UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 22, 2006
AMERICAN LEISURE HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
Nevada 333-48312 75-2877111
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2460 Sand Lake Road, Orlando, FL, 32809
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(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code (407) 251-2240
Check the appropriate box below if the Form 8-K is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On November 22, 2006, American Leisure Holdings, Inc. ("we," "us," "AMLH," and
the "Company") entered into a Credit Agreement with Reedy Creek Acquisition
Company, LLC ("RCAC") and Stanford International Bank Limited ("SIBL"), to
provide RCAC, our wholly owned subsidiary, a $4,300,000 credit facility (the "RC
Credit Agreement"). SIBL had previously loaned RCAC $7,150,000 on July 8, 2005
and $850,000 on January 5, 2006, which loans were evidenced by a Renewed,
Amended and Increased Promissory Note in the amount of $8,000,000, which we had
guaranteed. In connection with the RC Credit Agreement, the Renewed, Amended and
Increased Promissory Note was replaced by a Second Renewed, Amended and
Increased Promissory Note in the amount of $12,200,000 (the "RC Note"). We used
the $4,300,000 received in connection with the advance from SIBL for working
capital and to begin the construction of the planned water park at the Sonesta
Resort at Tierra Del Sol. Malcolm J. Wright, our Chairman and Chief Executive
Officer personally guaranteed the repayment of the RC Note. Mr. Wright will
receive 129,000 warrants to purchase shares of our common stock at an exercise
price of $1.02 per share in connection with his guaranty of the RC Credit
Agreement, equal to three percent (3%) of to the total indebtedness of the RC
Credit Agreement.
We entered into a Second Mortgage Modification Agreement and Future Advance
Certificate with SIBL in connection with our entry into the RC Credit Agreement,
which provided SIBL a mortgage over certain real property owned by us in Osceola
County, Florida, to secure the repayment of the RC Note.
On December 18, 2006, we entered into "Amendment No. 1 to the $4.3 Million
Credit Agreement" the ("Amended RC Credit Agreement") with SIBL and RCAC, which
amended the terms of the RC Credit Agreement, to increase the loan amount under
such agreement from $4,300,000 to $5,450,000, to include an advance of
$1,120,000 which was received on December 18, 2006 to cover the placement of an
appeal bond by us and related expenses paid by us on behalf of South Beach
Resorts, LLC ("Resorts," which we purchased pursuant to the Purchase Agreement,
described and defined below) in connection with Resorts' purchase of the
Boulevard Hotel (described below) from a company which was then in Chapter 11
bankruptcy, and a subsequent dispute regarding such purchase. The Amended RC
Credit Agreement also amended and restated the RC Note in the amount of
$13,420,000, evidenced by a "Third Renewed, Amended and Increased Promissory
Note" (the "Amended RC Note"), to include the increased Amended RC Credit
Agreement amount and provided for Malcolm J. Wright, our Chief Executive Officer
and Chairman to provide a restated Guaranty to SIBL to include the amended loan
amount. Mr. Wright will receive 33,600 warrants to purchase shares of our
common stock at an exercise price of $1.02 per share in connection with his
guaranty of Amended RC Credit Agreement, equal to three percent (3%) of the
total indebtedness of the increased amount of the RC Credit Agreement.
Eight million dollars ($8,000,000) of the Amended RC Note accrued interest at
the rate of 8% per annum and was due and payable on December 31, 2006, which
date has been verbally extended to June 30, 2007, the remaining five million
four hundred and twenty thousand dollars ($5,420,000) accrues interest at the
rate of 12% per annum and is due and payable on January 31, 2007. Any amounts
not paid when due under the Amended RC Note bear interest at the rate of 15% per
annum until paid.
We also entered into a Third Mortgage Modification Agreement and Future Advance
Certificate in connection with the increased RC Loan, which increased SIBL's
mortgage on certain of our property in Osceola County, Florida to secure the
Amended RC Loan.
