borrowings and Prepayments. Each Borrowing hereunder shall be made only if there is no then existing Event of Default hereunder. Borrowers shall have the right at any time, and from time to time, to prepay the outstanding principal amount in whole or in part without premium or penalty, provided that interest on the amount prepaid, accrued through the date of prepayment date, shall be paid on such date of prepayment. Section 2.3 Notice. The Borrowers shall give written notice, signed by the Borrowers (or telephone notice, promptly confirmed in writing) to the Lender at least five (5) business days prior to the proposed Borrowing Date specifying (i) the Borrowing Date (which shall be a business day), and (ii) the amount of the proposed Borrowing. Section 2.4 Manner of Borrowing. Each Borrowing under this Article 2 shall be made at the office of Lender, at its address as set forth opposite its signature at the end of this Agreement, by wire transfer to the Borrower's account; provided however, that the requested Borrowing shall in no event exceed the amount of Availability on such date. 6 Section 2.5 Warrants. With each Borrowing, in accordance with the Warrant Purchase Agreement, ALHI shall issue to Lender the Warrants, pro rata, in accordance with Schedule 2.5 ttached hereto. Section 2.6 Note. 2.6.1 The Loan made by the Lender under this Article 2 shall be evidenced by, and repaid with interest in accordance with, a single Promissory Note of the Borrowers in substantially the form of Exhibit "A" attached hereto and made a part hereof, with appropriate insertions, in the amount of the Maximum Loan Commitment, dated even date herewith and payable to the order of the Lender on the date or dates specified thereon, such Note to represent the obligation of the Borrowers to the Lender to repay the Credit Loan of the Borrowers. The Note provides that on the Maturity Date, the Commitment to make further Loans to the Borrower shall cease and that, on such date, the entire amount of principal outstanding thereunder and accrued interest shall be paid in full. 2.6.2 Although the stated amount of the Note shall be equal to the Maximum Loan Commitment, the Note shall be enforceable, with respect to the Borrowers' obligation to pay the principal amount thereof, only to the extent of the unpaid principal amount of the Loan at the time evidenced thereby together with unpaid accrued interest thereon. Interest on the Note shall be payable on, and only for the period during which, the principal amount of the Loan evidenced thereby is outstanding. Section 2.7 Principal and Interest. 2.7.1 Borrowers shall repay the outstanding principal balance of the Loan on the Maturity Date. 2.7.2 Borrower shall pay the Lender interest quarterly on the unpaid principal balance of the Loan, in arrears, at a per annum rate equal to eight percent (8%), with accrued interest from the date of the first advance on April 22, 2004. Interest charges shall be computed on the basis of a year of 360 days and actual days elapsed, and will be payable to the Lender on each applicable Loan Payment Date. 2.7.3 If any Event of Default occurs, then, while any such Event of Default is continuing, the Loan will bear interest at the Default Rate. 2.7.4 The Borrowers' obligation to repay the Loan and to pay interest on the Loan shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever and shall not be terminated for any reason whatsoever. Section 2.8 Conversion Rights. At any time prior to the Maturity Date, amounts outstanding under the Note and all sums, at any given time, due hereunder, shall, at the sole election of Lender and upon 5 days written notice to Borrowers and ALHI, be convertible in whole or in part, from time to time, into that number of shares of ALHI common stock calculated by dividing the amount due by $10.00. 7 2.8.1 Any conversion shall be exercised by written notice to ALHI at their principal place of business (the "Conversion Notice"). 2.8.2 Within five (5) days of its receipt of the Conversion Notice, ALHI shall issue and deliver to the address of the holder of the Note as set forth herein (as such address may be modified from time to time in the records of ALHI), or to the holder's nominees, a certificate or certificates, substantially in the form as shown in Exhibit -------- B attached hereto, for the number of shares of Common Stock to which such holder shall be entitled; provided, that ALHI shall not be obligated to issue to any Lender certificates evidencing the shares of Common Stock issuable upon such conversion unless either the Note is delivered to ALHI for cancellation and reissuance in the proper amount or an affidavit of loss of the Note has been executed by the holder. In the event that the Note is converted in full, the Lender will execute satisfaction of mortgages and security interests in customary form supplied by the Borrowers at no expense to the Lender. 2.8.3 If ALHI shall declare and pay to the holders of the shares of Common Stock a dividend in shares of Common Stock, the Conversion Price in effect immediately prior to the date fixed for the determination of shareholders entitled to such dividends shall be proportionately decreased (adjusted to the nearest 1/100th of a share of Common Stock), such adjustment to become effective immediately after the date fixed for such determination. 2.8.4 If ALHI shall subdivide the outstanding shares of Common Stock into a greater number of shares of Common Stock or combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, the Conversion Price in effect immediately prior to such subdivision or combination, as the case may be, shall be proportionately increased or decreased (adjusted to the nearest 1/100th of a share of Common Stock), as the case may require, such increase or decrease, as the case may be, to become effective when such subdivision or combination becomes effective. 2.8.5 In the case of any reclassification or change of outstanding shares of Common Stock issuable upon the conversion of the Note, or in the case of any consolidation or merger of ALHI with or into another corporation, or in the case of any sale or conveyance to another corporation of all or substantially all of the property of ALHI, the holder of the Note shall have the right thereafter, so long as such holder's conversion right hereunder shall exist, to convert the Note in whole or in part, into the same kind and amount of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock of ALHI into which the Note might have been converted immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. 2.8.6 In case securities or property other than shares of Common Stock shall be issuable or deliverable upon the conversion as aforesaid, then all references in this Section shall be deemed to apply, so far as appropriate and as nearly as may be, to such other securities or property. The subdivision or combination of shares of Common Stock at any time outstanding into a greater or lesser number of shares of Common Stock (whether with or without par value) shall not be deemed to be a reclassification of the Common Stock of ALHI for the purposes of this subsection. 8 2.8.7 ALHI shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of the Note, the sufficiency of which shall be determined by using the Conversion Price. Section 2.9 Payments and Prepayments. 2.9.1 Repayment of the Loans. The Borrowers shall repay the outstanding principal balance of Loans, plus all accrued but unpaid interest thereon, as provided herein. 2.9.2 Place and Form of Payments. All payments of principal, interest, fees, premiums and other sums payable hereunder to Lender shall be made without condition or reservation of right and (except for proceeds of Collateral received directly by the Lender) in same day funds and delivered to the Lender not later than 3:00 P.M. (Eastern Standard Time) on the date due to such account of Lender as the Lender may designate. Funds received by the Lender after that time shall be deemed to have been paid on the next succeeding Business Day. If any payment of principal, interest, fees, premiums or other sums payable hereunder becomes due and payable on a day other than a Business Day, the due date of such payment shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable Interest Rate during such extension. 2.9.3 Credit for Payments. All payments received by the Lender as proceeds of Collateral will be the sole property of the Lender up to the amount due and owing and until all of the Obligations have been satisfied in full. Any surplus shall immediately be paid to the Borrower. 2.9.4 Application of Payments. All payments not relating to specific principal or interest payable with respect to the Loans, or not constituting payment of specific fees, and all proceeds of Collateral received by the Lender from or as to the Borrower, shall be applied, subject to the provisions of this Agreement, first, to pay any fees, expense reimbursements or indemnities then due to the Lender from the Borrower; second, to pay interest due in respect of the Loans; third to pay or prepay principal of the Loans; and fourth to the payment of any other Obligation due to the Lender by the Borrower. The Lender shall have the right, upon an Event of Default, to apply payments received in connection with this Agreement or the other Loan Documents as provided above in such order as it deems appropriate. 2.9.5 Principal Prepayment. The Borrower shall have the right, at any time and from time to time, on thirty days' prior written notice to the Lender, to prepay the Loan in whole or in part, without penalty or premium. The Borrowers shall pay accrued interest then outstanding on the Loan through the date of prepayment. 9 Section 2.10 Collateral. The payment of all Obligations due under this Agreement is secured by the Additional Stock Pledge Agreement. Without in any way limiting the right of any holder of the Note to convert the Note, payment of the Note is nonrecourse to ALHI and the sole recourse against ALHI is the collateral under the Additional Stock Pledge Agreement, except in the event that: (i) any Borrower hereunder has made a representation or warranty to the Lender that is not true, correct or complete in any material respect when made; (ii) violation of Section 5.7 hereof; (iii) in the event of any default under the Note, failure of Borrowers to deliver to Lender the issued and outstanding stock of CLM free and clear of any liens, claims or encumbrances other than those of the Lender; or (iv) a claim for indemnification is made by Lender hereunder. Section 2.11 Fees and Expenses. The Borrowers shall bear its own costs, including attorney's fees, incurred in the negotiation of this Agreement and consummation of the transactions contemplated herein and the corporate proceedings of the Borrowers in contemplation hereof and thereof. At the date of issuance of the Note by the Borrowers to the Lender, the Borrowers shall reimburse the Lender for all of the Lender's reasonable out-of-pocket expenses incurred in connection with the negotiation or performance of this Agreement, in addition to an origination fee equal to 2.5% of the Notes which fee shall be paid to Lender and reasonable fees and disbursements of counsel to the Lender. Section 2.12 Assignment; Participation. Lender may assign to one or more Persons or sell participations to one or more such Persons, all or a portion of its rights and obligations hereunder and under the Note and, in connection with any such assignment or sale of a participation, may assign its rights and obligations under this Agreement and the other Loan Documents, subject to compliance with any applicable requirements of any applicable securities laws. Lender shall have no obligation to give notice to the Borrowers of any such assignment or sale of a participation. Lender may, in connection with any assignment or proposed assignment or sale or proposed sale of a participation, disclose to the assignee or proposed assignee or participant or proposed participant any information relating to the Borrowers furnished to the Lender by or on behalf of the Borrowers. Section 2.13 Notices. The Borrowers agree, at its expense, to execute all such notices and other instruments and make all such filings and recordings as the Lender shall request in order to assure that the Lender at all times holds duly executed, delivered, filed and recorded assignments and security interests of first priority against other creditors, bona fide purchasers without notice, a trustee in bankruptcy and other possible adverse claimants. ARTICLE III - REPRESENTATIONS AND WARRANTIES In order to induce the Lender to enter into this Agreement and to make the Loan provided for herein, the Borrowers make the following representations and warranties to the Lender, subject to the exceptions set forth on the Disclosure Schedule attached hereto, all of which shall survive the execution and delivery of this Agreement and the Note, and the other Loan Documents: Section 3.1 Corporate Existence and Power. The Borrowers are each duly incorporated, validly existing and in good standing under the laws of their respective states of incorporation and each is duly qualified or licensed to transact business in all places where such qualification or license is necessary. Each Borrower has the corporate power to make and perform this Agreement and the Note, and this Agreement does, and the Note when duly executed and delivered for value will, constitute the legal, valid and binding obligations of the Borrowers enforceable in accordance with their respective terms. The Borrowers have the corporate power to make and perform this Agreement the Loan Documents, and the Note, and this Agreement does, and the Loan Documents and Note when duly executed and delivered for value will, constitute the legal, valid and binding obligations of the Borrowers enforceable in accordance with their respective terms. 10 Section 3.2 Authority. The making and performance by the Borrowers of this Agreement, the Note, the Loan Documents, and any additional documents pursuant hereto, has been duly authorized by all necessary legal action of the Borrowers, and does not and will not violate any provision of law or regulation, or any writ, order or decree of any court, governmental, regulatory authority or agency, and does not and will not, with the passage of time or the giving of notice, result in a breach of, or constitute a default or require any consent under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the Borrowers, pursuant to any instrument or agreement to which any Borrower is a party or by which any Borrower or its properties may be bound or affected. Section 3.3 Financial Condition. The financial statements of ALHI set forth in the ALHI SEC Filings (as hereinafter defined) were prepared in accordance with generally accepted accounting principles consistently applied, are complete and correct and fairly present the consolidated financial condition of ALHI as of that date. Other than as disclosed by those financial statements, ALHI has no direct or contingent obligations or liabilities which would be material to the financial position of ALHI, nor any material unrealized or anticipated losses from any commitments of ALHI. Since the date of such financial statements, there has been no material adverse change in the business or financial condition of any Borrower except as set forth in Schedule 3.3 hereto. Section 3.4 SEC Filings. As of the date hereof, none of the filings made with the SEC by ALHI since January 1, 2000 (the "ALHI SEC Filings"), contained any untrue statement of a material fact or to the best of Borrower's knowledge, omitted any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent such filings have been all prior to the date of this Agreement corrected, updated or superseded by a document subsequently filed with Commission. ALHI has furnished or made available to the Lender true and complete copies of all the documents it has filed with the Commission since January 1, 2000, all in the forms so filed. ALHI has filed all filings required by law or regulation and ALHI's filings comply in all material respects with the requirements of the Securities Act and the Exchange Act, and the rules and regulations of the Commission promulgated thereunder, as the case may be, and none of the filings with the Commission will contain any untrue statement of a material fact or will omit any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. Section 3.5 Full Disclosure. The financial statements referred to in Section 3.3 do not, nor does this Agreement, nor any written statement furnished by any Borrower to the Lender in connection with the negotiation of this Agreement and Loans, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading. There is no fact which any Borrower have not disclosed to the Lender in writing which materially and adversely affects nor, so far as any Borrower can now foresee, is reasonably likely to prove to materially and adversely affect the business or financial condition of any Borrower or the ability of any Borrower to perform this Agreement or the Note. 11 Section 3.6 Litigation. Except to the extent disclosed in the ALHI SEC Filings, there are no suits, actions or proceedings pending, or to the knowledge of the Borrowers, threatened before any court or by or before any governmental or regulatory authority, commission, bureau or agency or public regulatory body against or affecting any Borrower which, if adversely determined, would have a material adverse effect on the business or financial condition of any Borrower. Section 3.7 Payment of Taxes. As of the date of execution of this Agreement, federal income tax returns of ALHI have been filed with Internal Revenue Service and no deficiencies have been assessed. Each of the Borrower has filed or caused to be filed, or has obtained extensions to file all federal, state and local tax returns which are required to be filed, and have paid or caused to be paid, or have reserved on their books amounts sufficient for the payment of, all taxes as shown on said returns or on any assessment received by them, to the extent that the taxes have become due, except as otherwise permitted by the provisions hereof. Each of the Borrower has set up reserves which are reasonably believed by each Borrower to be adequate for the payment of said taxes for the years that have not been audited by the respective tax authorities. Section 3.8 No Adverse Restrictions or Defaults. Except as disclosed in the ALHI SEC Filings, no Borrower is a party to any agreement or instrument or subject to any court order or judgment, governmental decree, charter or other restriction adversely and materially affecting its business, properties or assets, operations or condition (financial or otherwise). No Borrower is in material default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any material agreement or instrument to which it is a party or by which any Borrower and their respective properties, may be bound or affected, or under any material law, regulation, decree, order or the like, which default would have a material adverse effect on such Borrower. Section 3.9 Authorizations. All material authorizations, consents, approvals and licenses required under applicable law or regulation for the ownership or operation of the property owned or operated by any Borrower or for the conduct of business in which any Borrower is engaged, have been duly issued and are in full force and effect, and to the best of Borrowers' actual knowledge, none of the Borrowers are in default under any material order, decree, ruling, regulation, closing agreement or other decision or instrument of any government commission, bureau or other administrative agency or public regulatory body having jurisdiction over any of the Borrowers, which default would have a material adverse effect on any of the Borrowers. No approval, consent or authorization of or filing or registration with any governmental commission, bureau or other regulatory authority or agency is required with respect to the execution, delivery or performance of this Agreement, the Note or any of the Loan Documents executed in connection with the making of the Loan, other than filings required under applicable securities laws which shall have been duly made by ALHI as of the Effective Date. 12 Section 3.10 Title to Property. Each Borrower and each of their subsidiaries have, respectively, good and marketable fee title to all real property, and good and marketable title to all other property and assets, reflected in the latest financial statements referred to in Section 3.3 or purported to have been acquired by any of them subsequent to such date, except property and assets sold or otherwise disposed of subsequent to such date in the ordinary course of business. All property and assets of any kind of Borrowers, and each of their subsidiaries are free from any liens except as disclosed on the financial statements provided to the Lender and referred to in Section 3.3 hereof and other matters such as easements, covenants, and restrictions that do not materially adversely affect their use or enjoyment of such property. Borrowers and each of their subsidiaries enjoy peaceful and undisturbed possession under all of the leases under which they are operating, if any, none of which contain any provisions that will materially impair or adversely affect the operations of any Borrower, as the case may be. Section 3.11 Use of Proceeds. The proceeds of the Loans shall be used by the Borrowers exclusively for the operations of the Antigua Call Center. Section 3.12 Indemnification by Borrowers. All of the representations and warranties of Borrowers, as set forth in this Agreement shall survive the making of this Agreement and the full repayment of the Loan; accordingly, in the event of any claims against Lender, resulting in the breach of any of the foregoing warranties and representations, each Borrower shall and hereby agrees to indemnify Lender for any such claims notwithstanding the full repayment of the Loan. Each and every requisition submitted by Borrower for funds under this Agreement shall constitute a new and independent representation and warranty to Lender with respect to all of the matters set forth in this Agreement, as of the date of such requisition. ARTICLE IV - AFFIRMATIVE COVENANTS The Borrowers covenant and agree that from and after the Effective Date and until payment in full of the principal of and interest on the Note and the termination in full of the Commitment, unless the Lender shall otherwise consent in writing, the Borrowers, as the case may be, will: Section 4.1 Loan Proceeds. Use the proceeds of the Loans only for the purposes set forth in Section 3.11 and furnish the Lender with all evidence that it may reasonably require with respect to such use. Section 4.2 Corporate Existence. Do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights, franchises and privileges in the jurisdiction of its corporation, and qualify and remain qualified in each jurisdiction where qualification is necessary or desirable in view of its business operations or the ownership of its properties. Section 4.3 Maintenance of Business and Property. Continue to conduct and operate its business substantially as conducted and operated during the present and preceding calendar year; at all times maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property used or useful in the conduct of its business and keep the same in good repair, working order and condition, and from time to time make, or cause to be made, all needful and proper repairs, replacements, betterments and improvements thereto so that the business carried on in connection therewith may be conducted properly and advantageously at all times. 13 Section 4.4 Antigua Call Center. Commencing on the date hereof, maintain an employee work force comprising of at least 96 persons paid at current wage levels increased for inflation and seniority at the Antigua Call Center. Borrowers shall cause the Antigua Call Center to remain free of debt and shall not encumber the assets of the Antigua Call Center or the capital stock of the company that owns the Antigua Call Center. Section 4.5 SEC Filings. Make all required filings in connection with the Loan to the Borrowers as required by federal and state laws and regulations, or by any domestic securities exchange or trading market, and to provide copies thereof to the Lender promptly after such filing or filings. Section 4.6 Insurance. Insure and keep insured in good and financially sound and responsible insurance companies reasonably satisfactory to the Lender, all insurable property owned by it which is of a character usually insured by companies similarly situated and operating like properties, against loss or damage from such hazards or risks, including fire, flood, windstorm as are insured by companies similarly situated and operating like properties, insure and keep insured employers' and public liability risks in responsible insurance companies to the extent usually insured by companies similarly situated; maintain such other insurance as may be required by law or as may reasonably be required in writing by the Lender. Section 4.7 Payment of Indebtedness, Taxes, Etc. 4.7.1 Pay all of its indebtedness and obligations promptly and in accordance with normal terms; and 4.7.2 Pay and discharge or cause to be paid and discharged promptly all taxes, assessments and governmental charges or levies imposed upon it or upon its property or upon any part thereof, before the same shall become in default, as well as all lawful claims for labor, materials and supplies or otherwise which, if unpaid, might become a lien or charge upon such properties or any part thereof; provided however, that the Borrower shall not be required to pay and discharge or to cause to be paid and discharged any tax, assessment, charge, levy or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings and the Borrower shall have set aside on its books adequate reserves with respect to any tax, assessment, charge, levy or claim, so contested. Section 4.8 Compliance with Laws. Duly observe, conform and comply with all laws, decisions, judgments, rules, regulations and orders of all governmental authorities relative to the conduct of its business, its properties, and assets, except those being contested in good faith by appropriate proceedings diligently pursued; and maintain and keep in full force and effect all licenses and permits necessary to the proper conduct of its business. 