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.
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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.
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(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.
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(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.
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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