14 Section 4.9 Notice of Default. Upon the occurrence of any Default or Event of Default, promptly furnish written notice thereof to the Lender. Section 4.10 Inspection. At reasonable times and after reasonable prior written notice, each Borrower shall permit any representatives of Lender to visit and inspect any of the properties of such Borrower, to examine and copy all books of account, records, reports and other papers, and to discuss the affairs, finances and accounts with Borrower's employees and independent accountants at all such reasonable times and as often as may be reasonably requested. Section 4.11 Notice of Litigation and Other Proceedings. Give prompt notice in writing to the Lender of the commencement of (a) all material litigation which, if adversely determined, might adversely affect the business or financial condition of the Borrowers; (b) all other litigation involving a claim against the Borrower for Twenty-five Thousand Dollars ($25,000.00) or more in excess of applicable insurance coverage; and (c) any citation, order, decree, ruling or decision issued by, or any denial of any application or petition to, or any proceeding before any governmental commission, bureau or other administrative agency public regulatory body against or affecting the Borrower, or any property of the Borrower or any lapse, suspension or other termination or modification of any certification, license, consent or other authorization of any agency or public regulatory body, or any refusal of any thereof to grant any application therefor, in connection with the operation of any business conducted by any of the Borrowers. ARTICLE V - NEGATIVE COVENANTS Each of the Borrowers covenant and agree that from the Effective Date and until payment in full of the principal of and interest on the Note, unless the Lender shall otherwise consent in writing, none of the Borrowers will, out of the ordinary course of business violate any of the following covenants, provided that in the course of any of the following each of the Borrowers consider to be in the ordinary course of business each of the Borrowers shall provide Lender ten business days prior written notice thereof and if Lender disagrees then Lender will notify each of the Borrowers prior to the conclusion of such ten business days or matter shall be deemed to be in the ordinary course of business: Section 5.1 Limitation of Liens. Except as permitted by the Loan Documents, create, assure, incur or suffer to exist any Lien upon, or transfer or assignment of, any of its property or revenues or assets now owned or hereafter acquired to secure any Indebtedness of obligations, or enter into any arrangement for the acquisition of any property subject to conditional sale agreements or leases or other title retention agreements; excluding, however, from the operation of this covenant: (i) deposits or pledges to secure payment of worker's compensation, unemployment insurance, old age pensions or other social security; (ii) deposits or pledges to secure performance of bids, tenders, contracts (other than contracts for the payment of money) or leases, public or statutory obligations, surety or appeal bonds or other deposits or pledges for purposes of like general nature in the ordinary course of business; (iii) Liens for property taxes not delinquent and Liens for taxes which in good faith are being contested or litigated; (iv) mechanics', carriers', workmen's, repairmen's or other like liens arising in the ordinary course of business securing obligations which are not overdue for a period of sixty (60) days or more or which are in good faith being contested or litigated; (v) Liens securing the unpaid purchase price of equipment purchased by the Borrowers in the ordinary course of its business and Liens existing upon assets acquired by the Borrowers; and (vi) any existing Liens reflected in the financial statements referred to in Section 4.9 hereof. 15 Section 5.2 Limitation on Indebtedness. Incur, create, assume or permit to exist any Indebtedness, except 5.2.1 The Note and any other Indebtedness of the Borrower to the Lender; 5.2.2 Indebtedness which is subordinated to the prior payment in full of the principal of, and interest on, the Note(s) on terms and conditions approved in writing by the Lender; 5.2.3 Indebtedness representing the unpaid purchase price of equipment purchased by the Borrower in the ordinary course of its business and Indebtedness existing upon assets acquired by the Borrower; and 5.2.4 Existing Indebtedness reflected in the audited financial statements referred to in Section 3.3 hereof. Section 5.3 Mergers, Consolidations and Acquisition of Assets. Windup, liquidate, dissolve, merge or consolidate with any corporation, or acquire all or substantially all of the assets of any corporation except that (i) the Borrower may merge or consolidate with any Subsidiary if the Borrower is the surviving corporation and (ii) ALHI may directly or through any eighty percent (80%) or more owned Subsidiary of ALHI on or before September 30, 2004 acquire the assets of Around the World Travel, Inc. in accordance with the terms set forth in Schedule 5.3 hereto. Section 5.4 Sale, Lease, Etc. Sell, lease, assign, transfer or otherwise dispose of any of its assets or revenues (other than obsolete or worn-out personal property or personal property or real estate not used or useful in its business) whether now owned or hereafter acquired, other than in the ordinary course of business. Section 5.5 Management and Ownership. Permit any material change in its ownership or management. Section 5.6 General. (i) engage, directly or through other Persons, in any business other than the business now carried on; (ii) sell a material portion of any of the assets of any of the Borrowers out of the ordinary course of business or merge any of the Borrowers into or with another unaffiliated company, except as contemplated hereby; (iii) change the certificate of incorporation, bylaws or other charter documents of any of the Borrowers, except as contemplated hereby; (iv) change substantially or materially the nature of the business of any of the Borrowers; 16 (v) declare or pay dividends or make any other distribution or redeem equity securities of the Borrowers; or (vi) enter into or modify a related-party transaction. Section 5.7 Dividends or Intercompany Transactions. CLM nor CC shall not purchase, redeem, retire or otherwise acquire, directly or indirectly, or make any sinking fund payments with respect to any share of any class of their stock now or hereafter outstanding or set apart any sum for any such purpose, or declare or pay any dividends or make any distribution of any kind on their outstanding stock or set aside any sum for any such purpose or make any such payments. In addition, CC and CLM shall not incur any indebtedness, payables, advances or make any transfer to any affiliate or pay any such indebtedness, payables or advances which may arise or exist from the proceeds of the loan. Neither CC nor CLM will incur, create, assume or permit to exist any debt for services rendered by an affiliate except in the ordinary course of business. ARTICLE VI - CONDITIONS TO LENDER'S OBLIGATIONS TO MAKE THE LOAN The conditions listed below are precedent to any obligations of the Lender and shall be complied with in form and substance satisfactory to Lender and its counsel prior to the Lender's obligation to advance any portion of the Loan: Section 6.1 Each Loan. The obligation of the Lender to make each credit loan pursuant to Article 2 herein is subject to no adverse change in the condition, financial or otherwise of any of the Borrowers and no default or the occurrence of any event which with notice or passage of time would become a default under this Agreement, any of the Loan Documents, and is subject to the following conditions precedent, each of which shall have been met or performed by the Borrowing Date: 6.1.1 Notice of Borrowing. The Borrowers shall have delivered to the Lender the notice of Borrowing provided for in Section 2.3 hereof; 6.1.2 No Default. (i) No Default or Event of Default shall have occurred and be continuing or will occur upon the making of the Loan on such Borrowing Date, and all representations and warranties made by the Borrowers herein or otherwise in writing in connection herewith shall be true and correct in all material respects with the same effect as though the representations and warranties had been made on and as of such Borrowing Date, and (ii) a certificate to this effect shall have been issued to the Lender on such Borrowing Date, by each Borrower's Chief Financial Officer; 6.1.3 Use of Proceeds. The Loan proceeds shall have theretofore been applied in accordance with the Use of Proceeds as set forth in Section 3.11 herein. Section 6.2 Loan Documents. The appropriate parties shall have executed and delivered to Lender the (i) Pledge Agreements; (ii) Security Agreement; (iii) Warrant Purchase Agreement; (iv) Warrant Repricing Agreement; (v) Collateral Assignment Agreement; (vi) Right of First Refusal Agreement; and (vii) Option Pledge Agreement. 17 Section 6.3 Additional Conditions to Credit Loan. The obligation of the Lender to make the Credit Loan pursuant to Article 2 herein is subject to the following additional conditions precedent, each of which shall have been met or performed by the initial Borrowing Date: 6.3.1 Note. The Note, duly executed and completed in the form of Exhibit "A" attached hereto and made a part hereof, shall have been delivered to the Lender; 6.3.2 Supporting Documents. The Borrowers shall have executed and delivered, or caused to be executed and delivered, to the Lender each of the certificates and the other Loan Documents and, where applicable, recorded in the appropriate public offices; all additional opinions, documents and certificates that the Lender or its counsel may require, and all such opinions, certificates and documents specified in this Article 6 shall be reasonably satisfactory in form and substance to the Lender and its counsel; Section 6.4 Expenses. Borrowers shall have paid all those reasonable fees and charges due and payable or ordered paid by Lender. Section 6.5 Other Documents. Borrowers shall deliver to Lender such other documents and information as Lender may reasonably require. Section 6.6 Corporate Governance. On or before September 26, 2004 the ALHI Board of Directors shall be comprised of three Inside Directors and four Outside Directors. Section 6.7 Amendment to Series C Preferred Stock Designation. ALHI shall amend and restate its Series C Preferred Stock Designation to eliminate the mandatory redemption requirement. ARTICLE VII - EVENTS OF DEFAULT Section 7.1 Events of Default. If any one of the following "Events of Default" shall occur and shall not have been remedied: 7.1.1 Any representation or warranty made or deemed made by any Borrower herein or in any of the other Loan Documents, or in any certificate or report furnished by such Borrower at any time to the Lender, shall prove to have been incorrect, incomplete or misleading in any material respect on or as of the date made or deemed made; or 7.1.2 Any Borrower shall fail to pay, when due, any principal of or interest on the Note, or to pay when due any other sum payable under this Agreement and the same is not paid within ten (10) days after written notice from Lender; or 7.1.3 Any default by any Borrower under any other obligation to the Lender , and the same is not cured within any grace periods provided thereunder; or 7.1.4 Any Borrower shall default in any material respect in the performance of any agreement, covenant or obligation contained herein or in any of the other Loan Documents not provided for elsewhere in this Article 7, if the default continues for a period of thirty (30) days after notice of default to the Borrower by the Lender; or 18 7.1.5 There shall occur any default in any material respect in the due observance or performance of any covenant, condition or agreement on the part of any of the Borrowers to be observed or performed pursuant to the terms of Articles 4 or 5 hereof and the same is not cured within thirty (30) days after written notice from Lender; or 7.1.6 At any time on or after the date hereof, less than 96 persons shall be employed by the Antigua Call Center, and TGI (as defined under the Credit Agreement dated December 18, 2003) shall not have sold all of the assets of the Antigua Call Center now or hereafter existing, to Lender free and clear of all Liens for an amount not greater than $1,000 and paid all normal recurring expenses and payrolls through thirty days following such sale; or 7.1.7 There shall occur any default in the due observance of any agreement, covenant, or obligation on the part of any of the Borrowers to be observed or performed pursuant to Section 5.7 hereof. 7.1.8 Final judgment for the payment of money in an amount in excess of Fifty Thousand Dollars ($50,000.00) shall be rendered against any Borrower and the same shall remain undischarged for a period of thirty (30) days, during which period execution shall not effectively be stayed, provided such Borrower , as applicable, will have the right to contest in good faith by appropriate proceedings and provided such Borrower shall have set aside on its books adequate reserves for payment of such money; or 7.1.9 Any Borrower's default in the performance of its obligations as lessor or as lessee under any lease of all or any portion of its property, after the provision of written notice and the expiration of cure periods provided in such documents; or 7.1.10 Any Borrower shall die or cease to exist or to be qualified to do or transact business in the State in which the Property are located, or shall be dissolved or terminated or shall be a party to a merger or consolidation, or shall sell all or substantially all of its assets; or 7.1.11 If, without the prior written consent of Lender, which consent shall be in Lender's sole and absolute discretion any shares of stock of Borrower (other than ALHI) are issued, sold, transferred, conveyed, assigned, mortgaged, pledged, or otherwise disposed of, whether voluntarily or by operation of law, and whether with or without consideration, or any agreement for any of the foregoing is entered into; or 7.1.12 Any Borrower shall (i) voluntarily terminate operations or apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of any of the Borrowers, as the case may be, or of all or of a substantial part of the assets of such Borrower, as the case may be, (ii) admit in writing its inability, or be generally unable, to pay its debts as the debts become due, (iii) make a general assignment for the benefit of its creditors, (iv) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect), (v) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, (vi) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code, or (vii) take any corporate action for the purpose of effecting any of the foregoing; or 19 7.1.13 Any Borrower shall fail to furnish to the Lender notice of default in accordance with Section 4.7 hereof, within ten (10) days after any such notice of default becomes known to the President or Chief Financial Officer of such Borrower, whether or not notification to such Borrower is furnished by the Lender; 7.1.14 Borrowers shall be in default of this Agreement if all filings required by law or regulation to be made with the Commission as set forth in Section 3.4 herein, are not made on or before the Effective Date. Section 7.2 In the case of any such event, the Lender may, by written notice to the Borrowers, at its option: (A) immediately terminate the Commitment of the Lender hereunder, and/or (B) immediately declare the principal of, and interest accrued on, the Note immediately due and payable without presentment, demand, protest or notice, whereupon the same shall become immediately due and payable. ARTICLE VIII - MISCELLANEOUS Section 8.1 No Waiver, Remedies Cumulative. No failure on the part of the Lender to exercise and no delay in exercising any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and are not exclusive of any remedies provided by law. Section 8.2 Investment Representations. Lender represents that the Lender is an "accredited investor" as defined in the Securities Act and the rules promulgated thereunder, and agrees that the Note is being acquired for investment and not with a view to the distribution thereof, and that the Lender will not offer, sell or otherwise dispose of the Note or the shares of Common Stock issuable upon conversion thereof except under circumstances which will not result in a violation of the Securities Act or any applicable state "blue sky" laws or similar state or foreign laws relating to the sale of securities. Unless the issuance of the shares of Common Stock issuable upon conversion of the Note shall have been registered under the Securities Act, the Lender, by tendering notice to ALHI of the Lender's intent to convert all or part of the Note, shall be deemed to represent to the Borrowers that the Lender is acquiring such shares of Common Stock for investment and not with a view to the distribution thereof. Section 8.3 Release and Waiver of Claims. Borrower and its affiliates hereby acknowledge that Borrower acquired assets for use in the Antigua Call Center, incurred expenses, and made expenditures in connection therewith, and made the independent judgment to fund operations in Antigua Call Center, and in so doing has not in any way relied upon any representations, advice, or counsel of the Lender, and was not induced by the Lender to incur such expenses and make such expenditures. The Borrower hereby releases and covenants not to sue the Lender for any losses it has, or may in the future, incur in Antigua, and furthermore hereby waives any and all claims which may be asserted for the actual and consequential damages incurred by the Borrower (including, without limitation, amounts required to be paid under this Agreement by the Borrower to Lender), including claims to seek recourse against the Lender in the event the Lender fails to advance any remaining Availability Amount. Borrower agrees that neither Lender nor its agents shall be liable for any monetary damages (except to the extent that Borrower can prove Lender's bad faith or willful misconduct), 20 and in the event of bad faith or willful misconduct, Borrower's sole remedies shall be limited to commencing an action seeking injunctive relief or declaratory judgment. The parties hereto agree that any action or proceeding to determine whether Lender has acted in bad faith or with willful misconduct shall be determined by an action seeking declaratory judgment. Lender agrees that, in such event, it shall cooperate in expediting any action seeking injunctive relief or declaratory judgment. Borrower hereby expressly waives and releases, to the fullest extent permitted by law, the pleading of any statute of limitations as a defense to payment of any amounts due under this Agreement or the performance of its other obligations set forth in the Loan Documents. Borrower hereby waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by Lender or its agents. Section 8.4 Survival of Representations. All representations and warranties made herein shall survive the making of the loans hereunder and the delivery of the Note, and shall continue in full force and effect so long as the Note is outstanding and unpaid and the Commitment has not been terminated. Section 8.5 Notices. Any notice or other communication hereunder to any party hereto shall be by telegram, facsimile transmission with next day delivery of original, telex or registered or certified mail and shall be deemed to have been given or made when telegraphed, faxed as provided herein, telexed or deposited in mails, postage prepaid, addressed to the party at its address specified next to its signature hereto (or at any other address that the party may hereafter specify to the other parties in writing). Section 8.6 Construction. This Agreement and the Note shall be deemed a contract made under the law of the State of Florida and shall be governed by and construed in accordance with the law of said state and any suit, action or proceeding arising out of or relating to this Agreement may be commenced and maintained in any court of competent subject matter jurisdiction in Miami-Dade County, Florida, and any objection to such jurisdiction and venue is hereby expressly waived. Section 8.7 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of each Borrower and the Lender, and their respective successors and assigns, provided, that no Borrower may assign any of its rights hereunder without the prior written consent of the Lender, which may be arbitrarily withheld, and any such assignment will be void. Section 8.8 Limit on Interest. Anything herein or in the Note to the contrary notwithstanding, the obligations of the Borrowers under this Agreement and the Note to the Lender shall be subject to the limitation that payments of interest to the Lender shall not be required to the extent that receipt of any such payment by the Lender would be contrary to provisions of law applicable to the Lender (if any) which limit the maximum rate of interest which may be charged or collected by the Lender; provided however, that nothing herein shall be construed to limit the Lender to presently existing maximum rates of interest, if any increased interest rate is hereafter permitted by reason of applicable federal or state legislation. 21 Section 8.9 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to an original and all of which when taken together shall constitute but one and the same instrument. Section 8.10 Headings. The headings are for convenience only and are not to affect the construction of or to be taken into account in interpreting the substance of this Agreement. Section 8.11 Severability. In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. Section 8.12 Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement with respect to the subject matter hereof and is intended as a complete and exclusive statement of the terms and conditions thereof, and this Agreement supersedes and replaces all prior negotiations and agreements between the parties hereto, or any of them, whether oral or written. Each of the parties hereto acknowledges that no other party, agent or attorney of any other party, has made any promise, representation or warranty whatsoever, expressed or implied, not contained herein concerning the subject matter hereof to induce the other party to execute this Agreement or any of the other documents referred to herein, and each party hereto acknowledges that it has not executed this Agreement or such other documents in reliance upon any such promise, representation or warranty not contained herein. Section 8.13 Integration. This Agreement, together with the other documents and instruments executed herewith and contemplated by this Agreement, comprises the complete and integrated agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof. The Borrower further releases and discharges Lender from and against any and all liability with respect to all prior agreements and preliminary commitments. The Loan Documents were drafted with the joint participation of Borrower and Lender, and their respective counsel, and shall be construed neither against nor in favor of any of them, but rather in accordance with the fair meaning thereof. Section 8.14 Course of Dealing; Amendment; Supplemental Agreements. No course of dealing between the Lender and Borrower shall be effective to amend, modify or change any provision of this Agreement. This Agreement or any document executed in connection herewith, may not be amended, modified, or changed in any respect except by agreement in writing signed by the Lender and the Borrower. Section 8.15 Indemnification. Each of the Borrowers hereby agree to hold the Lender and its officers, directors, employees and agents harmless from and against all claims, damages, liabilities and expenses, including reasonable attorney fees and disbursements of counsel, which may be incurred by or asserted against any of them in connection with or arising out of any investigation, litigation, or proceeding relating to the Loan, except that the Borrowers shall not be required to indemnify the Lender to the extent that such claims, damages, liabilities or expenses arise from the negligence or willful misconduct of Lender. 22 Section 8.16 Waiver of Jury Trial. BORROWERS AND LENDER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY DOCUMENT EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OR EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER ENTERING INTO THIS AGREEMENT AND MAKING ANY LOAN, ADVANCE OR OTHER EXTENSION OF CREDIT TO THE BORROWERS. *SIGNATURES ON FOLLOWING PAGE(S)* 24 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be effective on the date first written above. "BORROWER" Signed, sealed and delivered AMERICAN LEISURE HOLDINGS, INC., a Nevada corporation - -------------------------------- By: (Signature of Witness) -------------------------------- Its: ------------------------------- - -------------------------------- (Printed Name of Witness) Address: --------------------------- ------------------------------------ ------------------------------------ Signed, sealed and delivered CARIBBEAN LEISURE MARKETING, LIMITED INC., an Antiguan limited company - -------------------------------- By: (Signature of Witness) -------------------------------- Its: ------------------------------- - -------------------------------- (Printed Name of Witness) Address: --------------------------- ------------------------------------ ------------------------------------ ------------------------------------ Signed, sealed and delivered CASTLECHART LIMITED, a United Kingdom private limited company - -------------------------------- By: (Signature of Witness) -------------------------------- Its: ------------------------------- - -------------------------------- (Printed Name of Witness) Address: --------------------------- ------------------------------------ ------------------------------------ ------------------------------------ - -------------------------------- STANFORD VENTURE CAPITAL (Signature of Witness) HOLDINGS, INC. By: - -------------------------------- -------------------------------- (Printed Name of Witness) Name: ------------------------------ Title: ----------------------------- 24 EXHIBIT A NOTE EXHIBIT B EXHIBIT C EXHIBIT D LEGAL OPINION DISLOSURE SCHEDULE SCHEDULE 3.3 No material changes. SCHEDULE 5.3 TO CREDIT AGREEMENT The Lender has consented to the acquisition by a wholly owned subsidiary of ALHI of all the assets f Around the World Travel, Inc. on or before December 31, 2004 for common stock of ALHI not in excess of 33% of the total fully diluted shares of ALHI then outstanding in accordance with documentation in customary terms and conditions. EX-10.2 4 v05390_ex10-2.txt Exhibit 10.2 Credit Agreement $3,000,000 Credit Facility by and among AMERICAN LEISURE HOLDINGS, INC., a Nevada corporation AMERICAN LEISURE MARKETING & TECHNOLOGY, INC., a Florida corporation ORLANDO HOLIDAYS, INC., a Florida corporation AMERICAN LEISURE, INC., a Florida corporation WELCOME TO ORLANDO, INC., a Florida corporation AMERICAN TRAVEL & MARKETING GROUP, INC., a Florida corporation HICKORY TRAVEL SYSTEMS, INC., a Delaware corporation collectively, "Borrowers" and STANFORD VENTURE CAPITAL HOLDINGS, INC. "Lender" Dated as of June 17, 2004 CREDIT AGREEMENT THIS CREDIT AGREEMENT(the "Agreement"), dated as of the June __, 2004 (the "Effective Date"), is made by and among AMERICAN LEISURE MARKETING & TECHNOLOGY, INC., a Florida corporation ("ALMT"), ORLANDO HOLIDAYS, INC., a Florida corporation ("OHI"), AMERICAN LEISURE, INC., a Florida corporation ("AL"), WELCOME TO ORLANDO, INC., a Florida corporation ("WTO"), AMERICAN TRAVEL & MARKETING GROUP, INC., a Florida corporation ("ATMG"), HICKORY TRAVEL SYSTEMS, INC., a Florida corporation ("HTS"), and AMERICAN LEISURE HOLDINGS, INC., a Nevada corporation ( "ALHI") ALHI, together with ALMT, OHI, AL, WTO, ATMG, and HTS collectively referred to herein as the "Borrowers" and individually as a "Borrower") and STANFORD VENTURE CAPITAL HOLDINGS, INC. (the "Lender"). W I T N E S S E T H WHEREAS, the Borrowers desire to obtain a commitment from the Lender to make credit loans to the Borrowers; and WHEREAS, the Lender is willing to extend the commitment to the Borrowers on the terms and subject to the conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, and other good and valuable consideration exchanged between the parties, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I - DEFINITIONS Section 1.1 Definitions. In addition to terms defined elsewhere in this Agreement, the following terms have the meanings indicated which meanings shall be equally applicable to both the singular and the plural forms of such terms: 1.1.1 "$5.00 Warrants" shall mean those certain warrants to purchase up to an aggregate of 500,000 shares of ALHI's common stock, $0.001 par value per share at an exercise price of $5.00 per share being issued to Lender in accordance with the terms hereof and of the Warrant Purchase Agreement. 1.1.2 "$2.96 Warrants" shall mean those certain warrants to purchase up to an aggregate of 1,350,000 shares of ALHI's common stock, $0.001 par value per share at an exercise price of $2.96 per share issued to Lender in accordance with the terms of the Credit Agreement dated December 18, 2003 and of the Warrant Purchase Agreement by and between ALHI and Lender dated December 18, 2003. 1.1.3 "$0.001 Warrants" shall mean those certain warrants to purchase up to an aggregate of 600,000 of ALHI's common stock, $0.001 par value per share at an exercise price of $0.001 per share being issued to the Lender in accordance with the terms of the Warrant Purchase Agreement dated December 18, 2003. 2 1.1.4 "Additional Credit Agreement" shall mean the Credit Agreement by and among Caribbean Leisure Marketing Limited, Castlechart Limited, ALHI and Lender for a $1,000,000 credit facility. 1.1.5 "Affiliate" shall mean any Person (other than a Subsidiary) which directly or indirectly through one or more intermediaries controls, or is controlled by or is under common control, with a Borrower, or five percent (5%) or more of the equity interest of which is held beneficially or of record by any of the Borrowers or a Subsidiary. The term "control" means the possession, directly of indirectly, of the power to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. 1.1.6 "Agreement" means this Credit Agreement, as the same may from time to time be amended. 1.1.7 "Availability" shall mean the following aggregate amounts (including all advances previously made) on the following dates: Effective Date (all advances previously made) $ 1,088,461.53 6/21/04 $ 1,265,384.61 6/24/04 $ 1,442,307.69 6/28/04 $ 1,588,461.54 7/1/04 $ 1,950,000.00 7/5/04 $ 2,096,153.85 7/8/04 $ 2,319,230.77 7/12/04 $ 2,465,384.62 7/15/04 $ 2,642,307.70 7/22/04 $ 2,788,461.55 7/29/04 $ 3,000,000.00 1.1.8 "Borrowers" has the meaning assigned to that term in the introduction to this Agreement. 1.1.9 "Borrowing" shall mean the drawing down by a Borrower of a loan or loans from the Lender on any given Borrowing Date. 1.1.10 "Borrowing Date" shall mean the date as of which a Borrowing is consummated. 1.1.11 "Business Day" shall mean a day on which commercial banks are open for business in the state of Florida. 1.1.12 "Code" shall mean the Internal Revenue Code of 1986 as amended from time to time, and the regulations and published interpretations thereof. 3 1.1.13 "Collateral Assignment Agreement" shall mean the assignment of the Galileo Debt by ALHI in favor of Lender, dated of even date herewith, granting Lender a security interest in the Galileo Debt. 1.1.14 "Commencement Date" shall mean the date of execution by the Borrowers of this Agreement. 1.1.15 "Commission" shall mean the Securities and Exchange Commission. 1.1.16 "Conversion Notice" shall have the meaning ascribed to such term as in Section 2.8.1 of this Agreement. 1.1.17 "Credit Loan" shall mean the aggregate principal amount advanced by the Lender as a Loan to the Borrowers under Article 2 hereof, or, where the context requires, the amount thereof then outstanding. 1.1.18 "Default" means any event which, with the lapse of time, the giving of notice, or both, would become an Event of Default. 1.1.19 "Default Rate" shall mean fifteen percent (15%) per annum. 1.1.20 "Director" shall mean any member of the Board of Directors of ALHI. 1.1.21 "Effective Date" means the date all parties hereto have executed this Agreement and the Loan Documents and Borrower has complied with all conditions precedent thereto. 1.1.22 "Entity Authorizations" shall mean (i) If any Borrower is a corporation, certified copies of Borrower(s)' and/or articles of incorporation and bylaws and current certificates of good standing and certified resolutions or authorizations as may be required to establish the power and authority of each Borrower to execute, deliver and perform its respective obligations under, as the case may be, the Loan Documents. (ii) If any Borrower is a limited liability company, certified copies of Borrower(s)' articles of organization and operating agreement and current certificates of good standing and certified resolutions or authorizations as may be required to establish the power and authority of each Borrower to execute, deliver and perform its respective obligations under, as the case may be, the Loan Documents. (iii) If any Borrower is a general partnership, a certified copy of the partnership agreement with all modifications and amendments thereto in recordable form, or a Memorandum of the partnership agreement, in recordable form, together with certifications from the Partnership: (a) identifying the full names of all partners, (b) confirming the fact that the partnership is in full force and effect, (c) addressing the authority of the partner(s) to execute the Loan Documents, and (d) acknowledging that the within transaction is in the 4 usual course of the business of the partnership. If any Borrower is a limited partnership, a certified copy of the certificate of limited partnership (as filed with the Secretary of State of the state of its formation), a certificate of good standing (from the state of its formation and from the State of Florida) and a certified copy of the partnership agreement, with all modifications and amendments thereto. (iv) If any Borrower is a trust, a certified copy of the trust agreement with all modifications and amendments thereto, together with a certificate (certifying the authenticity of such trust agreement) and resolutions as may be required to establish the power and authority of the Trustee to execute, deliver and perform its obligations under the Loan Documents. In addition to the foregoing, Borrower must deliver or cause to be delivered such other documents as may be reasonably required by Lender or Lender's counsel. (v) Borrowers must deliver or cause to be delivered such other documents as may be reasonably required by Lender or Lender's counsel. 1.1.23 "Event of Default" has the meaning assigned to that term in Section 7.1 hereof. 1.1.24 "Exchange Act" shall mean the Securities and Exchange Act of 1934, as amended. 1.1.25 "GalileoDebt" shall mean the approximately $23,000,000 of indebtedness owed by Around the World Travel, Inc. and originally payable to Galileo International LLC and related liens on all of the assets of Around the World Travel, Inc. originally held by CNG Hotels Ltd. and transferred to GDC Acquisition Corp. pursuant to that certain Assignment Agreement dated February 23, 2004 and subsequently transferred to ALHI pursuant to that certain Agreement dated March 19, 2004. 1.1.26 "Governmental Authority" shall mean any court, board, agency, commission, office or authority of any nature whatsoever or any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or here-after in existence. 1.1.27 "Indebtedness" of any Person shall mean (i) all indebtedness or liability for borrowed money or for the deferred purchase price of any property (including accounts payable to trade creditors under customary trade credit terms) or services for which the Person is liable as principal, (ii) all indebtedness (excluding unaccrued finance charges) secured by a Lien on property owned or being purchased by the Person, whether or not such indebtedness shall have been assumed by the Person, (iii) any arrangement (commonly described as a sale-and-leaseback transaction) with any financial institution or other lender or investor providing for the leasing to the Person of property which at the time has been or is to be sold or transferred by the Person to the lender or investor, or which has been or is being acquired from another Person, and (iv) all obligations of partnerships or joint ventures in respect of which the Person is primarily or secondarily liable as a partner or joint venturer or otherwise (provided that in any event for purposes of determining the amount of the 5 Indebtedness, the full amount of such obligations, without giving effect to the contingent liability or contributions of other participants in the partnership or joint venture, shall be included). 1.1.28 "Inside Director" shall mean any Director who is not an Outside Director. 1.1.29 "Inventory" shall mean any and all goods, supplies, wares, merchandise, and other tangible personal property, including raw materials, work in process, supplies and components, and finished goods, whether held for sale or otherwise or to be furnished under any contract for service, and also including any products of and accessions to inventory, packing and shipping materials, and all documents of title, whether negotiable or non-negotiable, representing any of the foregoing, and the insurance proceeds from any of the foregoing. 1.1.30 "Investments" shall mean, with respect to any Person, all advances, loans or extensions of credit to any other Person, all purchases or commitments to purchase any stock, bonds, notes, debentures or other securities of any other Person, and any investment in other Persons, including partnerships or joint ventures. 1.1.31 "Lender" has the meaning assigned to that term in the introduction to this Agreement. 1.1.32 "Lien" shall mean a mortgage, pledge, lien, hypothecation, assignment, security interest or other charge or encumbrance or any segregation of assets or revenues or other preferential arrangement (whether or not constituting a security interest) with respect to any present or future assets, including fixtures, revenues or rights to the receipt of income of the Person referred to in the context in which the term is used. 1.1.33 "Loan" shall mean the aggregate principal amount advanced by the Lender as a loan or loans to the Borrowers under Article 2 and Article 6 hereof, or, where the context so requires, subject to Availability. 1.1.34 "Loan Documents" shall mean those documents executed or submitted in connection with the Loan, including, without limitation, (i) the Note; (ii) this Credit Agreement; (iii) the Stock Pledge Agreements; (iv) the Security Agreement; (v) the Warrant Purchase Agreement; (vi) the Registration Rights Agreement; (vii) the Warrant Repricing Agreement; (viii) Collateral Assignment Agreement; (ix) Right of First Refusal Agreement; (x) Option Pledge Agreement; and (xi) all other documents and instruments executed by any Borrower in connection with the Loan and/or as may be required by Lender or Lender's counsel, including those referred to in Section 6 hereof. 1.1.35 "Loan Funding Period" shall mean the period between the Effective Date and the Maturity Date. 1.1.36 "Maturity Date" shall mean April 22, 2007. 6 1.1.37 "Maximum Loan Commitment" means the obligation of the Lender, subject to the Availability, to make the Credit Loan pursuant to Section 2.1 hereof in the aggregate principal amount of up to Three Million Dollars ($3,000,000.00). 1.1.38 "Note" shall mean the Convertible Promissory Note described in Section 2.5 hereof, in the principal amount of Three Million Dollars ($3,000,000.00) dated the initial Borrowing Date and payable to the order of the Lender, substantially in the form of Exhibit "A" attached hereto and made a part hereof, and any modifications, renewals, replacements or substitutions therefor made from time to time hereafter, and to the extent applicable. 1.1.39 "Obligations" shall mean the Maximum Loan Commitment and any and all liabilities, obligations, covenants, duties and debts, owing by the Borrower to the Lender, arising under this Agreement, any other Loan Document, including without limitation, all interest, charges, indemnities, expenses, fees, attorneys' fees, filing fees and any other sums chargeable to the Borrowers hereunder or under any other Loan Document, or any other contractual agreement between the Lender and the Borrowers. 1.1.40 "Option Pledge Agreement" shall mean that certain Option Pledge Agreement of even date herewith executed by ALHI assigning the option to purchase all of the membership units of Around the World Holdings, LLC, a Delaware limited liability company granted to ALHI pursuant to that certain Option Agreement dated May 17, 2004. 1.1.41 "Outside Director" shall mean a Director who meets those the requirements set forth for a "Non-Employee Director" under Rule 16b-3(3) of the Securities Exchange Act of 1934. 1.1.42 "Permitted Liens" shall mean a mortgage, pledge, lien security interest or other charge or encumbrance or any segregation of assets or revenues or other preferential arrangement (whether or not constituting a security interest) with respect to any present or future assets, including fixtures, revenues or rights to the receipt of income of the Person referred to in the context in which the term is used which are permitted to exist under this Agreement. 1.1.43 "Person" shall mean any natural person, corporation, unincorporated organization, trust, joint-stock company, joint venture, association, company, partnership or government, or any agency or political subdivision of any government, or other entity of whatever nature. 1.1.44 "Pledge Agreements" shall mean those certain Pledge Agreements of even date herewith executed by ALHI pledging all of the issued and outstanding capital stock of ALMT, OHI, AL and WTO, certain of the issued and outstanding capital stock of ATMG; and certain of the issued and outstanding capital stock of HTS. 1.1.45 "Right of First Refusal Agreement" shall mean that certain Right of First Refusal Agreement by and among the individuals owning the $.001 Warrants and Malcolm Wright, granting Mr. Wright a right of first refusal to 7 purchase the shares of common stock underlying the $.001 Warrants for a period defined in such agreement. 1.1.46 "Securities Act" shall mean the Securities Act of 1933, as amended and the rules promulgated thereunder. 1.1.47 "Security Agreement" shall mean that certain Security Agreement of even date herewith executed by ALHI granting a security interest in all of the assets of ALMT, OHI, AL, WTO, ATMG, CLM and HTS, respectively, but excludes the receivables of such companies. 1.1.48 "Subsidiary" shall mean any Person in which any Borrower or a Wholly-Owned Subsidiary may own, directly or indirectly, an equity interest of more than fifty percent (50%), or which may effectively be controlled by any Borrower or a Wholly-Owned Subsidiary, during the term of this Agreement, as well as all Subsidiaries and other Persons from time to time included in the consolidated financial statements of the Borrowers. 1.1.49 "Warrants" shall mean the $5.00 Warrants to purchase an aggregate of 500,000 shares of common stock $0.001 par value per share of ALHI being issued to Lender in accordance with the terms hereof and of the Warrant Purchase Agreement. 1.1.50 "Warrant Purchase Agreement" shall mean that certain Warrant Purchase Agreement of even date herewith executed by Lender and ALHI pursuant to which Lender purchased, and ALHI issued and sold, warrants to purchase an aggregate of 500,000 of ALHI's common stock $5.00 par value per share as set forth in Schedule A to Warrant Purchase Agreement. 1.1.51 "Warrant Repricing Agreement" shall mean that certain Instrument of Warrant Repricing which reduces the exercise price of all of the $2.96 Warrants to an exercise price of $.001. 1.1.52 "Wholly-Owned Subsidiary" shall mean any Subsidiary, one hundred percent (100%) of the outstanding capital stock of all classes of which is owned by the Borrowers and/or one or more Wholly-Owned Subsidiaries. Section 1.2 Accounting Terms. Accounting terms not specifically defined in this Agreement shall have the meaning given to them under accounting principles and practices generally accepted in the United States, applied on a consistent basis with the financial statements referred to in Section 4.9 hereof, and shall be determined both as to classification of items and amounts in accordance therewith. All Subsidiaries shall be consolidated to the fullest extent permitted by such principles and practices, and any accounting terms, financial covenants and financial statements referred to herein shall be determined and prepared on the basis of such consolidation. Section 1.3 Other Definitional Provisions. The words "hereof," "herein," and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Subsection and Exhibit references are to this Agreement unless otherwise specified. 8 ARTICLE II - CREDIT LOAN Section 2.1 Commitment. The Lender agrees, on the terms, conditions and limitations of this Agreement, to make Credit Loans in United States Dollars to the Borrowers, from time to time, during the Loan Funding Period, in an aggregate amount not to exceed at any one time outstanding the Maximum Loan Commitment, subject to compliance with the Availability. The Credit Loan shall bear interest as set out in the Note. Section 2.2 Borrowings and Prepayments. Each Borrowing hereunder shall be made only if there is no then existing Event of Default hereunder. Borrowers shall have the right at any time, and from time to time, to prepay the outstanding principal amount in whole or in part without premium or penalty, provided that interest on the amount prepaid, accrued through the date of prepayment date, shall be paid on such date of prepayment. Section 2.3 Notice. The Borrowers shall give written notice, signed by the Borrowers (or telephone notice, promptly confirmed in writing) to the Lender at least five (5) business days prior to the proposed Borrowing Date specifying (i) the Borrowing Date (which shall be a business day), and (ii) the amount of the proposed Borrowing. Section 2.4 Manner of Borrowing. Each Borrowing under this Article 2 shall be made at the office of Lender, at its address as set forth opposite its signature at the end of this Agreement, by wire transfer to the Borrower's account; provided however, that the requested Borrowing shall in no event exceed the amount of Availability on such date. Section 2.5 Warrants. With each Borrowing, in accordance with the Warrant Purchase Agreement, ALHI shall issue to Lender the Warrants, pro rata, in accordance with Schedule 2.5 attached hereto. Section 2.6 Note. 2.6.1 The Loan made by the Lender under this Article 2 shall be evidenced by, and repaid with interest in accordance with, a single Promissory Note of the Borrowers in substantially the form of Exhibit "A" attached hereto and made a part hereof, with appropriate insertions, in the amount of the Maximum Loan Commitment, dated even date herewith and payable to the order of the Lender on the date or dates specified thereon, such Note to represent the obligation of the Borrowers to the Lender to repay the Credit Loan of the Borrowers. The Note provides that on the Maturity Date, the Commitment to make further Loans to the Borrower shall cease and that, on such date, the entire amount of principal outstanding thereunder and accrued interest shall be paid in full. 2.6.2 Although the stated amount of the Note shall be equal to the Maximum Loan Commitment, the Note shall be enforceable, with respect to the Borrowers' obligation to pay the principal amount thereof, only to the extent of the unpaid principal amount of the Loan at the time evidenced thereby together with unpaid accrued interest thereon. Interest on the Note shall be payable on, and only for the period during which, the principal amount of the Loan evidenced thereby is outstanding. 9 Section 2.7 Principal and Interest. 2.7.1 Borrowers shall repay the outstanding principal balance of the Loan on the Maturity Date. 2.7.2 Borrower shall pay the Lender interest quarterly on the unpaid principal balance of the Loan, in arrears, at a per annum rate equal to eight percent (8%) with accrued interest from the date of the first advance on April 22, 2004. Interest charges shall be computed on the basis of a year of 360 days and actual days elapsed, and will be payable to the Lender on each applicable Loan Payment Date. 2.7.3 If any Event of Default occurs, then, while any such Event of Default is continuing, the Loan will bear interest at the Default Rate. 2.7.4 The Borrowers' obligation to repay the Loan and to pay interest on the Loan shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever and shall not be terminated for any reason whatsoever. Section 2.8 Conversion Rights. At any time prior to the Maturity Date, amounts outstanding under the Note and all sums, at any given time, due hereunder, shall, at the sole election of Lender and upon 5 days written notice to Borrowers and ALHI, be convertible in whole or in part, from time to time, into that number of shares of ALHI common stock calculated by dividing the amount due by $10.00. 2.8.1 Any conversion shall be exercised by written notice to ALHI at their principal place of business (the "Conversion Notice"). 2.8.2 Within five (5) days of its receipt of the Conversion Notice, ALHI shall issue and deliver to the address of the holder of the Note as set forth herein (as such address may be modified from time to time in the records of ALHI), or to the holder's nominees, a certificate or certificates, substantially in the form as shown in Exhibit B attached hereto, for the number of shares of Common Stock to which such holder shall be entitled; provided, that ALHI shall not be obligated to issue to any Lender certificates evidencing the shares of Common Stock issuable upon such conversion unless either the Note is delivered to ALHI for cancellation and reissuance in the proper amount or an affidavit of loss of the Note has been executed by the holder. In the event that the Note is converted in full, the Lender will execute satisfaction of mortgages and security interests in customary form supplied by the Borrowers at no expense to the Lender. 2.8.3 If ALHI shall declare and pay to the holders of the shares of Common Stock a dividend in shares of Common Stock, the Conversion Price in effect immediately prior to the date fixed for the determination of shareholders entitled to such dividends shall be proportionately decreased (adjusted to the nearest 1/100th of a share of Common Stock), such adjustment to become effective immediately after the date fixed for such determination. 2.8.4 If ALHI shall subdivide the outstanding shares of Common Stock into a greater number of shares of Common Stock or combine the outstanding shares of Common Stock into a smaller number of shares of 10 Common Stock, the Conversion Price in effect immediately prior to such subdivision or combination, as the case may be, shall be proportionately increased or decreased (adjusted to the nearest 1/100th of a share of Common Stock), as the case may require, such increase or decrease, as the case may be, to become effective when such subdivision or combination becomes effective. 2.8.5 In the case of any reclassification or change of outstanding shares of Common Stock issuable upon the conversion of the Note, or in the case of any consolidation or merger of ALHI with or into another corporation, or in the case of any sale or conveyance to another corporation of all or substantially all of the property of ALHI, the holder of the Note shall have the right thereafter, so long as such holder's conversion right hereunder shall exist, to convert the Note in whole or in part, into the same kind and amount of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock of ALHI into which the Note might have been converted immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. 2.8.6 In case securities or property other than shares of Common Stock shall be issuable or deliverable upon the conversion as aforesaid, then all references in this Section shall be deemed to apply, so far as appropriate and as nearly as may be, to such other securities or property. The subdivision or combination of shares of Common Stock at any time outstanding into a greater or lesser number of shares of Common Stock (whether with or without par value) shall not be deemed to be a reclassification of the Common Stock of ALHI for the purposes of this subsection. 2.8.7 ALHI shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of the Note, the sufficiency of which shall be determined by using the Conversion Price. Section 2.9 Payments and Prepayments. 2.9.1 Repayment of the Loans. The Borrowers shall repay the outstanding principal balance of Loans, plus all accrued but unpaid interest thereon, as provided herein. 2.9.2 Place and Form of Payments. All payments of principal, interest, fees, premiums and other sums payable hereunder to Lender shall be made without condition or reservation of right and (except for proceeds of Collateral received directly by the Lender) in same day funds and delivered to the Lender not later than 3:00 P.M. (Eastern Standard Time) on the date due to such account of Lender as the Lender may designate. Funds received by the Lender after that time shall be deemed to have been paid on the next succeeding Business Day. If any payment of principal, interest, fees, premiums or other sums payable hereunder becomes due and payable on a day other than a Business Day, the due date of such payment shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable Interest Rate during such extension. 11 2.9.3 Credit for Payments. All payments received by the Lender as proceeds of Collateral will be the sole property of the Lender up to the amount due and owing and until all of the Obligations have been satisfied in full. Any surplus shall immediately be paid to the Borrower. 2.9.4 Application of Payments. All payments not relating to specific principal or interest payable with respect to the Loans, or not constituting payment of specific fees, and all proceeds of Collateral received by the Lender from or as to the Borrower, shall be applied, subject to the provisions of this Agreement, first, to pay any fees, expense reimbursements or indemnities then due to the Lender from the Borrower; second, to pay interest due in respect of the Loans; third to pay or prepay principal of the Loans; and fourth to the payment of any other Obligation due to the Lender by the Borrower. The Lender shall have the right, upon an Event of Default, to apply payments received in connection with this Agreement or the other Loan Documents as provided above in such order as it deems appropriate. 2.9.5 Principal Prepayment. The Borrower shall have the right, at any time and from time to time, on thirty days' prior written notice to the Lender, to Prepay the Loan in whole or in part, without penalty or premium. The Borrowers shall pay accrued interest then outstanding on the Loan through the date of prepayment. Section 2.10 Collateral. The payment of all Obligations due under this Agreement is secured by the Pledge Agreements, the Galileo Debt, Option Pledge Agreement, Collateral Assignment Agreement and the Security Agreement. In addition, if ALHI shall purchase Around the World Travel, Inc., such ownership interests shall be included in the Collateral. Section 2.11 Fees and Expenses. The Borrowers shall bear its own costs, including attorney's fees, incurred in the negotiation of this Agreement and consummation of the transactions contemplated herein and the corporate proceedings of the Borrowers in contemplation hereof and thereof. At the date of issuance of the Note by the Borrowers to the Lender, the Borrowers shall reimburse the Lender for all of the Lender's reasonable out-of-pocket expenses incurred in connection with the negotiation or performance of this Agreement, in addition to an origination fee equal to 2.5% of the Notes which fee shall be paid to Lender and reasonable fees and disbursements of counsel to the Lender. Section 2.12 Assignment; Participation. Lender may assign to one or more Persons or sell participations to one or more such Persons, all or a portion of its rights and obligations hereunder and under the Note and, in connection with any such assignment or sale of a participation, may assign its rights and obligations under this Agreement and the other Loan Documents, subject to compliance with any applicable requirements under any applicable securities laws. Lender shall have no obligation to give notice to the Borrowers of any such assignment or sale of a participation. Lender may, in connection with any assignment or proposed assignment or sale or proposed sale of a participation, disclose to the assignee or proposed assignee or participant or proposed participant any information relating to the Borrowers furnished to the Lender by or on behalf of the Borrowers. Section 2.13 Notices. The Borrowers agree, at its expense, to execute all such notices and other instruments and make all such filings and recordings as the Lender shall request in order to assure that the Lender at all times 12 holds duly executed, delivered, filed and recorded assignments and security interests of first priority against other creditors, bona fide purchasers without notice, a trustee in bankruptcy and other possible adverse claimants. ARTICLE III - REPRESENTATIONS AND WARRANTIES In order to induce the Lender to enter into this Agreement and to make the Loan provided for herein, the Borrowers make the following representations and warranties to the Lender with exceptions set forth in the Disclosure Schedule attached hereto, all of which shall survive the execution and delivery of this Agreement and the Note, and the other Loan Documents: Section 3.1 Corporate Existence and Power. The Borrowers are each duly incorporated, validly existing and in good standing under the laws of their respective states of incorporation and each is duly qualified or licensed to transact business in all places where such qualification or license is necessary. Each Borrower has the corporate power to make and perform this Agreement and the Note, and this Agreement does, and the Note when duly executed and delivered for value will, constitute the legal, valid and binding obligations of the Borrowers enforceable in accordance with their respective terms. The Borrowers have the corporate power to make and perform this Agreement the Loan Documents, and the Note, and this Agreement does, and the Loan Documents and Note when duly executed and delivered for value will, constitute the legal, valid and binding obligations of the Borrowers enforceable in accordance with their respective terms. Section 3.2 Authority. The making and performance by the Borrowers of this Agreement, the Note, the Loan Documents, and any additional documents pursuant hereto, has been duly authorized by all necessary legal action of the Borrowers, and does not and will not violate any provision of law or regulation, or any writ, order or decree of any court, governmental, regulatory authority or agency, and does not and will not, with the passage of time or the giving of notice, result in a breach of, or constitute a default or require any consent under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the Borrowers, pursuant to any instrument or agreement to which any Borrower is a party or by which any Borrower or its properties may be bound or affected. Section 3.3 Financial Condition. The financial statements of ALHI set forth in the ALHI SEC Filings (as hereinafter defined) were prepared in accordance with generally accepted accounting principles consistently applied, are complete and correct and fairly present the consolidated financial condition of ALHI as of that date. Other than as disclosed by those financial statements, ALHI has no direct or contingent obligations or liabilities which would be material to the financial position of ALHI, nor any material unrealized or anticipated losses from any commitments of ALHI. Since the date of such financial statements, there has been no material adverse change in the business or financial condition of any Borrower, except as set forth in Schedule 3.3 hereto. Section 3.4 SEC Filings. As of the date hereof, none of the filings made with the SEC by ALHIsince January 1, 2000 (the "ALHI SEC Filings"), contained any untrue statement of a material fact or to the best of Borrower's knowledge, omitted any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent such filings have been all prior to the date of this Agreement corrected, updated or superseded by a document 13 subsequently filed with Commission. ALHIhas furnished or made available to the Lender true and complete copies of all the documents it has filed with the Commission since January 1, 2000, all in the forms so filed. ALHIhas filed all filings required by law or regulation and ALHIfilings comply in all material respects with the requirements of the Securities Act and the Exchange Act, and the rules and regulations of the Commission promulgated thereunder, as the case may be, and none of the filings with the Commission will contain any untrue statement of a material fact or will omit any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. Section 3.5 Full Disclosure. The financial statements referred to in Section 3.3 do not, nor does this Agreement, nor any written statement furnished by any Borrower to the Lender in connection with the negotiation of this Agreement and Loans, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading. There is no fact which any Borrower have not disclosed to the Lender in writing which materially and adversely affects nor, so far as any Borrower can now foresee, is reasonably likely to prove to materially and adversely affect the business or financial condition of any Borrower or the ability of any Borrower to perform this Agreement or the Note. Section 3.6 Litigation. Except to the extent disclosed in the ALHI SEC Filings, there are no suits, actions or proceedings pending, or to the knowledge of the Borrowers, threatened before any court or by or before any governmental or regulatory authority, commission, bureau or agency or public regulatory body against or affecting any Borrowers which, if adversely determined, would have a material adverse effect on the business or financial condition of any Borrower. Section 3.7 Payment of Taxes. As of the date of execution of this Agreement, federal income tax returns of each Borrower have been filed with Internal Revenue Service and no deficiencies have been assessed. Each of the Borrower has filed or caused to be filed, or has obtained extensions to file all federal, state and local tax returns which are required to be filed, and have paid or caused to be paid, or have reserved on their books amounts sufficient for the payment of, all taxes as shown on said returns or on any assessment received by them, to the extent that the taxes have become due, except as otherwise permitted by the provisions hereof. Each of the Borrower has set up reserves which are reasonably believed by each Borrower to be adequate for the payment of said taxes for the years that have not been audited by the respective tax authorities. Section 3.8 No Adverse Restrictions or Defaults. Except as disclosed in the ALHI SEC Filings, no Borrower is a party to any agreement or instrument or subject to any court order or judgment, governmental decree, charter or other restriction adversely and materially affecting its business, properties or assets, operations or condition (financial or otherwise). No Borrower is in material default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any material agreement or instrument to which it is a party or by which any Borrower and their respective properties, may be bound or affected, or under any material law, regulation, decree, order or the like, which default would have a material adverse effect on such Borrower. 14 Section 3.9 Authorizations. All material authorizations, consents, approvals and licenses required under applicable law or regulation for the ownership or operation of the property owned or operated by any Borrower or for the conduct of business in which any Borrower is engaged, have been duly issued and are in full force and effect, and to the best of Borrowers' actual knowledge, none of the Borrowers are in default under any material order, decree, ruling, regulation, closing agreement or other decision or instrument of any government commission, bureau or other administrative agency or public regulatory body having jurisdiction over any of the Borrowers, which default would have a material adverse effect on any of the Borrowers. No approval, consent or authorization of or filing or registration with any governmental commission, bureau or other regulatory authority or agency is required with respect to the execution, delivery or performance of this Agreement, the Note or any of the Loan Documents executed in connection with the making of the Loan, other than filings required under applicable securities laws which shall have been duly made by ALHI as of the Effective Date. Section 3.10 Title to Property. Each Borrower and each of their subsidiaries have, respectively, good and marketable fee title to all real property, and good and marketable title to all other property and assets, reflected in the latest financial statements referred to in Section 3.3 or purported to have been acquired by any of them subsequent to such date, except property and assets sold or otherwise disposed of subsequent to such date in the ordinary course of business. All property and assets of any kind of Borrowers, and each of their subsidiaries are free from any liens except as disclosed on the financial statements provided to the Lender and referred to in Section 3.3 hereof and other matters such as easements, covenants, and restrictions that do not materially adversely affect their use or enjoyment of such property. Borrowers and each of their subsidiaries enjoy peaceful and undisturbed possession under all of the leases under which they are operating, if any, none of which contain any provisions that will materially impair or adversely affect the operations of any Borrower, as the case may be. Section 3.11 Use of Proceeds. The proceeds of the Loans shall be used by the Borrowers exclusively as previously disclosed in writing by the Borrowers to the Lender. Section 3.12 Indemnification by Borrowers. All of the representations and warranties of Borrowers, as set forth in this Agreement shall survive the making of this Agreement and the full repayment of the Loan; accordingly, in the event of any claims against Lender, resulting in the breach of any of the foregoing warranties and representations, each Borrower shall and hereby agrees to indemnify Lender for any such claims notwithstanding the full repayment of the Loan. Each and every requisition submitted by Borrower for funds under this Agreement shall constitute a new and independent representation and warranty to Lender with respect to all of the matters set forth in this Agreement, as of the date of such requisition. ARTICLE IV - AFFIRMATIVE COVENANTS The Borrowers covenant and agree that from and after the Effective Date and until payment in full of the principal of and interest on the Note and the termination in full of the Commitment, unless the Lender shall otherwise consent in writing, the Borrowers, as the case may be, will: 15 Section 4.1 Loan Proceeds. Use the proceeds of the Loans only for the purposes set forth in Section 3.11 and furnish the Lender with all evidence that it may reasonably require with respect to such use. Section 4.2 Corporate Existence. Do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights, franchises and privileges in the jurisdiction of its corporation, and qualify and remain qualified in each jurisdiction where qualification is necessary or desirable in view of its business operations or the ownership of its properties. Section 4.3 Maintenance of Business and Property. Continue to conduct and operate its business substantially as conducted and operated during the present and preceding calendar year; at all times maintain, preserve and protect all franchises and trade names and preserve all the remainder of its property used or useful in the conduct of its business and keep the same in good repair, working order and condition, and from time to time make, or cause to be made, all needful and proper repairs, replacements, betterments and improvements thereto so that the business carried on in connection therewith may be conducted properly and advantageously at all times. Section 4.4 Antigua Call Center. Commencing on the date hereof, maintain an employee work force comprising of at least 96 persons paid at current wage levels increased for inflation and seniority at the Antigua Call Center. Borrowers shall cause the Antigua Call Center to remain free of debt and shall not encumber the assets of the Antigua Call Center or the capital stock of the company that owns the Antigua Call Center, except as provided under this Agreement or the Additional Credit Agreement. Section 4.5 SEC Filings. Make all required filings in connection with the Loan to the Borrowers as required by federal and state laws and regulations, or by any domestic securities exchange or trading market, and to provide copies thereof to the Lender promptly after such filing or filings. Section 4.6 Insurance. Insure and keep insured in good and financially sound and responsible insurance companies reasonably satisfactory to the Lender, all insurable property owned by it which is of a character usually insured by companies similarly situated and operating like properties, against loss or damage from such hazards or risks, including fire, flood, windstorm as are insured by companies similarly situated and operating like properties, insure and keep insured employers' and public liability risks in responsible insurance companies to the extent usually insured by companies similarly situated; maintain such other insurance as may be required by law or as may reasonably be required in writing by the Lender. On or before September 26, 2004, ALHI shall purchase key man insurance on Keith St. Clair with a face amount of at least $3,000,000 naming the Company as beneficiary and assign all such rights and benefits under the insurance policy to Lender pursuant to an Assignment of Insurance Proceeds in the form of Schedule 4.6 hereto which shall also be duly executed and delivered by ALHI to the Lender on or before September 26, 2004. Such insurance shall be maintained in full force for as long as any portion of the Note remains outstanding and ALHI shall promptly provide Lender with any premium notice. Section 4.7 16 Section 4.8 Payment of Indebtedness, Taxes, Etc. 4.8.1 Pay all of its indebtedness and obligations promptly and in accordance with normal terms; and 4.8.2 Pay and discharge or cause to be paid and discharged promptly all taxes, assessments and governmental charges or levies imposed upon it or upon its property or upon any part thereof, before the same shall become in default, as well as all lawful claims for labor, materials and supplies or otherwise which, if unpaid, might become a lien or charge upon such properties or any part thereof; provided however, that the Borrower shall not be required to pay and discharge or to cause to be paid and discharged any tax, assessment, charge, levy or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings and the Borrower shall have set aside on its books adequate reserves with respect to any tax, assessment, charge, levy or claim, so contested. Section 4.9 Compliance with Laws. Duly observe, conform and comply with all laws, decisions, judgments, rules, regulations and orders of all governmental authorities relative to the conduct of its business, its properties, and assets, except those being contested in good faith by appropriate proceedings diligently pursued; and maintain and keep in full force and effect all licenses and permits necessary to the proper conduct of its business. Section 4.10 Notice of Default. Upon the occurrence of any Default or Event of Default, promptly furnish written notice thereof to the Lender. Section 4.11 Inspection. At reasonable times and after reasonable prior written notice, each Borrower shall permit any representatives of Lender to visit and inspect any of the properties of such Borrower, to examine and copy all books of account, records, reports and other papers, and to discuss the affairs, finances and accounts with Borrower's employees and independent accountants at all such reasonable times and as often as may be reasonably requested. Section 4.12 Notice of Litigation and Other Proceedings. Give prompt notice in writing to the Lender of the commencement of (a) all material litigation which, if adversely determined, might adversely affect the business or financial condition of the Borrowers; (b) all other litigation involving a claim against the Borrower for Twenty-five Thousand Dollars ($25,000.00) or more in excess of applicable insurance coverage; and (c) any citation, order, decree, ruling or decision issued by, or any denial of any application or petition to, or any proceeding before any governmental commission, bureau or other administrative agency public regulatory body against or affecting the Borrower, or any property of the Borrower or any lapse, suspension or other termination or modification of any certification, license, consent or other authorization of any agency or public regulatory body, or any refusal of any thereof to grant any application therefor, in connection with the operation of any business conducted by any of the Borrowers. ARTICLE V - NEGATIVE COVENANTS Each of the Borrowers covenant and agree that from the Effective Date and until payment in full of the principal of and interest on the Note, unless the Lender shall otherwise consent in writing, none of the Borrowers will, out 17 of the ordinary course of business violate any of the following covenants, provided that in the course of any of the following each of the Borrowers consider to be in the ordinary course of business each of the Borrowers shall provide Lender ten business days prior written notice thereof and if Lender disagrees then Lender will notify each of the Borrowers prior to the conclusion of such ten business days or matter shall be deemed to be in the ordinary course of business: Section 5.1 Limitation of Liens. Except as permitted by the Loan Documents, create, assure, incur or suffer to exist any Lien upon, or transfer or assignment of, any of its property or revenues or assets now owned or hereafter acquired to secure any Indebtedness of obligations, or enter into any arrangement for the acquisition of any property subject to conditional sale agreements or leases or other title retention agreements; excluding, however, from the operation of this covenant: (i) deposits or pledges to secure payment of worker's compensation, unemployment insurance, old age pensions or other social security; (ii) deposits or pledges to secure performance of bids, tenders, contracts (other than contracts for the payment of money) or leases, public or statutory obligations, surety or appeal bonds or other deposits or pledges for purposes of like general nature in the ordinary course of business; (iii) Liens for property taxes not delinquent and Liens for taxes which in good faith are being contested or litigated; (iv) mechanics', carriers', workmen's, repairmen's or other like liens arising in the ordinary course of business securing obligations which are not overdue for a period of sixty (60) days or more or which are in good faith being contested or litigated; (v) Liens securing the unpaid purchase price of equipment purchased by the Borrowers in the ordinary course of its business and Liens existing upon assets acquired by the Borrowers; and (vi) any existing Liens reflected in the financial statements referred to in Section 4.9 hereof. Section 5.2 Limitation on Indebtedness. Incur, create, assume or permit to exist any Indebtedness, except 5.2.1 The Note and any other Indebtedness of the Borrower to the Lender; 5.2.2 Indebtedness which is subordinated to the prior payment in full of the principal of, and interest on, the Note(s) on terms and conditions approved in writing by the Lender; 5.2.3 Indebtedness representing the unpaid purchase price of equipment purchased by the Borrower in the ordinary course of its business and Indebtedness existing upon assets acquired by the Borrower; 5.2.4 Existing Indebtedness reflected in the audited financial statements referred to in Section 3.3 hereof. Section 5.3 Mergers, Consolidations and Acquisition of Assets. Windup, liquidate, dissolve, merge or consolidate with any corporation, or acquire all or substantially all of the assets of any corporation except that (i)the Borrower may merge or consolidate with any Subsidiary provided that the Borrower is the surviving corporation, and (ii) ALHI may directly or through any eighty percent (80%) or more owned Subsidiary of ALHI on or before September 30, 2004 acquire the assets of Around the World Travel Inc. in accordance with the terms set forth in Schedule 5.3 hereto. 18 Section 5.4 Sale, Lease, Etc. Sell, lease, assign, transfer or otherwise dispose of any of its assets or revenues (other than obsolete or worn-out personal property or personal property or real estate not used or useful in its business) whether now owned or hereafter acquired, other than in the ordinary course of business. Section 5.5 Management and Ownership. Permit any material change in its ownership or management. Section 5.6 General. (i) engage, directly or through other Persons, in any business other than the business now carried on; (ii) sell a material portion of any of the assets of any of the Borrowers out of the ordinary course of business or merge any of the Borrowers into or with another unaffiliated company, except as contemplated hereby; (iii) change the certificate of incorporation, bylaws or other charter documents of any of the Borrowers, except as contemplated hereby; (iv) change substantially or materially the nature of the business of any of the Borrowers; (v) declare or pay dividends or make any other distribution or redeem equity securities of the Borrowers; or (vi) enter into or modify a related-party transaction. ARTICLE VI - CONDITIONS TO LENDER'S OBLIGATIONS TO MAKE THE LOAN The conditions listed below are precedent to any obligations of the Lender and shall be complied with in form and substance satisfactory to Lender and its counsel prior to the Lender's obligation to advance any portion of the Loan: Section 6.1 Each Loan. The obligation of the Lender to make each credit loan pursuant to Article 2 herein is subject to no adverse change in the condition, financial or otherwise of any of the Borrowers and no default or the occurrence of any event which with notice or passage of time would become a default under this Agreement, any of the Loan Documents, and is subject to the following conditions precedent, each of which shall have been met or performed by the Borrowing Date: 6.1.1 Notice of Borrowing. The Borrowers shall have delivered to the Lender the notice of Borrowing provided for in Section 2.3 hereof; 6.1.2 No Default. (i) No Default or Event of Default shall have occurred and be continuing or will occur upon the making of the Loan on such Borrowing Date, and all representations and warranties made by the Borrowers herein or otherwise in writing in connection herewith shall be true and correct in all material respects with the same effect as though the representations and warranties had been made 19 on and as of such Borrowing Date, and (ii) a certificate to this effect shall have been issued to the Lender on such Borrowing Date, by each Borrower's Chief Financial Officer; 6.1.3 Use of Proceeds. The Loan proceeds shall have theretofore been applied in accordance with the Use of Proceeds as set forth in Section 3.11 herein. Section 6.2 Loan Documents. The appropriate parties shall have executed and delivered to Lender the (i) Pledge Agreements; (ii) Security Agreement; (iii) Warrant Purchase Agreement; (iv) Warrant Repricing Agreement; (v) Collateral Assignment Agreement; (vi) Right of First Refusal Agreement; and (vii) Option Pledge Agreement. Section 6.3 Additional Conditions to Credit Loan. The obligation of the Lender to make the Credit Loan pursuant to Article 2 herein is subject to the following additional conditions precedent, each of which shall have been met or performed by the initial Borrowing Date: 6.3.1 Note. The Note, duly executed and completed in the form of Exhibit "A" attached hereto and made a part hereof, shall have been delivered to the Lender; 6.3.2 Supporting Documents. The Borrowers shall have executed and delivered, or caused to be executed and delivered, to the Lender each of the certificates and the other Loan Documents and, where applicable, recorded in the appropriate public offices; all additional opinions, documents and certificates that the Lender or its counsel may require, and all such opinions, certificates and documents specified in this Article 6 shall be reasonably satisfactory in form and substance to the Lender and its counsel; Section 6.4 Expenses. Borrowers shall have paid all those reasonable fees and charges due and payable or ordered paid by Lender. Section 6.5 Other Documents. Borrowers shall deliver to Lender such other documents and information as Lender may reasonably require. Section 6.6 Corporate Governance. On or before September 26, 2004 the ALHI Board of Directors shall be comprised of three Inside Directors and four Outside Directors. Section 6.7 Amendment to Series C Preferred Stock Designation. ALHI shall amend and restate its Series C Preferred Stock Designation to eliminate the mandatory redemption requirement. ARTICLE VII - EVENTS OF DEFAULT Section 7.1 Events of Default. If any one of the following "Events of Default" shall occur and shall not have been remedied: 7.1.1 Any representation or warranty made or deemed made by any Borrower herein or in any of the other Loan Documents, or in any certificate or report furnished by such Borrower at any time to the Lender, shall prove to have been incorrect, incomplete or misleading in any material respect on or as of the date made or deemed made; or 20 7.1.2 Any Borrower shall fail to pay, when due, any principal of or interest on the Note, or to pay when due any other sum payable under this Agreement and the same is not paid within ten (10) days after written notice from Lender; or 7.1.3 Any default by any Borrower under any obligation to the Lender and the same is not cured within any grace periods provided thereunder; provided, however that no default hereunder shall be deemed to have occurred solely as a result of a default by the borrowers under that certain promissory note dated as of the Effective Date in the original principal amount of $1,000,000.00 (the $1 million Note") except in the event that: (i) any borrower thereunder has made a representation or warranty to Lender that was not true, correct or complete when made; (ii) any violation of Section 5.7 of the Credit Agreement among the Lender and ALHI, Caribbean Leisure Marketing Limited ("CLM") and Castlechart Limited dated June __, 2004 shall have occurred; (iii) ALHI shall have failed to cause the holders thereof to transfer to the Lender all of the issued and outstanding capital stock of CLM free of any liens, claims or encumbrances; or (iv) ALHI shall have failed to duly and timely pay any indemnification claims of the Lender. 7.1.4 Any Borrower shall default in any material respect in the performance of any agreement, covenant or obligation contained herein or in any of the other Loan Documents not provided for elsewhere in this Article 7, if the default continues for a period of thirty (30) days after notice of default to the Borrower by the Lender; or 7.1.5 There shall occur any default in any material respect the due observance or performance of any covenant, condition or agreement on the part of any of the Borrowers to be observed or performed pursuant to the terms of Articles 4 or 5 hereof and the same is not cured within thirty (30) days after written notice from Lender; or 7.1.6 Final judgment for the payment of money in an amount in excess of Fifty Thousand Dollars ($50,000.00) shall be rendered against any Borrower and the same shall remain undischarged for a period of thirty (30) days, during which period execution shall not effectively be stayed, provided such Borrower , as applicable, will have the right to contest in good faith by appropriate proceedings and provided such Borrower shall have set aside on its books adequate reserves for payment of such money; or 7.1.7 Any Borrower's default in the performance of its obligations as lessor or as lessee under any lease of all or any portion of its property, after the provision of written notice and the expiration of cure periods provided in such documents; or 7.1.8 Any Borrower shall die or cease to exist or to be qualified to do or transact business in the State in which the Property are located, or shall be dissolved or terminated or shall be a party to a merger or consolidation, or shall sell all or substantially all of its assets; or 7.1.9 If, without the prior written consent of Lender, which consent shall be in Lender's sole and absolute discretion any shares of stock of Borrower (other than ALHI) are issued, sold, transferred, conveyed, assigned, mortgaged, pledged, or otherwise disposed of, 21 whether voluntarily or by operation of law, and whether with or without consideration, or any agreement for any of the foregoing is entered into; or 7.1.10 Any Borrower shall (i) voluntarily terminate operations or apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of any of the Borrowers, as the case may be, or of all or of a substantial part of the assets of such Borrower, as the case may be, (ii) admit in writing its inability, or be generally unable, to pay its debts as the debts become due, (iii) make a general assignment for the benefit of its creditors, (iv) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect), (v) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, (vi) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code, or (vii) take any corporate action for the purpose of effecting any of the foregoing; or 7.1.11 Any Borrower shall fail to furnish to the Lender notice of default in accordance with Section 4.7 hereof, within ten (10) days after any such notice of default becomes known to the President or Chief Financial Officer of such Borrower, whether or not notification to such Borrower is furnished by the Lender; 7.1.12 Borrowers shall be in default of this Agreement if all filings required by law or regulation to be made with the Commission as set forth in Section 3.4 herein, are not made on or before the Effective Date. Section 7.2 THEREUPON, in the case of any such event other than an event described in Subsections 7.1.5 of Section 7.1, the Lender may, by written notice to the Borrowers, at its option: (A) immediately terminate the Commitment of the Lender hereunder, and/or (B) immediately declare the principal of, and interest accrued on, the Note(s) immediately due and payable without presentment, demand, protest or notice, whereupon the same shall become immediately due and payable; and, in the case of any event described in Subsection 7.1.5 of Section 7.1, the Commitment of the Lender hereunder shall automatically terminate, without any action on the part of the Lender, and the principal of, and interest accrued on, the Note(s) shall become immediately due and payable, both as to principal and interest, without presentment, demand, protest, or notice of any kind, all of which are hereby expressly waived, anything contained herein or in the Note(s) to the contrary notwithstanding. ARTICLE VIII - MISCELLANEOUS Section 8.1 No Waiver, Remedies Cumulative. No failure on the part of the Lender to exercise and no delay in exercising any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and are not exclusive of any remedies provided by law. Section 8.2 Investment Representations. Lender represents that the Lender is an "accredited investor" as defined in the Securities Act and the 22 rules promulgated thereunder, and agrees that the Note is being acquired for investment and not with a view to the distribution thereof, and that the Lender will not offer, sell or otherwise dispose of the Note or the shares of Common Stock issuable upon conversion thereof except under circumstances which will not result in a violation of the Securities Act or any applicable state "blue sky" laws or similar state or foreign laws relating to the sale of securities. Unless the issuance of the shares of Common Stock issuable upon conversion of the Note shall have been registered under the Securities Act, the Lender, by tendering notice to ALHI of the Lender's intent to convert all or part of the Note, shall be deemed to represent to the Borrowers that the Lender is acquiring such shares of Common Stock for investment and not with a view to the distribution thereof. Section 8.3 Release and Waiver of Claims. Borrower and its affiliates hereby acknowledge that Borrower acquired assets for use in the Antigua Call Center, incurred expenses, and made expenditures in connection therewith, and made the independent judgment to fund operations in Antigua Call Center, and in so doing has not in any way relied upon any representations, advice, or counsel of the Lender, and was not induced by the Lender to incur such expenses and make such expenditures. The Borrower and hereby releases and covenants not to sue the Lender for any losses it has, or may in the future, incur in Antigua, and furthermore hereby waives any and all claims which may be asserted for the actual and consequential damages incurred by the Borrower (including, without limitation, amounts required to be paid under this Agreement by the Borrower to Lender), including claims to seek recourse against the Lender in the event the Lender fails to advance any remaining Availability Amount. Borrower agrees that neither Lender nor its agents shall be liable for any monetary damages (except to the extent that Borrower can prove Lender's bad faith or willful misconduct), and in the event of bad faith or willful misconduct, Borrower's sole remedies shall be limited to commencing an action seeking injunctive relief or declaratory judgment. The parties hereto agree that any action or proceeding to determine whether Lender has acted in bad faith or with willful misconduct shall be determined by an action seeking declaratory judgment. Lender agrees that, in such event, it shall cooperate in expediting any action seeking injunctive relief or declaratory judgment. Borrower hereby expressly waives and releases, to the fullest extent permitted by law, the pleading of any statute of limitations as a defense to payment of any amounts due under this Agreement or the performance of its other obligations set forth in the Loan Documents. Borrower hereby waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by Lender or its agents. Section 8.4 Survival of Representations. All representations and warranties made herein shall survive the making of the loans hereunder and the delivery of the Note, and shall continue in full force and effect so long as the Note is outstanding and unpaid and the Commitment has not been terminated. Section 8.5 Notices. Any notice or other communication hereunder to any party hereto shall be by telegram, facsimile transmission with next day delivery of original, telex or registered or certified mail and shall be deemed to have been given or made when telegraphed, faxed as provided herein, telexed or deposited in mails, postage prepaid, addressed to the party at its address specified next to its signature hereto (or at any other address that the party may hereafter specify to the other parties in writing). 23 Section 8.6 Construction. This Agreement and the Note shall be deemed a contract made under the law of the State of Florida and shall be governed by and construed in accordance with the law of said state and any suit, action or proceeding arising out of or relating to this Agreement may be commenced and maintained in any court of competent subject matter jurisdiction in Miami-Dade County, Florida, and any objection to such jurisdiction and venue is hereby expressly waived. Section 8.7 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of each Borrower and the Lender, and their respective successors and assigns, provided, that no Borrower may assign any of its rights hereunder without the prior written consent of the Lender, which may be arbitrarily withheld, and any such assignment will be void. Section 8.8 Limit on Interest. Anything herein or in the Note to the contrary notwithstanding, the obligations of the Borrowers under this Agreement and the Note to the Lender shall be subject to the limitation that payments of interest to the Lender shall not be required to the extent that receipt of any such payment by the Lender would be contrary to provisions of law applicable to the Lender (if any) which limit the maximum rate of interest which may be charged or collected by the Lender; provided however, that nothing herein shall be construed to limit the Lender to presently existing maximum rates of interest, if any increased interest rate is hereafter permitted by reason of applicable federal or state legislation. Section 8.9 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to an original and all of which when taken together shall constitute but one and the same instrument. Section 8.10 Headings. The headings are for convenience only and are not to affect the construction of or to be taken into account in interpreting the substance of this Agreement. Section 8.11 Severability. In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. Section 8.12 Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement with respect to the subject matter hereof and is intended as a complete and exclusive statement of the terms and conditions thereof, and this Agreement supersedes and replaces all prior negotiations and agreements between the parties hereto, or any of them, whether oral or written. Each of the parties hereto acknowledges that no other party, agent or attorney of any other party, has made any promise, representation or warranty whatsoever, expressed or implied, not contained herein concerning the subject matter hereof to induce the other party to execute this Agreement or any of the other documents referred to herein, and each party hereto acknowledges that it has not executed this Agreement or such other documents in reliance upon any such promise, representation or warranty not contained herein. 24 Section 8.13 Integration. This Agreement, together with the other documents and instruments executed herewith and contemplated by this Agreement, comprises the complete and integrated agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof. The Borrower further releases and discharges Lender from and against any and all liability with respect to all prior agreements and preliminary commitments. The Loan Documents were drafted with the joint participation of Borrower and Lender, and their respective counsel, and shall be construed neither against nor in favor of any of them, but rather in accordance with the fair meaning thereof. Section 8.14 Course of Dealing; Amendment; Supplemental Agreements. No course of dealing between the Lender and Borrower shall be effective to amend, modify or change any provision of this Agreement. This Agreement or any document executed in connection herewith, may not be amended, modified, or changed in any respect except by agreement in writing signed by the Lender and the Borrower. Section 8.15 Indemnification. Each of the Borrowers hereby agree to hold the Lender and its officers, directors, employees and agents harmless from and against all claims, damages, liabilities and expenses, including reasonable attorney fees and disbursements of counsel, which may be incurred by or asserted against any of them in connection with or arising out of any investigation, litigation, or proceeding relating to the Loan, except that the Borrowers shall not be required to indemnify the Lender to the extent that such claims, damages, liabilities or expenses arise from the negligence or willful misconduct of Lender. Section 8.16 Waiver of Jury Trial. BORROWERS AND LENDER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY DOCUMENT EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OR EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER ENTERING INTO THIS AGREEMENT AND MAKING ANY LOAN, ADVANCE OR OTHER EXTENSION OF CREDIT TO THE BORROWERS. *Signatures on Following Page(s)* 25 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be effective on the date first written above. "BORROWER" Signed, sealed and delivered AMERICAN LEISURE HOLDINGS, INC., a Nevada corporation - -------------------------------- By: (Signature of Witness) -------------------------------- Its: ------------------------------- - -------------------------------- (Printed Name of Witness) Address: --------------------------- ------------------------------------ ------------------------------------ Signed, sealed and delivered AMERICAN LEISURE MARKETING & TECHNOLOGY, INC., a Florida corporation - -------------------------------- By: (Signature of Witness) -------------------------------- Its: ------------------------------- - -------------------------------- (Printed Name of Witness) Address: --------------------------- ------------------------------------ ------------------------------------ Signed, sealed and delivered ORLANDO HOLIDAYS, INC., a Florida corporation - -------------------------------- By: (Signature of Witness) -------------------------------- Its: ------------------------------- - -------------------------------- (Printed Name of Witness) Address: --------------------------- ------------------------------------ ------------------------------------ Signed, sealed and delivered AMERICAN LEISURE, INC., a Florida corporation - -------------------------------- By: (Signature of Witness) -------------------------------- Its: ------------------------------- - -------------------------------- (Printed Name of Witness) Address: --------------------------- ------------------------------------ ------------------------------------ 26 Signed, sealed and delivered WELCOME TO ORLANDO, INC., a Florida corporation - -------------------------------- By: (Signature of Witness) -------------------------------- Its: ------------------------------- - -------------------------------- (Printed Name of Witness) Address: --------------------------- ------------------------------------ ------------------------------------ Signed, sealed and delivered AMERICAN TRAVEL & MARKETING GROUP, INC., a Florida corporation - -------------------------------- By: (Signature of Witness) -------------------------------- Its: ------------------------------- - -------------------------------- (Printed Name of Witness) Address: --------------------------- ------------------------------------ ------------------------------------ Signed, sealed and delivered HICKORY TRAVEL SYSTEMS, INC., a Delaware corporation - -------------------------------- By: (Signature of Witness) -------------------------------- Its: ------------------------------- - -------------------------------- (Printed Name of Witness) Address: --------------------------- ------------------------------------ ------------------------------------ - -------------------------------- STANFORD VENTURE CAPITAL (Signature of Witness) HOLDINGS, INC. By: - -------------------------------- -------------------------------- (Printed Name of Witness) Name: ------------------------------ Title: ----------------------------- 27 EXHIBIT A NOTE EXHIBIT B EXHIBIT C EXHIBIT D LEGAL OPINION DISCLOSURE SCHEDULE EX-10.3 5 v05390_ex10-3.txt Exhibit 10.3 EXECUTION COPY INSTRUMENT OF WARRANT REPRICING Reference is made to those certain Warrants (the "Warrants"), to purchase an aggregate of 1,350,000 shares of the common stock, $0.001 par value per share ("Common Stock") exercisable at $2.96 per share, of American Leisure Holdings, Inc., a Nevada corporation (the "Company") issued to such persons and in such numbers as outlined in Schedule A attached hereto. Capitalized terms not defined herein shall have the meaning given to them in the Credit Agreement the "Initial Credit Agreement"), dated as of December 19, 2003, by and among the Company, certain parties defined therein and Stanford Venture Capital Holdings, Inc., a Delaware corporation ("Stanford"). WHEREAS, the Company has determined it to be in its best interest to secure additional financing from Stanford, pursuant to, and in accordance with, the terms of a Credit Agreement dated as of June 17, 2004 and entered into by and between American Leisure Marketing & Technology, Inc., Orlando Holidays, Inc., American Leisure, Inc., Welcome to Orlando, Inc., American Travel & Marketing Group, Inc., Hickory Travel Systems, Inc., the Company and Stanford (the "2004 Credit Agreement"); and WHEREAS, as further consideration for Stanford entering into the 2004 Credit Agreement, the Company has agreed to reprice the Warrants. NOW THEREFORE, for value received, the Company hereby agrees that each share of Common Stock represented by the Warrants (the "Warrant Shares") shall be exercisable at an exercise price per Warrant Share of $0.001 in accordance with the terms of this Warrant Agreement. Except as modified hereby, the terms and provisions of the Warrants remain in full force and effect Date: June 17, 2004 American Leisure Holdings, Inc. By:________L/S_________________ L. William Chiles Vice President EXECUTION COPY SCHEDULE A Name Number ---- ------ Osvaldo Pi 168,750 Ronald M. Stein 168,750 Daniel T. Bogar 168,750 William R. Fusselman 168,750 Stanford Venture Capital Holdings, Inc. 675,000 ------- Total 1,350,000 EX-10.4 6 v05390_ex10-4.txt AMERICAN LEISURE HOLDINGS, INC. A NEVADA CORPORATION WARRANT PURCHASE AGREEMENT THIS WARRANT PURCHASE AGREEMENT, dated as of June 17, 2004 (the "AGREEMENT"), is entered into by and between American Leisure Holdings, Inc., a Nevada corporation (the "COMPANY") and Stanford Venture Capital Holdings, Inc., a Delaware corporation (the "PURCHASER"). W I T N E S S E T H: WHEREAS, of even date herewith, the Purchaser, American Leisure Marketing & Technology, Inc. ("ALMT"), Orlando Holidays, Inc. ("OHI"), American Leisure, Inc. ("AL"), Welcome to Orlando, Inc. ("WTO"), American Travel & Marketing Group, Inc. ("ATMG"), Caribbean Leisure Marketing, Ltd. ("CLM"), CastleCharts Ltd. ("CC"), Hickory Travel Systems, Inc. ("HTS") and the Company (ALMT, OHI, AL, CLM, WTO, CC, HTS and the Company are collectively referred to herein as, the "Makers") have entered into a Credit Agreement of even date herewith pursuant to which, among other things, the Company and the Makers borrowed from the Purchaser up to an aggregate of Four Million Dollars (the "CREDIT AGREEMENT"); and WHEREAS, as partial consideration for the Purchaser entering into the Credit Agreement and upon the terms and conditions of this Agreement, the Purchaser has agreed to purchase, and the Company wishes to issue and sell, warrants to purchase up to an aggregate of 500,000 of the Company's common stock $0.001 par value per share (the "COMMON STOCK"), at an exercise price of $5.00 per share for warrants to purchase 500,000 shares of the Common Stock, on a pro rata basis in accordance with Schedule A attached hereto, expiring May 26, 2009 (the "WARRANTS"); and WHEREAS, the Company and the Purchaser are executing and delivering this Agreement in reliance upon the exemptions from registration provided by Regulation D ("REGULATION D") promulgated by the Securities and Exchange Commission (the "COMMISSION") under the Securities Act of 1933, as amended (the "SECURITIES ACT"), and/or Section 4(2) of the Securities Act. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. AGREEMENT TO PURCHASE; PURCHASE PRICE (a) Capitalized terms used herein not otherwise defined herein shall have the same meaning ascribed to such terms as in the Credit Agreement. (b) Subject to the terms and conditions in this Agreement, the Purchaser hereby agrees to purchase from the Company, and the Company hereby agrees to issue and sell to the Purchaser, the Warrants as additional consideration for the execution and delivery of the Credit Agreement on the date hereof. (c) With each Borrowing, in accordance with the Credit Agreement, the Company shall issue to Purchaser the Warrants, in such numbers and exercisable at such exercise price as is set forth on Exhibit A attached hereto. 2. ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION The Purchaser represents and warrants to, and covenants and agrees with, the Company as follows: (a) QUALIFIED INVESTOR. The Purchaser is (i) experienced in making investments of the kind described in this Agreement and the related documents, (ii) able to afford the entire loss of its investment in the Warrants, and (iii) an "ACCREDITED INVESTOR" as defined in Rule 501(a) of Regulation D and knows of no reason to anticipate any material change in its financial condition for the foreseeable future. (b) RESTRICTED WARRANTS. The Warrants are "restricted Securities" as defined in Rule 144 promulgated under the Securities Act. All subsequent offers and sales by the Purchaser of the Warrants and the Common Stock issuable upon exercise of the Warrants shall be made pursuant to an effective registration statement under the Securities Act or pursuant to an applicable exemption from such registration. (c) RELIANCE ON REPRESENTATIONS. The Purchaser understands that the Warrants are being offered and sold to it in reliance upon exemptions from the registration requirements of the United States federal Securities laws, and that the Company is relying upon the truthfulness and accuracy of the Purchaser's representations and warranties, and the Purchaser's compliance with its covenants and agreements, each as set forth herein, in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Warrants. (d) LEGALITY. The Purchaser has the requisite corporate power and authority to enter into this Agreement. (e) AUTHORIZATION. This Agreement and any related agreements, and the transactions contemplated hereby and thereby, have been duly and validly authorized by the Purchaser, and such agreements, when executed and delivered by each of the Purchaser and the Company will each be a valid and binding agreement of the Purchaser, enforceable in accordance with their respective terms, except to the extent that enforcement of each such agreement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors rights generally and to general principles of equity. (f) BROKER'S FEES AND COMMISSIONS. Neither the Purchaser nor any of its officers, partners, employees or agents has employed any investment banker, broker, or finder in connection with the transactions contemplated by the Primary Documents. 2 3. REPRESENTATIONS OF THE COMPANY The Company represents and warrants to, and covenants and agrees with, the Purchaser that: (a) ORGANIZATION. The Company is a corporation duly organized and validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted after the consummation of the transactions contemplated by this Agreement. The Company is duly qualified as a foreign corporation and in good standing in all jurisdictions in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification. The minute books and stock record books and other similar records of the Company have been provided or made available to the Purchaser or its counsel prior to the execution of this Agreement, are complete and correct in all material respects and have been maintained in accordance with sound business practices. Such minute books contain true and complete records of all actions taken at all meetings and by all written consents in lieu of meetings of the directors, stockholders and committees of the board of directors of the Company from the date of organization through the date hereof. The Company has, prior to the execution of this Agreement, delivered to the Purchaser true and complete copies of the Company's Articles of Incorporation, and Bylaws, each as amended through the date hereof. The Company is not in violation of any provisions of its Articles of Incorporation or Bylaws. (b) CAPITALIZATION. On the date hereof, the authorized capital of the Company consists of: (i)100,000,000 shares of Common Stock, par value $0.001 per share, of which 7,488,983 shares are issued and outstanding and the preferred stock set forth in the Company's most recently filed Form 10-QSB. Except as set forth on Schedule 3(b), the Company has no authorized or outstanding options or warrants issued and outstanding except for the Warrants to purchase 1,950,000 shares of Common Stock previously issued to the Purchaser and the Warrants to purchase 500,000 shares of Common Stock to be issued to the Purchaser hereunder, there are no outstanding rights, agreements, arrangements or understandings to which the Company is a party (written or oral) which would obligate the Company to issue any equity interest, option, warrant, convertible note, or other types of Warrants or to register any shares in a registration statement filed with the Commission. There is no agreement, arrangement or understanding between or among any entities or individuals which affects, restricts or relates to voting, giving of written consents, dividend rights or transferability of shares with respect to any voting shares of the Company, including without limitation any voting trust agreement or proxy. There are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire for value any outstanding shares of capital stock or other ownership interests of the Company or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity. There are no anti-dilution or price adjustment provisions regarding any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Warrants. 3 (c) CONCERNING THE WARRANTS. The Common Stock issuable upon exercise of the Warrants, shall be duly and validly issued, fully paid and non-assessable and will not subject the holder thereof to personal liability by reason of being such a holder. (d) AUTHORIZED SHARES. The Company has available and has reserved a sufficient number of authorized and unissued shares of Common Stock as may be necessary to effect exercise of the Warrants. The Company understands and acknowledges the potentially dilutive effect to the Common Stock of the issuance of shares of Common Stock upon the exercise of the Warrants. The Company further acknowledges that its obligation to issue shares of Common Stock upon exercise of the Warrants is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company. (e) LEGALITY. The Company has the requisite corporate power and authority to enter into this Agreement, and to issue and deliver the Common Stock issuable upon exercise of the Warrants. (f) TRANSACTION AGREEMENTS. This Agreement, the Warrants, the Registration Rights Agreement of even date herewith among the Company and the Purchaser (the "REGISTRATION RIGHTS AGREEMENT"), (collectively, the "PRIMARY DOCUMENTS"), and the transactions contemplated hereby and thereby, have been duly and validly authorized by the Company; this Agreement has been duly executed and delivered by the Company and this Agreement is, and the other Primary Documents, when executed and delivered by the Company, will each be, a valid and binding agreement of the Company, enforceable in accordance with their respective terms, except to the extent that enforcement of each of the Primary Documents may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors' rights generally and to general principles of equity. (f) (g) SEC FILINGS. As of the date hereof, none of the filings made with the SEC by the Company since January 1, 2000 (the "ALHI SEC FILINGS"), contained any untrue statement of a material fact or to the best of Company's knowledge, omitted any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent such filings have been all prior to the date of this Agreement corrected, updated or superseded by a document subsequently filed with Commission. The Company has furnished or made available to the Purchaser true and complete copies of all the documents it has filed with the Commission since January 1, 2000, all in the forms so filed. As of May 26, 2004, the Company shall have made all filings with the Securities and Exchange Commission (the "COMMISSION") that it has been required to make under the Securities Act of 1933 (the "SECURITIES ACT") and the Securities and Exchange Act of 1934 (the "EXCHANGE ACT"), as amended (the "COMPANY SEC FILINGS") and will have furnished or made available to the Purchaser true and complete copies of all the documents it has filed with the Commission since its inception, all in the forms so filed. As of May 26, 2004, filings by the Company will comply in all material respects with the requirements of the Securities Act and the Exchange Act, and the rules and regulations of the Commission promulgated thereunder, as the case may be, and none of the filings with the Commission contained or will contain any untrue statement of a material fact or omitted or will omit any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent such filings have been all prior to the date of this Agreement corrected, updated or superseded by a document subsequently filed with Commission. To the best of the Company's knowledge, the confidential informal investigation presently underway by the Commission does not form, provide or give rise to any basis for, or cause, a material adverse effect on the Company or any of its officers and/or directors. 4 (h) FINANCIAL STATEMENTS. The Company's financial statements and related notes thereto, as delivered to Purchaser (the "COMPANY FINANCIALS") are correct and complete in all material respects and have been prepared in accordance with United States generally accepted accounting principles applied on a basis consistent throughout the periods indicated and consistent with each other. The Company Financials present fairly and accurately the financial condition and operating results of the Company in all material respects as of the dates and during the periods indicated therein and are consistent with the books and records of the Company. Except as set forth in the Company Financials, the Company has no material liabilities, contingent or otherwise. (i) NON-CONTRAVENTION. The execution and delivery of this Agreement and each of the other Primary Documents, and the consummation by the Company of the transactions contemplated by this Agreement and each of the other Primary Documents, do not and will not conflict with, or result in a breach by the Company of, or give any third party any right of termination, cancellation, acceleration or modification in or with respect to, any of the terms or provisions of, or constitute a default under, (A) its Articles of Incorporation or Bylaws, as amended through the date hereof, (B) any material indenture, mortgage, deed of trust, lease or other agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, or (C) any existing applicable law, rule, or regulation or any applicable decree, judgment or order of any court or federal, state, Warrants industry or foreign regulatory body, administrative agency, or any other governmental body having jurisdiction over the Company or any of their properties or assets (collectively, "LEGAL REQUIREMENTS"), other than those which have been waived or satisfied on or prior to the First Closing Date. (j) APPROVALS AND FILINGS. No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, stock exchange or market or the stockholders of the Company is required to be obtained by the Company for the entry into or the performance of this Agreement and the other Primary Documents. (k) COMPLIANCE WITH LEGAL REQUIREMENTS. The Company has not violated in any material respect, and is not currently in material default under, any Legal Requirement applicable to the Company, or any of the assets or properties of the Company, where such violation could reasonably be expected to have material adverse effect on the business or financial condition of the Company. (l) ABSENCE OF CERTAIN CHANGES. There has been no material adverse change nor any material adverse development in the business, properties, operations, financial condition, prospects, outstanding Warrants or results of operations of the Company, and no event has occurred or circumstance exists that may result in such a material adverse change. 5 (m) INDEBTEDNESS TO OFFICERS, DIRECTORS AND STOCKHOLDERS. Except as set disclosed in the Company Financials, the Company is not indebted to any of the Company's stockholders, officers or directors or their Affiliates in any amount whatsoever (including, without limitation, any deferred compensation, salaries or rent payable). (n) RELATIONSHIPS WITH RELATED PERSONS. Except as set forth in the SEC filings of the Company, no officer, director, or principal stockholder of the Company nor any Related Person (as defined below) of any of the foregoing has had any interest in any property (whether real, personal, or mixed and whether tangible or intangible) used in or pertaining to the business of the Company. No officer, director, or principal stockholder of the Company nor any Related Person of the any of the foregoing is or has owned an equity interest or any other financial or profit interest in, a Person (as defined below) that has (i) had business dealings or a material financial interest in any transaction with the Company, or (ii) engaged in competition with the Company with respect to any line of the merchandise or services of such company (a "COMPETING BUSINESS") in any market presently served by such company except for ownership of less than one percent of the outstanding capital stock of any Competing Business that is publicly traded on any recognized exchange or in the over-the-counter market. No director, officer, or principal stockholder of the Company nor any Related Person of any of the foregoing is a party to any Contract with, or has claim or right against, the Company. As used in this Agreement, "PERSON" means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or any governmental body; "RELATED PERSON" means, (X) with respect to a particular individual, (a) each other member of such individual's Family (as defined below); (b) any Person that is directly or indirectly controlled by such individual or one or more members of such individual's Family; (c) any Person in which such individual or members of such individual's Family hold (individually or in the aggregate) a Material Interest (as defined below); and (d) any Person with respect to which such individual or one or more members of such individual's Family serves as a director, officer, partner, executor, or trustee (or in a similar capacity); (Y) with respect to a specified Person other than an individual, (a) any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with such specified Person; (b) any Person that holds a Material Interest in such specified Person; (c) each Person that serves as a director, officer, partner, executor, or trustee of such specified Person (or in a similar capacity); (d) any Person in which such specified Person holds a Material Interest; (e) any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity); and (f) any Related Person of any individual described in clause (b) or (c). For purposes of the foregoing definition, (a) the "FAMILY" of an individual includes (i) the individual, (ii) the individual's spouse and former spouses, (iii) any other natural person who is related to the individual or the individual's spouse within the second degree, and (iv) any other natural person who resides with such individual, and (b) "MATERIAL INTEREST" means direct or indirect beneficial ownership of voting Warrants or other voting interests representing at least 1% of the outstanding voting power of a Person or equity Warrants or other equity interests representing at least 1% of the outstanding equity Warrants or equity Warrants in a Person. 6 (o) TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. Except as set forth in the SEC filings of the Company, the Company has good and marketable title to all of its material properties and assets, both real and personal, and has good title to all its leasehold interests. All material properties and assets reflected in the Company Financials are free and clear of all Encumbrances (as defined below) except liens for current Taxes not yet due and except as disclosed in the Company Financials. As used in this Agreement, "ENCUMBRANCE" means any charge, claim, community property interest, condition, equitable interest, lien, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership. (p) PERMITS. The Company has all permits, licenses and any similar authority necessary for the conduct of its business as now conducted, the lack of which would materially and adversely affect the business or financial condition of such company. The Company is not in default in any respect under any of such permits, licenses or similar authority. (q) ABSENCE OF LITIGATION. Except as set forth in the Company SEC Filings, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body, or arbitration tribunal pending or, to the Knowledge of the Company, threatened against or affecting the Company, in which an unfavorable decision, ruling or finding would have a material adverse effect on the properties, business, condition (financial or other) or results of operations of the Company, taken as a whole, or the transactions contemplated by the Primary Documents, or which would adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, the Primary Documents. All references to the "KNOWLEDGE OF THE COMPANY" in this Agreement shall mean the actual knowledge of the Company or any of its officers or the knowledge that the Company or any of its officers could reasonably be expected to have, after reasonable investigation and due diligence. (r) NO DEFAULT. The Company is not in default in the performance or observance of any obligation, covenant or condition contained in any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it or its property may be bound. (s) TAXES. (i) All Tax Returns (as defined below) required to have been filed by or with respect to the Company (including any extensions) have been filed. All such Tax Returns are true, complete and correct in all material respects. All Taxes (as defined below) due and payable by the Company, whether or not shown on any Tax Return, or claimed to be due by any Taxing Authority (as defined below), have been paid. (ii) The Company does not have any material liability for Taxes outstanding. 7 (iii) The Company is not a party to any agreement extending the time within which to file any Tax Return. No claim has ever been made by a Taxing Authority of any jurisdiction in which the Company does not file Tax Returns that the Company is or may be subject to taxation by that jurisdiction. (iv) The Company has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor or independent contractor. (v) There has been no action by any Taxing Authority in connection with assessing additional Taxes against, or in respect of, the Company for any past period. There is no dispute or claim concerning any Tax liability of the Company either (i) claimed, raised or, to the Knowledge of the Company, threatened by any Taxing Authority or (ii) of which the Company is otherwise aware. There are no liens for Taxes upon the assets and properties of the Company other than liens for Taxes not yet due. (vi) There are no outstanding agreements or waivers extending the statutory period of limitation applicable to any Tax Returns required to be filed by, or which include or are treated as including, the Company or with respect to any Tax assessment or deficiency affecting the Company. (vii) The Company has not received any written ruling related to Taxes or entered into any agreement with a Taxing Authority relating to Taxes. (viii) The Company does not have any liability for the Taxes of any person or entity other than the Company (i) under Section 1.1502-6 of the Treasury regulations (or any similar provision of state, local or foreign Legal Requirements), (ii) as a transferee or successor, (iii) by contract or (iv) otherwise. (ix) The Company (i) has not agreed to make nor is required to make any adjustment under Section 481 of the Internal Revenue Code by reason of a change in accounting method and (ii) is not a "consenting corporation" within the meaning of Section 341(f)(1) of the Internal Revenue Code. (x) The Company is not a party to or bound by any obligations under any tax sharing, tax allocation, tax indemnity or similar agreement or arrangement. (xi) The Company is not involved in, subject to, or a party to any joint venture, partnership, contract or other arrangement that is treated as a partnership for federal, state, local or foreign Tax purposes. (xii) The Company was not included nor is includible, in the Tax Return of any other entity. As used in this Agreement, a "TAX RETURN" means any return, report, information return, schedule, certificate, statement or other document (including any related or supporting information) filed or required to be filed with, or, where none is required to be filed with a Taxing Authority, the statement or other document issued by, a Taxing Authority in connection with any Tax; "TAX" means any and all taxes, charges, fees, levies or other assessments, including, without limitation, income, gross, receipts, excise, real or personal property, sales, withholding, social security, retirement, unemployment, occupation, use, service, service use, license, net worth, payroll, franchise, transfer and recording taxes, fees and charges, imposed by Taxing Authority, whether computed on a separate, consolidated, unitary, combined or any other basis; and such term includes any interest whether paid or received, fines, penalties or additional amounts attributable to, or imposed upon, or with respect to, any such taxes, charges, fees, levies or other assessments; and "TAXING AUTHORITY" means any governmental agency, board, bureau, body, department or authority of any United States federal, state or local jurisdiction or any foreign jurisdiction, having or purporting to exercise jurisdiction with respect to any Tax. 8 (t) CERTAIN PROHIBITED ACTIVITIES. Neither the Company nor any of its directors, officers or other employees has (i) used any Company funds for any unlawful contribution, endorsement, gift, entertainment or other unlawful expense relating to any political activity, (ii) made any direct or indirect unlawful payment of Company funds to any foreign or domestic government official or employee, (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (iv) made any bribe, rebate, payoff, influence payment, kickback or other similar payment to any person. (u) CONTRACTS. As used in this Agreement, "CONTRACT" means any agreement, contract, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding; or any Contract (a) under which the Company has or may acquire any rights, (b) under which the Company has or may become subject to any obligation or liability, or (c) by which the Company or any of the assets owned or used by it is or may become bound. With respect to each Contract (i) the Company is, and has been, in material compliance with all applicable terms and requirements of each Contract under which the Company has or had any obligation or liability or by which the Company or any of the assets owned or used by it is or was bound; (ii) each other person or entity that has or had any obligation or liability under any Contract under which the Company has or had any rights is, and has been, in material compliance with all applicable terms and requirements of such Contract; (iii) no event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with, or result in a material violation or breach of, or give the Company or other person or entity the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Contract; and (iv) the Company has not given to or received from any other person or entity any notice or other communication (whether oral or written) regarding any actual, alleged, possible, or potential violation or breach of, or default under, any Contract. Each Contract is valid, in full force, and binding on and enforceable against the other party or parties to such contract in accordance with its terms and provisions. There have been no renegotiation of, attempts to renegotiate, or outstanding rights to renegotiate any material amounts paid or payable to the Company under current or completed Contracts with any person or entity and no such person or entity has made written demand for such renegotiation. 9 (v) AGENT FEES. Except for the fee paid solely by the Company to Walter Kolker, with regard to which the Company shall indemnify and hold Purchaser harmless for any amounts due thereunder, the Company has not incurred any liability for any finder's or brokerage fees or agent's commissions in connection with the transactions contemplated by this Agreement. (w) EMPLOYEES. The Company has no accrued vacation or sick pay due any employees. (x) EMPLOYEE BENEFITS. (i) The Company does not have, and has not at any time had, any Plans (as defined below). As used in this Agreement, "PLAN" means (i) each of the "employee benefit plans" (as such term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA")), of which any of the Company or any member of the same controlled group of businesses as the Company within the meaning of Section 4001(a)(14) of ERISA (an "ERISA AFFILIATE") is or ever was a sponsor or participating employer or as to which the Company or any of its ERISA Affiliates makes contributions or is required to make contributions, and (ii) any similar employment, severance or other arrangement or policy of any of the Company or any of its ERISA Affiliates (whether written or oral) providing for health, life, vision or dental insurance coverage (including self-insured arrangements), workers' compensation, disability benefits, supplemental unemployment benefits, vacation benefits or retirement benefits, fringe benefits, or for profit sharing, deferred compensation, bonuses, stock options, stock appreciation or other forms of incentive compensation or post-retirement insurance, compensation or benefits. (y) PRIVATE OFFERING. Subject to the accuracy of the Purchaser's representations and warranties set forth in Section y2 hereof, (i) the offer, sale and issuance of the Warrants, and (ii) the issuance of Common Stock pursuant to the exercise of the Warrants as contemplated by the Primary Documents, are exempt from the registration requirements of the Securities Act. The Company agrees that neither the Company nor anyone acting on its behalf will offer any of the Warrants or any similar Warrants for issuance or sale, or solicit any offer to acquire any of the same from anyone so as to render the issuance and sale of such Warrants subject to the registration requirements of the Securities Act (z) MERGERS, ACQUISITIONS AND DIVESTITURES. Except as set forth in the SEC filings of the Company, the Company has never acquired any equity interest in or any major assets of any other Person, or sold the equity interest or any major asset owned by it in a transaction the terms of which were not based on arms' length negotiations. None of the officers and directors of the Company has received any benefit in connection with any of the foregoing transactions or is under any agreement or understanding with any Person (including agreements or understandings among themselves) with respect to the receipt of or entitlement to any such benefit. (aa) FULL DISCLOSURE. There is no fact known to the Company (other than general economic conditions known to the public generally) that has not been disclosed to the Purchaser that could (i) reasonably be expected to have a material adverse effect upon the condition (financial or otherwise) or the earnings, business affairs, properties or assets of the Company or (ii) reasonably be expected to materially and adversely affect the ability of the Company to perform the obligations set forth in the Primary Documents. The representations and warranties of the Company set forth in this Agreement do not contain any untrue statement of a material fact or omit any material fact necessary to make the statements contained herein, in light of the circumstances under which they were made, not misleading. 10 4. CERTAIN COVENANTS, ACKNOWLEDGMENTS AND RESTRICTIONS (a) TRANSFER RESTRICTIONS. The Purchaser acknowledges that (i) neither the Warrants nor the Common Stock issuable upon exercise of the Warrants have been registered under the Securities Act, and such Warrants may not be transferred unless (A) subsequently registered thereunder or (B) they are transferred pursuant to an exemption from such registration, and (ii) any sale of the Warrants or the Common Stock issuable upon exercise or exchange thereof (collectively, the "COVERED WARRANTS") made in reliance upon Rule 144 under the Securities Act ("RULE 144") may be made only in accordance with the terms of said Rule 144. The provisions of Section y4(a) and y4(b) hereof, together with the rights of the Purchaser under this Agreement and the other Primary Documents, shall be binding upon any subsequent transferee of the Common Stock. (b) RESTRICTIVE LEGEND. The Purchaser acknowledges and agrees that, until such time as the Covered Warrants shall have been registered under the Securities Act or the Purchaser demonstrates to the reasonable satisfaction of the Company and its counsel that such registration shall no longer be required, such Covered Warrants may be subject to a stop-transfer order placed against the transfer of such Covered Warrants, and such Covered Warrants shall bear a restrictive legend in substantially the following form: THESE WARRANTS (INCLUDING ANY UNDERLYING CAPITAL STOCK) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE WARRANTS UNDER SAID ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION SHALL NO LONGER BE REQUIRED. (c) RESERVATION OF COMMON STOCK. The Company will at all times have authorized and reserved for the purpose of issuance a sufficient number of shares of Common Stock to provide for the conversion of the exercise of the Warrants. (d) RETURN OF CERTIFICATES ON CONVERSION. Upon any exercise by any holder of the Warrants of less than all of the shares of Common Stock into which such Warrants are exercisable, the Company shall issue and deliver to the holder thereof, within seven business days of the date of exercise, a new Warrant exercisable for the total number of shares of Common Stock which the holder has not yet elected to exercise. 11 (e) REPLACEMENT CERTIFICATES. The certificate(s) representing the Warrants held by the Purchaser shall be exchangeable, at the option of the Purchaser at any time and from time to time at the office of Company, for certificates with different denominations representing, as applicable, an equal aggregate number of Warrants as requested by the holder upon surrendering the same. No service charge will be made for such registration or transfer or exchange. (f) FINANCIAL STATEMENTS. At the expense of the Company, the Company's accountant shall annually prepare for each calendar year, a report of the Company, including a balance sheet, annual profit and loss statement, and annual cash flow statement to be furnished to the Purchaser within one hundred twenty (120) days after the end of each calendar year. In addition the Company shall cause to be prepared and distributed to the Purchaser for each calendar quarter during the term of this Agreement a report of the Company, including a balance sheet, quarterly profit and loss statement, and quarterly cash flow statement for such calendar quarter to be furnished to the Purchaser within forty-five (45) days after the end of each calendar quarter. The Company shall also cause to be prepared and filed all Federal, state and local income tax returns and information returns, if any, which the Company is required to file. 5. FEES AND EXPENSES The Company shall bear its own costs, including attorney's fees, incurred in the negotiation of this Agreement and consummating of the transactions contemplated herein and in the corporate proceedings of the Company in contemplation hereof and thereof. At the date of execution and delivery hereof, the Company shall reimburse the Purchaser for all of the Purchaser's reasonable out-of-pocket expenses incurred in connection with the negotiation or performance of this Agreement, including without limitation reasonable fees and disbursements of counsel to the Purchaser. 6. SURVIVAL The agreements, covenants, representations and warranties of the Company and the Purchaser shall survive the execution and delivery of this Agreement and the delivery of the Warrants hereunder for a period of two years from the date of the Final Closing Date, except that: (a) the Company's representations and warranties regarding Taxes contained in Section 3(r) of this Agreement shall survive as long as the Company remains statutorily liable for any obligation referenced in Section 3(r), and (b) the Company's representations and warranties contained in Section y3(b) shall survive until the Purchaser and any of its affiliates are no longer holders of any of the Warrants purchased hereunder. 7. INDEMNIFICATION (a) The Company, on the one side, and the Purchaser (each in such capacity under this section, the "INDEMNIFYING PARTY") agrees to indemnify the other party and each officer, director, employee, agent, partner, stockholder, member and affiliate of such other party (collectively, the "INDEMNIFIED PARTIES") for, and hold each Indemnified Party harmless from and against: (i) any and all damages, losses, claims, diminution in value and other liabilities of any and every kind, including, without limitation, judgments and costs of settlement, and (ii) any and all reasonable out-of-pocket costs and expenses of any and every kind, including, without limitation, reasonable fees and disbursements of counsel for such Indemnified Parties (all of which expenses periodically shall be reimbursed as incurred), in each case, arising out of or suffered or incurred in connection with any of the following, whether or not involving a third party claim: (a) any misrepresentation or any breach of any warranty made by the Indemnifying Party herein or in any of the other Primary Documents, (b) any breach or non-fulfillment of any covenant or agreement made by the Indemnifying Party herein or in any of the other Primary Documents, or (c) any claim relating to or arising out of a violation of applicable federal or state Warrants laws by the Indemnifying Party in connection with the sale or issuance of the Warrants by the Indemnifying Party to the Indemnified Party (collectively, the "INDEMNIFIED LIABILITIES"). To the extent that the foregoing undertaking by the Indemnifying Party may be unenforceable for any reason, the Indemnifying Party shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. 12 8. NOTICES Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be effective upon personal delivery, via facsimile (upon receipt of confirmation of error-free transmission and mailing a copy of such confirmation, postage prepaid by certified mail, return receipt requested) or three business days following deposit of such notice with an internationally recognized courier service, with postage prepaid and addressed to each of the other parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by five days advance written notice to each of the other parties hereto. COMPANY: American Leisure Holdings, Inc. 2701 Spivey Lane Orlando, Florida 32837 Attention: Malcolm J. Wright Telephone: (407) 421-6660 Facsimile: (407) 857-3598 WITH A COPY TO: Nason, Yeager, Gerson, White & Lioce, P.A. 1645 Palm Beach Lakes Boulevard, Suite 1200 West Palm Beach, Florida 33401 Attention: Alan I. Armour II, Esquire Facsimile No.: (561) 686-5442 13 PURCHASER: Stanford Venture Capital Holdings, Inc. 6075 Poplar Avenue Memphis, TN 38119 Attention: James M. Davis, President Telephone: (901) 680-5260 Facsimile: (901) 680-5265 WITH A COPY TO: Adorno & Yoss, P.A. 2601 S. Bayshore Drive, Suite 1600 Miami, Florida 33133 Attention: Seth Joseph, Esq. Telephone: (305) 858-5555 Facsimile: (305) 858-4777 9. GOVERNING LAW; JURISDICTION This Agreement shall be governed by and interpreted in accordance with the laws of the State of Florida, without regard to its principles of conflict of laws. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against any party in the federal courts of Florida or the state courts of the State of Florida, Miami-Dade County and each of the parties consents to the jurisdiction of such courts and hereby waives, to the maximum extent permitted by law, any objection, including any objections based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions. 10. MISCELLANEOUS (a) ENTIRE AGREEMENT. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. This Agreement, together with the other Primary Documents, including any certificate, schedule, exhibit or other document delivered pursuant to their terms, constitutes the entire agreement among the parties hereto with respect to the subject matters hereof and thereof, and supersedes all prior agreements and understandings, whether written or oral, among the parties with respect to such subject matters. (b) AMENDMENTS. This Agreement may not be amended except by an instrument in writing signed by the party to be charged with enforcement. (c) WAIVER. No waiver of any provision of this Agreement shall be deemed a waiver of any other provisions or shall a waiver of the performance of a provision in one or more instances be deemed a waiver of future performance thereof. (d) CONSTRUCTION. This Agreement and each of the Primary Documents have been entered into freely by each of the parties, following consultation with their respective counsel, and shall be interpreted fairly in accordance with its respective terms, without any construction in favor of or against either party. 14 (e) BINDING EFFECT OF AGREEMENT. This Agreement shall inure to the benefit of, and be binding upon the successors and assigns of each of the parties hereto, including any transferees of the Warrants. (f) SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or unenforceability of this Agreement in any other jurisdiction. (g) ATTORNEYS' FEES. If any action should arise between the parties hereto to enforce or interpret the provisions of this Agreement, the prevailing party in such action shall be reimbursed for all reasonable expenses incurred in connection with such action, including reasonable attorneys' fees. (h) HEADINGS. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of this Agreement. (i) COUNTERPARTS. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original and all of which, when taken together, will be deemed to constitute one and the same agreement. (j) WAIVER OF JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. [SIGNATURES ON FOLLOWING PAGE] 15 IN WITNESS WHEREOF, this Agreement has been duly executed by each of the undersigned as of the date first written above. AMERICAN LEISURE HOLDINGS, INC. By: ---------------------------------------------------- Name: -------------------------------------------------- Title: ------------------------------------------------- STANFORD VENTURE CAPITAL HOLDINGS, INC. By: ---------------------------------------------------- Name: -------------------------------------------------- Title: ------------------------------------------------- 16 EXHIBIT INDEX EXHIBIT A WARRANT EXHIBIT B CLOSING CERTIFICATE SCHEDULE INDEX SCHEDULE A WARRANT SPLIT CHART EX-10.5 7 v05390_ex10-5.txt EXECUTION COPY AMERICAN LEISURE HOLDINGS, INC A NEVADA CORPORATION REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT, dated as of June 17, 2004 (the "AGREEMENT"), is entered into by and between American Leisure Holdings, Inc., a Nevada corporation (the "COMPANY"), and Stanford Venture Capital Holdings, Inc. and its successors and assigns (the "INVESTOR") as the proposed purchaser of certain shares of the Company's capital stock. Capitalized terms not defined herein shall have the meanings ascribed to them in the Credit Agreement of even date herewith by and between the Company, American Leisure Marketing & Technology, Inc., Orlando Holidays, Inc., American Leisure, Inc., Welcome to Orlando, Inc., American Travel & Marketing Group, Inc., Hickory Travel Systems, Inc. and the Investor. WHEREAS, simultaneously with the execution and delivery of this Agreement, (i) the Company has issued a Convertible Promissory Note ("$3,000,000 NOTE"), payable to the Investor in the aggregate principal amount of $3,000,000, which Note is convertible into shares of the Company's common stock, $0.001 par value per share (the "COMMON STOCK") upon the terms and conditions therein stated; (ii) the Company has issued a Convertible Promissory Note ("$1,000,000 NOTE"), payable to the Investor in the aggregate principal amount of $1,000,000, which Note is convertible into shares of the Company's Common Stock, upon the terms and conditions therein stated; and (iii) Investor is agreeing to purchase from the Company, pursuant to the Warrant Purchase Agreement dated as of June ____, 2004 entered into by and between the Company and the Investor (the "WARRANT PURCHASE AGREEMENT") Warrants to purchase an aggregate of 500,000 shares of the Company's Common Stock at an exercise price of $5.00 per share expiring June 30, 2009 (collectively, the "WARRANTS"); and WHEREAS, the Company desires to grant to the Investor the registration rights set forth herein with respect to the shares of Common Stock issuable upon conversion of the $3,000,000 Note and the $1,000,000 Note (the "NOTE CONVERSION SHARES") and upon exercise of the Warrants (the "WARRANT Shares"), and the shares of Common Stock issued as a dividend or other distribution with respect to the Warrant Shares and or the Conversion Shares (the "DISTRIBUTION SHARES") (all the shares of the Warrants, the Warrant Shares, the Note Conversion Shares and the Distribution Shares, collectively and interchangeably, are referred to herein as the "SECURITIES"). NOW, THEREFORE, the parties hereto mutually agree as follows: 1. CERTAIN DEFINITIONS As used herein the term "REGISTRABLE SECURITY" means the Warrant Shares, the Note Conversion Shares and the Distribution Shares, together with any other securities issued pursuant to the terms hereof until (i) the Registration Statement (as defined below) has been declared effective by the Securities and Exchange Commission (the "COMMISSION"), and all Securities have been disposed of pursuant to the Registration Statement, (ii) all Securities have been sold under circumstances under which all of the applicable conditions of Rule 144 ("RULE 144") (or any similar provision then in force) under the Securities Act of 1933, as amended (the "SECURITIES ACT") are met, or (iii) such time as, in the opinion of counsel to the Company reasonably satisfactory to the Investors and upon delivery to the Investors of such executed opinion, all Securities may be sold without any time, volume or manner limitations pursuant to Rule 144 (or any similar provision then in effect). In the event of any merger, reorganization, consolidation, recapitalization or other change in corporate structure affecting the Common Stock, such adjustment shall be deemed to be made in the definition of "Registrable Security" as is appropriate in order to prevent any dilution or enlargement of the rights granted pursuant to this Agreement. As used herein the term "HOLDER" means any Person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 10 hereof. As used herein "TRADING DAY" shall mean any business day on which the market on which the Common Stock trades is open for business. EXECUTION COPY 2. RESTRICTIONS ON TRANSFER Each of the Investors acknowledges and understands that prior to the registration of the Securities as provided herein, the Securities are "restricted securities" as defined in Rule 144. Each of the Investors understands that no disposition or transfer of the Securities may be made by any of the Investors in the absence of (i) an opinion of counsel to such Investor, in form and substance reasonably satisfactory to the Company, that such transfer may be made without registration under the Securities Act or (ii) such registration. 3. COMPLIANCE WITH REPORTING REQUIREMENTS With a view to making available to the Investors the benefits of Rule 144 or any other similar rule or regulation of the Commission that may at any time permit the holders of the Securities to sell securities of the Company to the public pursuant to Rule 144, the Company agrees from and after the date that it registers a class of Covered Securities under the Securities Exchange Act of 1934, as amended, to: (a) comply with the provisions of paragraph (c)(1) of Rule 144; (b) file with the Commission in a timely manner all reports and other documents required to be filed with the Commission pursuant to Section 13 or 15(d) under the Securities Exchange Act of 1934 (the "EXCHANGE ACT") by companies subject to either of such sections, irrespective of whether the Company is then subject to such reporting requirements; and (c) Upon request by any Holder or the Company's transfer agent, the Company shall provide an opinion of counsel, which opinion shall be reasonably acceptable to the Holder and/or the Company's transfer agent, that the such Holder has complied with the applicable conditions of Rule 144 (or any similar provision then in force). 4. REGISTRATION RIGHTS WITH RESPECT TO THE REGISTRABLE SECURITIES (a) The Company agrees that it will prepare and file with the Commission, (i) no later than August 15, 2004, a registration statement (on Form S-1 or SB-2, or other appropriate registration statement form) under the Securities Act (the "REGISTRATION STATEMENT") and maintain the effectiveness of such registration statement until all of the securities offered thereunder are sold. The Company shall use diligent best efforts to cause the Registration Statement to become effective as soon as practical following the filing of the Registration Statement. The number of shares designated in the Registration Statement to be registered shall include 150% of the Warrant Shares and shall include appropriate language regarding reliance upon Rule 416 to the extent permitted by the Commission. The Company will notify the Holders and its transfer agent of the effectiveness of the Registration Statement within one Trading Day of such event. 2 EXECUTION COPY (b) The Company will maintain the Registration Statement or post-effective amendment filed under this Section 4 effective under the Securities Act until the earlier of (i) the date that none of the Registrable Securities covered by such Registration Statement are or may become issued and outstanding, (ii) the date that all of the Registrable Securities have been sold pursuant to such Registration Statement, (iii) the date all the Holders receive an opinion of counsel to the Company, which counsel shall be reasonably acceptable to the Holders, that the Registrable Securities may be sold under the provisions of Rule 144 without limitation as to volume, (iv) all Registrable Securities have been otherwise transferred to persons who may trade such shares without restriction under the Securities Act, and the Company has delivered a new certificate or other evidence of ownership for such securities not bearing a restrictive legend, or (v) two years from the Effective Date. (c) All fees, disbursements and out-of-pocket expenses and costs incurred by the Company in connection with the preparation and filing of the Registration Statement under this Section 4 and in complying with applicable securities and blue sky laws (including, without limitation, all attorneys' fees of the Company) shall be borne by the Company. The Company shall also reimburse the fees and expenses of counsel to the Holders incurred in connection with such counsel's review of the Registration Statement and advice concerning the Registration Statement and its filing subject to a cap of $10,000. The Holders shall bear the cost of underwriting and/or brokerage discounts, fees and commissions, if any, applicable to the Registrable Securities being registered. The Holders and their counsel shall have a reasonable period, not to exceed 15 Trading Days, to review the proposed Registration Statement or any amendment thereto, prior to filing with the Commission, and the Company shall provide the Holders with copies of any comment letters received from the Commission with respect thereto within two Trading Days of receipt thereof. The Company shall qualify any of the Registrable Securities for sale in such states as the Holders reasonably designate and shall furnish indemnification in the manner provided in Section 7 hereof. However, the Company shall not be required to qualify in any state which will require an escrow or other restriction relating to the Company and/or the Holders, or which will require the Company to qualify to do business in such state or require the Company to file therein any general consent to service of process. The Company at its expense will supply each of the Investors with copies of the applicable Registration Statement and the prospectus included therein and other related documents in such quantities as may be reasonably requested by any of the Investors. (d) The Company shall not be required by this Section 4 to include the Registrable Securities in any Registration Statement which is to be filed if, in the opinion of counsel for both the Holders and the Company (or, should they not agree, in the opinion of another counsel experienced in securities law matters acceptable to counsel for the Holders and the Company) the proposed offering or other transfer as to which such registration is requested is exempt from applicable federal and state securities laws and would result in all purchasers or transferees obtaining securities which are not "restricted securities," as defined in Rule 144. 3 EXECUTION COPY (e) In the event that (i) the Registration Statement is not filed by the Company in a timely manner as set forth in Section 4(a); (ii) such Registration Statement does not become effective for any reason before December 31, 2004; or (iii) such Registration Statement is not maintained as effective by the Company for the period set forth in Section 4(b) above for any reason (each a "REGISTRATION DEFAULT"), then the Company will issue to each of the Holders as of the first day of such Registration Default and for every consecutive quarter in which such Registration Default is occurring, as liquidated damages, and not as a penalty, (i) warrants to purchase ten percent (10%) of the Warrants originally issuable to the Holders under the Warrant Purchase Agreement, upon the same terms and conditions therein stated ("DEFAULT WARRANTS") and (ii) ten percent (10%) of the Shares of Common Stock to which the Note is convertible ("DEFAULT SHARES") (the Default Warrants and Default Shares are collectively referred to herein as the "DEFAULT SECURITIES") until such corresponding Registration Default no longer exists ("LIQUIDATED DAMAGES"); provided, however, that the issuance of such Default Securities shall not relieve the Company from its obligations to register the Registrable Securities pursuant to this Section. If the Company does not issue the Default Securities to the Holders as set forth above, the Company will pay any Holder's reasonable costs of any action in a court of law to cause compliance with this Section 4(e), including reasonable attorneys' fees, in addition to the Default Securities. The registration of the Registrable Securities pursuant to this Section shall not affect or limit a Holder's other rights or remedies as set forth in this Agreement. (f) The Company shall be precluded from including in any Registration Statement which it is required to file pursuant to this Section 4 any other securities apart from the Registrable Securities, without the prior written consent of the Holders. (g) If, at any time any Registrable Securities are not at the time covered by any effective Registration Statement, the Company shall determine to register under the Securities Act (including pursuant to a demand of any stockholder of the Company exercising registration rights) any of its shares of the Common Stock (other than in connection with a merger or other business combination transaction, or pursuant to Form S-8), it shall send to each Holder written notice of such determination and, if within 20 days after receipt of such notice, such Holder shall so request in writing, the Company shall its best efforts to include in such registration statement all or any part of the Registrable Securities that such Holder requests to be registered. Notwithstanding the foregoing, if, in connection with any offering involving an underwriting of the Common Stock to be issued by the Company, the managing underwriter shall impose a limitation on the number of shares of the Common Stock included in any such registration statement because, in such underwriter's judgment, such limitation is necessary based on market conditions: (a) if the registration statement is for a public offering of common stock on a "firm commitment" basis with gross proceeds to the Company of at least $30,000,000 and a minimum price of $5.00 per share (a "QUALIFIED PUBLIC OFFERING"), the Company may exclude, to the extent so advised by the underwriters, the Registrable Securities from the underwriting; provided, however, that if the underwriters do not entirely exclude the Registrable Securities from such Qualified Public Offering, the Company shall be obligated to include in such registration statement, with respect to the requesting Holder, only an amount of Registrable Securities equal to the product of (i) the number of Registrable Securities that remain available for registration after the underwriter's cutback and (ii) such Holder's percentage of ownership of all the Registrable Securities then outstanding (on an as-converted basis) (the "REGISTRABLE PERCENTAGE"); and (b) if the registration statement is not for a Qualified Public Offering, the Company shall be obligated to include in such registration statement, with respect to the requesting Holder, only an amount of Registrable Securities equal to the product of (i) the number of Registrable Securities that remain available for registration after the underwriter's cutback and (ii) such Holder's Registrable Percentage; provided, however, that the aggregate value of the Registrable Securities to be included in such registration may not be so reduced to less than 10% of the total value of all securities included in such registration. If any Holder disapproves of the terms of any underwriting referred to in this paragraph, it may elect to withdraw therefrom by written notice to the Company and the underwriter. No incidental right under this paragraph shall be construed to limit any registration required under the other provisions of this Agreement. 4 EXECUTION COPY 5. COOPERATION WITH COMPANY Each Holder will cooperate with the Company in all respects in connection with this Agreement, including timely supplying all information reasonably requested by the Company (which shall include all information regarding such Holder and proposed manner of sale of the Registrable Securities required to be disclosed in any Registration Statement) and executing and returning all documents reasonably requested in connection with the registration and sale of the Registrable Securities and entering into and performing its obligations under any underwriting agreement, if the offering is an underwritten offering, in usual and customary form, with the managing underwriter or underwriters of such underwritten offering. Nothing in this Agreement shall obligate any Holder to consent to be named as an underwriter in any Registration Statement. The obligation of the Company to register the Registrable Securities shall be absolute and unconditional as to those Registrable Securities which the Commission will permit to be registered without naming any Holder as underwriters. Any delay or delays caused by a Holder by failure to cooperate as required hereunder shall not constitute a Registration Default as to such Holder. 6. REGISTRATION PROCEDURES If and whenever the Company is required by any of the provisions of this Agreement to effect the registration of any of the Registrable Securities under the Securities Act, the Company shall (except as otherwise provided in this Agreement), as expeditiously as possible, subject to the Holders' assistance and cooperation as reasonably required with respect to each Registration Statement: (a) (i) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all Registrable Securities covered by such Registration Statement whenever any of the Holder shall desire to sell or otherwise dispose of the same (including prospectus supplements with respect to the sales of Registrable Securities from time to time in connection with a registration statement pursuant to Rule 415 promulgated under the Securities Act) and (ii) take all lawful action such that each of (A) the Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (B) the prospectus forming part of the Registration Statement, and any amendment or supplement thereto, does not at any time during the Registration Period include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 5 EXECUTION COPY (b) (i) prior to the filing with the Commission of any Registration Statement (including any amendments thereto) and the distribution or delivery of any prospectus (including any supplements thereto), provide draft copies thereof to the Holders as required by Section 4(c) and reflect in such documents all such comments as the Holders (and their counsel) reasonably may propose; (ii) furnish to each of the Holders such numbers of copies of a prospectus including a preliminary prospectus or any amendment or supplement to any prospectus, as applicable, in conformity with the requirements of the Securities Act, and such other documents, as any of the Holders may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such Holder; and (iii) provide to the Holders copies of any comments and communications from the Commission relating to the Registration Statement, if lawful to do so; (c) register and qualify the Registrable Securities covered by the Registration Statement under such other securities or blue sky laws of such jurisdictions as any of the Holders shall reasonably request (subject to the limitations set forth in Section 4(c) above), and do any and all other acts and things which may be necessary or advisable to enable such Holder to consummate the public sale or other disposition in such jurisdiction of the Registrable Securities owned by such Holder; (d) list such Registrable Securities on the markets where the Common Stock of the Company is listed as of the effective date of the Registration Statement, if the listing of such Registrable Securities is then permitted under the rules of such markets; (e) notify the Holders at any time when a prospectus relating thereto covered by the Registration Statement is required to be delivered under the Securities Act, of the happening of any event of which it has knowledge as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and the Company shall prepare and file a curative amendment under Section 6(a) as quickly as reasonably possible and during such period, the Holders shall not make any sales of Registrable Securities pursuant to the Registration Statement; (f) after becoming aware of such event, notify each of the Holders who holds Registrable Securities being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance by the Commission of any stop order or other suspension of the effectiveness of the Registration Statement at the earliest possible time and take all lawful action to effect the withdrawal, rescission or removal of such stop order or other suspension; 6 EXECUTION COPY (g) cooperate with the Holders to facilitate the timely preparation and delivery of certificates for the Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates for the Registrable Securities to be in such denominations or amounts, as the case may be, as any of the Holders reasonably may request and registered in such names as any of the Holders may request; and, within three Trading Days after a Registration Statement which includes Registrable Securities is declared effective by the Commission, deliver and cause legal counsel selected by the Company to deliver to the transfer agent for the Registrable Securities (with copies to the Holders) an appropriate instruction and, to the extent necessary, an opinion of such counsel; (h) take all such other lawful actions reasonably necessary to expedite and facilitate the disposition by the Holders of their Registrable Securities in accordance with the intended methods therefor provided in the prospectus which are customary for issuers to perform under the circumstances; (i) in the event of an underwritten offering, promptly include or incorporate in a prospectus supplement or post-effective amendment to the Registration Statement such information as the managers reasonably agree should be included therein and to which the Company does not reasonably object and make all required filings of such prospectus supplement or post-effective amendment as soon as practicable after it is notified of the matters to be included or incorporated in such prospectus supplement or post-effective amendment; and (j) maintain a transfer agent and registrar for the Common Stock. 7. INDEMNIFICATION (a) To the maximum extent permitted by law, the Company agrees to indemnify and hold harmless each of the Holders, each person, if any, who controls any of the Holders within the meaning of the Securities Act, and each director, officer, shareholder, employee, agent, representative, accountant or attorney of the foregoing (each of such indemnified parties, a "DISTRIBUTING INVESTOR") against any losses, claims, damages or liabilities, joint or several (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys' fees and expenses), to which the Distributing Investor may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, or any related final prospectus or amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company will not be liable in any such case to the extent, and only to the extent, that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus or amendment or supplement thereto in reliance upon, and in conformity with, written information furnished to the Company by the Distributing Investor, its counsel, or affiliates, specifically for use in the preparation thereof or (ii) by such Distributing Investor's failure to deliver to the purchaser a copy of the most recent prospectus (including any amendments or supplements thereto). This indemnity agreement will be in addition to any liability which the Company may otherwise have. 7 EXECUTION COPY (b) To the maximum extent permitted by law, each Distributing Investor agrees that it will indemnify and hold harmless the Company, and each officer and director of the Company or person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages or liabilities (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys' fees and expenses) to which the Company or any such officer, director or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, or any related final prospectus or amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in such Registration Statement, final prospectus or amendment or supplement thereto in reliance upon, and in conformity with, written information furnished to the Company by such Distributing Investor, its counsel or affiliates, specifically for use in the preparation thereof. This indemnity agreement will be in addition to any liability which the Distributing Investor may otherwise have under this Agreement. Notwithstanding anything to the contrary herein, the Distributing Investor shall be liable under this Section 7(b) for only that amount as does not exceed the net proceeds to such Distributing Investor as a result of the sale of Registrable Securities pursuant to the Registration Statement. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action against such indemnified party, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve the indemnifying party from any liability which it may have to any indemnified party except to the extent the failure of the indemnified party to provide such written notification actually prejudices the ability of the indemnifying party to defend such action. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, assume the defense thereof, subject to the provisions herein stated and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 7 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation, unless the indemnifying party shall not pursue the action to its final conclusion. The indemnified parties shall have the right to employ one or more separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the indemnifying party if the indemnifying party has assumed the defense of the action with counsel reasonably satisfactory to the indemnified party unless (i) the employment of such counsel has been specifically authorized in writing by the indemnifying party, or (ii) the named parties to any such action (including any interpleaded parties) include both the indemnified party and the indemnifying party and the indemnified party shall have been advised by its counsel that there may be one or more legal defenses available to the indemnifying party different from or in conflict with any legal defenses which may be available to the indemnified party or any other indemnified party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party, it being understood, however, that the indemnifying party shall, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable only for the reasonable fees and expenses of one separate firm of attorneys for the indemnified party, which firm shall be designated in writing by the indemnified party). No settlement of any action against an indemnified party shall be made without the prior written consent of the indemnified party, which consent shall not be unreasonably withheld so long as such settlement includes a full release of claims against the indemnified party. 8 EXECUTION COPY All fees and expenses of the indemnified party (including reasonable costs of defense and investigation in a manner not inconsistent with this Section and all reasonable attorneys' fees and expenses) shall be paid to the indemnified party, as incurred, within 10 Trading Days of written notice thereof to the indemnifying party; provided, that the indemnifying party may require such indemnified party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such indemnified party is not entitled to indemnification hereunder. 8. CONTRIBUTION In order to provide for just and equitable contribution under the Securities Act in any case in which (i) the indemnified party makes a claim for indemnification pursuant to Section 7 hereof but is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that the express provisions of Section 7 hereof provide for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any indemnified party, then the Company and the applicable Distributing Investor shall contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys' fees and expenses), in either such case (after contribution from others) on the basis of relative fault as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the applicable Distributing Investor on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Distributing Investor agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 8. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 9 EXECUTION COPY Notwithstanding any other provision of this Section 8, in no event shall (i) any of the Distributing Investors be required to undertake liability to any person under this Section 8 for any amounts in excess of the dollar amount of the proceeds received by such Distributing Investor from the sale of such Distributing Investor's Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) pursuant to any Registration Statement under which such Registrable Securities are registered under the Securities Act and (ii) any underwriter be required to undertake liability to any person hereunder for any amounts in excess of the aggregate discount, commission or other compensation payable to such underwriter with respect to the Registrable Securities underwritten by it and distributed pursuant to such Registration Statement. 9. NOTICES Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be effective upon personal delivery, via facsimile (upon receipt of confirmation of error-free transmission and mailing a copy of such confirmation, postage prepaid by certified mail, return receipt requested) or two business days following deposit of such notice with an internationally recognized courier service, with postage prepaid and addressed to each of the other parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by five days advance written notice to each of the other parties hereto. COMPANY: American Leisure Holdings, Inc. 2701 Spivey Lane Orlando, Florida 32837 Tel. No.:407-421-6660 Facsimile No.: 407-857-3598 With a copy to: Nason, Yeager, Gerson, White & Lioce, P.A. 1645 Palm Beach Lakes Boulevard, Suite 1200 West Palm Beach, Florida 33401 Attention: Alan I. Armour II, Esquire Facsimile No.: (561) 686-5442 INVESTOR: Stanford Venture Capital Holdings, Inc. 6075 Poplar Avenue Memphis, TN 38119 Attention: James M. Davis, President Tel: (901) 680-5260 Facsimile: (901) 680-5265 10 EXECUTION COPY With a copy to: Adorno & Yoss, P.A. 2601 South Bayshore Drive, Suite 1600 Miami, Florida 33133 Attention: Seth P. Joseph, Esquire Telephone: (305) 860-7363 Facsimile No.: (305) 858-4777 10. ASSIGNMENT The registration rights granted to any Holder under this Agreement may be transferred or assigned provided the transferee is bound by the terms of this Agreement and the Company is given written notice of such transfer or assignment. 11. ADDITIONAL COVENANTS OF THE COMPANY For so long as it shall be required to maintain the effectiveness of the Registration Statement, it shall file all reports and information required to be filed by it with the Commission in a timely manner and take all such other action so as to maintain such eligibility for the use of the applicable form. 12. CONFLICTING AGREEMENTS The Company shall not enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise prevents the Company from complying with all of its obligations hereunder. 13. GOVERNING LAW; JURISDICTION This Agreement shall be governed by and interpreted in accordance with the laws of the State of Florida, without regard to its principles of conflict of laws. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may be brought against any party in the federal courts of Florida or the state courts of the State of Florida, and each of the parties consents to the jurisdiction of such courts and hereby waives, to the maximum extent permitted by law, any objection, including any objections based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions. 14. MISCELLANEOUS (a) ENTIRE AGREEMENT. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. This Agreement, together with the other Primary Documents, including any certificate, schedule, exhibit or other document delivered pursuant to their terms, constitutes the entire agreement among the parties hereto with respect to the subject matters hereof and thereof, and supersedes all prior agreements and understandings, whether written or oral, among the parties with respect to such subject matters. (b) AMENDMENTS. This Agreement may not be amended except by an instrument in writing signed by the party to be charged with enforcement. 11 EXECUTION COPY (c) WAIVER. No waiver of any provision of this Agreement shall be deemed a waiver of any other provisions or shall a waiver of the performance of a provision in one or more instances be deemed a waiver of future performance thereof. (d) CONSTRUCTION. This Agreement and each of the Primary Documents have been entered into freely by each of the parties, following consultation with their respective counsel, and shall be interpreted fairly in accordance with its respective terms, without any construction in favor of or against either party. (e) BINDING EFFECT OF AGREEMENT. This Agreement shall inure to the benefit of, and be binding upon the successors and assigns of each of the parties hereto, including any transferees of the Securities. (f) SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or unenforceability of this Agreement in any other jurisdiction. (g) ATTORNEYS' FEES. If any action should arise between the parties hereto to enforce or interpret the provisions of this Agreement, the prevailing party in such action shall be reimbursed for all reasonable expenses incurred in connection with such action, including reasonable attorneys' fees. (h) HEADINGS. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of this Agreement. (i) COUNTERPARTS. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original and all of which, when taken together, will be deemed to constitute one and the same agreement. (j) WAIVER OF JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY OTHER AGREEMENT, DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. [SIGNATURES ON FOLLOWING PAGE] 12 EXECUTION COPY IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be duly executed, as of this _____ day of June, 2004. AMERICAN LEISURE HOLDINGS, INC By: -------------------------------- Name: --------------------------- Title: -------------------------- STANFORD VENTURE CAPITAL HOLDINGS, INC. By: -------------------------------- Name: --------------------------- Title: -------------------------- 13 EX-99.1 8 v05390_ex99-1.txt Exhibit 99.1 AMERICAN LEISURE HOLDINGS, INC. ESTABLISHES NEW CREDIT FACILITIES WITH STANFORD VENTURE CAPITAL HOLDINGS, INC.; ANNOUNCES CHANGES TO MANAGEMENT STRUCTURE FOR TRAVEL DIVISION August 3, 2004 Saddle Brook, New Jersey - American Leisure Holdings, Inc. (OTCPS: AMLH), announced today that it has established two new credit facilities with Stanford Venture Capital Holdings, Inc. of Houston, Memphis and Miami ("Stanford"). It also announced changes to the management structure of its travel division. New Credit Facilities The first facility is in the amount of $1,000,000 and will be used to pay operating and related costs of the Company's customer service and marketing center based in Antigua. The loan is secured by a lien on the shares of the subsidiary which owns and operates this facility and the shares of a related intermediate subsidiary. The loan bears interest at 8% per annum, payable quarterly in arrears. The principal amount is due in one lump sum on April 27, 2007. Stanford is entitled to convert the loan into shares of the Company's common stock at any time, at a conversion price of $10.00 per share. 1 The second facility is in the amount of $3,000,000 and will be used to support the planned acquisition of Around The World Travel, Inc. ("AWT") of Coral Gables, Florida, and to pay the expenses of the Company's travel division. The loan bears interest at 8% per annum, payable quarterly in arrears. The principal amount is due on April 27, 2007. Stanford is entitled to convert the loan into shares of the Company's common stock at any time, at a conversion price of $10.00 per share. The loan is secured by a subordinated lien on the shares of the Company's travel division subsidiaries (other than the subsidiary which owns the Antigua call center and the related intermediate holding company), a pledge of various notes payable by AWT held by the Company, and substantially all of the stock in and the assets of the Company's travel division subsidiaries other than accounts receivable. In conjunction with the new credit facilities, the Company obtained the consent of the holders of more than 75% of the Company's Series C Preferred Stock to eliminate any obligation of the Company to redeem the Series C shares. The Company also modified the terms of the certain warrants (covering 1,350,000 shares of the Company's common stock) previously issued to Stanford and certain of its affiliates to reduce the exercise price from $2.96 per share to $.001 per share. The Company also issued warrants covering 500,000 shares of common stock to Stanford and certain of its affiliates as additional consideration for the new credit facilities. The new warrants have an exercise price of $5.00 per share and a term of 5 years. 2 New Management Structure For Travel Division The Company also announced a new management structure for its travel division. In anticipation of the Company's planned acquisition of AWT, the Company has engaged AWT, d/b/a TraveLeaders to assist in the management of its travel division. TraveLeaders has a strong base of experienced senior executives currently under the direction of Keith St. Clair, its Chairman of the Board and Chief Executive Officer. Pursuant to an agreement with TraveLeaders, TraveLeaders will employ its resources to manage the expansion of the Company's travel division, integrate the existing travel businesses of the Company into the division and arrange for new acquisitions to expand the travel division. Upon the completion of the Company's planned acquisition of Traveleaders, all of Traveleaders' travel distribution enterprises will be consolidated under the Company's travel division. About TraveLeaders: TraveLeaders is a travel services distribution company which provides clients with a comprehensive range of business and leisure travel services, including corporate travel management, leisure sales, meetings and incentive planning, plus industry education and training. AWT's integrated multi-channel distribution model offers its customers the choice of a "brick and mortar" agency, a totally "on-site" corporate travel department, and/or the latest advancements in travel internet technology. 3 About American Leisure Holdings, Inc. American Leisure Holdings, Inc. (OTCPS: AMLH) is a fully integrated travel services distribution company operating through its subsidiary, Hickory Travel Systems, Inc. The Company's goal is to acquire travel companies and expand its affiliated travel network within AMLH's business model for an integrated distribution channel while continuing its web based and e-commerce solutions development. The Company also has a vacation resort development division that is actively involved in the development of a luxury destination resort named "TIERRA DEL SOL RESORT" in Orlando Florida. This project is expected to feature 971 vacation town homes and condominiums on 122 acres, within 10 miles of Walt Disney World. Pre-sales commenced on February 1, 2004. Forward Looking Statement: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The statements regarding AMLH in this release that are not historical in nature, particularly those that utilize terminology such as "may," "will," "should," "likely," "expects," "anticipates," "estimates," "believes" or "plans," or comparable terminology, are forward-looking statements based on current expectations about future events, which AMLH has derived from the information currently available to it. These forward-looking statements involve known and unknown risks and uncertainties that may cause AMLH's results to be materially different from results implied in such forward-looking statements. Important factors known to AMLH that could cause forward-looking statements to turn out to be incorrect are identified and discussed from time to time in AMLH's filings with the Securities and Exchange Commission. The forward-looking statements contained in this release speak only as of the date hereof, and AMLH undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise. For additional information, contact: Toni J. McGann American Leisure Holdings, Inc., Miami 305-245-5050 Media Contact: Marlene Oliver-Sosa, APR NJC Corporate Communications 305-491-0512 SOURCE: AMERICAN LEISURE HOLDINGS, INC. 4 EX-99.2 9 v05390_ex99-2.txt AMERICAN LEISURE HOLDINGS, INC. Draft of letter to shareholders of Around The World Travel, Inc. Dear [insert name of Shareholder and/or Creditor] As you are may be aware, since January 2004, American Leisure Holdings, Inc. ("AMLH"), has been exploring the feasibility of acquiring the travel business of Around The World Travel, Inc., d/b/a TraveLeaders ("TraveLeaders"). AMLH has learned that there are a variety of rumors regarding AMLH and its plans for TraveLeaders. Many of these rumors are inaccurate. For example, it is not true that AMLH intends to relocate TraveLeaders to Antigua. It is not true that TraveLeaders is going to change its name to Travel-E-Stream-E-Flow. It is not true that AMLH is starting a new shuttle flight company to be called Question-Aire. Actions Taken by AMLH What is true is that AMLH has taken the following steps in anticipation of the possible acquisition of TraveLeaders: o AMLH has conducted a due diligence of TraveLeaders' business. o AMLH has acquired the loans made by Galileo International LLC to TraveLeaders. These loans have a principal balance of $19.2 million. o AMLH has loaned TraveLeaders in excess of $2.2 million to allow TraveLeaders to meet its cash flow requirements. o AMLH has entered into an option agreement with AWT Holdings LLC, which allows AMLH to acquire 62% of the common stock of TraveLeaders. o AMLH has entered into negotiations with individual shareholders and creditors of AMLH regarding the acquisition of their interests in TraveLeaders. AMLH's goal is to acquire the travel business of TraveLeaders on terms which are fair and reasonable to the shareholders and creditors of TraveLeaders and consistent with AMLH's fiduciary duties to its own shareholders. AMLH believes that a review of the actions which it has taken demonstrates its commitment to this goal: 1. Due Diligence Investigation. AMLH has conducted a thorough due diligence of the business of TraveLeaders. This process has taken longer than anticipated due to the many financial and contractual issues facing TraveLeaders. This process is still ongoing. 2. Acquisition of Galileo Loans. AMLH has acquired the Galileo loans from GCD Acquisition Corp. ("GCD") Under the terms of this agreement, AMLH has assumed GCD's obligation under a $5.0 million promissory note which GCD made when it acquired the Galileo loans. Additionally, AMLH paid GCD other consideration in the form of common stock in AMLH valued at $1.7 million. AMLH believes that its acquisition of the Galileo loans is ultimately in the best interests of the shareholders and creditors of TraveLeaders since these loans were in default and were secured by substantially all of the assets of TraveLeaders. AMLH believes that they can be used as part of a restructuring of TraveLeaders which is fair and reasonable to all of TraveLeaders' shareholders and creditors. 3. Advances to TraveLeaders. AMLH has provided over $2.2 million in loans to TraveLeaders since March 2004. AMLH believes that TraveLeaders would not have survived without these loans. These loans are secured by substantially the same collateral as the Galileo loans. 4. Option Agreement with ATW Holdings LLC. AMLH has entered into an option agreement with ATW Holdings LLC ("Holdings") which entitles AMLH to acquire 62% of the common stock of TraveLeaders held by Holdings. If AMLH exercises the option, Holdings would receive common stock in AMLH based upon the accuracy of certain warranties of debt and profits made by Holdings. The range of stock to be transferred ranges from $1.7 million shares if all warranties are accurate and the profit predictions are exceeded by 25% to zero if the debt assumed exceeds the warranty by a sufficient amount. Holdings is owned by Keith St. Clair, the Chairman and CEO of TraveLeaders. AMLH is currently considering the feasibility of exercising the option as part of a restructuring of TraveLeaders. 5. Negotiations with Individual Shareholders and Creditors. AMLH has entered into negotiations with many of the individual shareholders and creditors of AWT as part of its plan to acquire TraveLeaders. In certain cases, these negotiations have resulted in agreements under which AMLH has acquired shares of the common and preferred stock of TraveLeaders. In most cases, AMLH has agreed to acquire these shares in TraveLeaders in exchange for shares of preferred stock of AMLH. As discussed below, AMLH currently plans to make similar offers to substantially all of the other shareholders and noteholders of TraveLeaders. Pending Litigation As you may know, AMLH's efforts to restructure TraveLeaders have been challenged by two of TraveLeaders' shareholders/creditors. In particular, these shareholders/creditors have filed lawsuits naming AMLH and others as defendants, claiming, among other things that AMLH is seeking to acquire control of TraveLeaders on terms that are unfair. We believe these suits are nothing more than an attempt to coerce AMLH into overpaying these shareholders/creditors at the expense of TraveLeaders' other shareholders and creditors. AMLH intends to vigorously prosecute and defend its interests in these suits and to file significant counterclaims against the individuals and companies involved as plaintiffs. Ultimately, we believe that our defense of these bogus claims will accrue to the benefit of all of TraveLeaders shareholders and creditors. 2 Timing of Possible Acquisition The proposed acquisition of TraveLeaders by AMLH has taken more time than expected due to the following items: o As a public company, AMLH must file two years of audited financial statements for TraveLeaders with the Securities and Exchange Commission ("SEC") when it acquires TraveLeaders or its assets. AMLH does not want to complete the acquisition until AMLH is certain that these financial statements will be available for filing with the SEC within the required time period (i.e., 75 days after the acquisition). o AMLH desires to obtain the cooperation of substantially all of the shareholders and creditors of TraveLeaders to its plans. As indicated above, certain of the shareholders and creditors of AMLH have rejected AMLH's efforts and are seeking to obtain an unfair advantage from AMLH. o AMLH has been required to conduct significant due diligence regarding TraveLeaders in light of the many financial, operational and contractual problems facing TraveLeaders. This process has taken longer than expected and is ongoing. AMLH's Future Plans At the present time, AMLH still expects to acquire the travel business of TraveLeaders, provided that it can resolve the pending litigation and obtain the cooperation of TraveLeaders' other shareholders and creditors. As part of this process, AMLH intends to initiate discussions with remaining shareholders and creditors of TraveLeaders with a view to reaching an agreement on the terms of an acquisition of their interests in TraveLeaders. As part of this process, AMLH expects that it would offer to exchange preferred stock in AMLH for the common stock and outstanding notes held by TraveLeaders' shareholders and creditors. AMLH believes that this proposal provides significant potential upside to the shareholders and creditors of TraveLeaders. In contrast, AMLH believes that the shares and notes of TraveLeaders will become worthless if AMLH's intended acquisition is not consummated. Our goal is to enlarge the AMLH Travel Division by acquiring compatible and complementary travel businesses to facilitate the assembly of both horizontal and vertical channels of distribution. While we cannot undo the damage to the travel industry caused in recent years by national and international violence, wars and catastrophe, we believe that we can build a more diverse, and therefore more durable, company. 3 In the next few weeks, AMLH's representatives and Jim Tolzien will contact you and the other shareholders and creditors of TraveLeaders to set up meetings to discuss this situation. In the meantime, if you have any questions that should be addressed prior to your meeting, please feel free to call or e-mail the undersigned. Very truly yours, - ------------------ Albert Delaney Acquisitions Manager 305-648-8202 afdaea@aol.com 4 -----END PRIVACY-ENHANCED MESSAGE-----