On November 22, 2006, we entered into a Credit Agreement with Stanford Venture
Capital Holdings, Inc. ("Stanford"), Tierra Del Sol Resort (Phase 2), Ltd.,
Costa Blanca II Real Estate, LLC, Costa Blanca III Real Estate, LLC, TDS Town
Homes (Phase 2) LLC and TDS Clubhouse, Inc. (the "TDSR Credit Agreement") to
provide $6,200,000 of capital for (1) the repayment of the RC Credit Agreement,
which was later amended to include the repayment of the increased amount of the
Amended RC Credit Agreement in connection with the Amended TDSR Credit Agreement
(described below), (2) construction of the pool complex at the Tierra del Sol
Phase One project, (3) furniture, fixtures and equipment, and (4) various other
expenses. Any amounts borrowed under the TDSR Credit Agreement bear interest at
the rate of 12% per annum, and any amounts not paid when due will bear interest
at the rate of 15% per annum. Any amounts borrowed under the TDSR Credit
Agreement are due and payable on June 30, 2007.
On December 18, 2006, we also entered into "Amendment No. 1 to $6.2 Million
Credit Agreement" (the "Amended TDSR Credit Agreement") to amend the TDSR Credit
Agreement to reflect the Amended RC Credit Agreement amount, which is to be
repaid with any funds received in connection with the exercise of the Amended
TDSR Credit Agreement.
The Amended TDSR Credit Agreement is not effective until we substitute a portion
of Tierra Del Sol Resorts, Inc. as collateral for future advances under the TDSR
Credit Agreement, and as such, we have not borrowed any funds pursuant to the
Amended TDSR Credit Agreement. We anticipate the funds received from the
Amended TDSR Credit Agreement, if such agreement is funded to be used to repay
the Amended RC Credit Agreement. We paid Stanford a placement fee of $186,000
(or 3% of the TDSR Credit Agreement amount) as a placement fee upon our
execution of the TDSR Credit Agreement. Malcolm J. Wright has agreed to
guarantee the repayment of a $6,200,000 promissory note, which we plan to
provide Stanford to evidence the amount borrowed under the TDSR Credit
Agreement, assuming we choose to move forward with such credit facility. It is
anticipated that if the Amended TDSR Credit Agreement is funded, Mr. Wright will
receive approximately 186,000 warrants to purchase shares of our common stock at
an exercise price of $1.02 per share, in connection with his guaranty.
WARRANT PARTICIPATION AGREEMENT
In connection with SIBL's agreeing to enter into the Amended RC Credit
Agreement, we entered into a Warrant Participation Agreement with SIBL, Resorts,
Malcolm J. Wright and Frederick Pauzar (the "Participation Agreement"), whereby
we agreed to grant SIBL and six (6) of its assigns the right to a 25%
participation interest (the "Participation Interest") in the Net Proceeds (as
defined below) realized by us upon the disposition of the real property located
at 740 Ocean Drive, Miami Beach, Florida, known as the Boulevard Hotel (the
"Property"), for aggregate consideration of $1.00 per warrant (collectively, the
"Warrant"). "Net Proceeds" is defined as the proceeds realized upon the
disposition or refinancing of the Property, less our cost basis in the Property,
excluding any operating losses or operating profits. In the event the Property
is not sold by us by December 22, 2009, we agreed to appoint SIBL as true and
lawful proxy of us in connection with the engagement of a real estate broker and
the subsequent sale of the Property. Mr. Wright and Mr. Pauzar are jointly and
severally liable for our obligations under the Participation Agreement, however
they are not receiving any warrants in connection with such guaranties.
The Warrant was evidenced by seven (7) Warrants, which are exercisable at any
time prior to the disposition date of the Property, which Warrants were
distributed as follows:
Percentage of Percentage of
Name Exercise Price Participation Interest Total Net Proceeds
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SIBL $1.00 50% 12.5%
Daniel T. Bogar $1.00 11.5625% 2.891%
William R. Fusselmann $1.00 11.5625% 2.891%
Osvaldo Pi $1.00 11.5625% 2.891%
Ronald M. Stein $1.00 11.5625% 2.891%
Charles M. Weiser $1.00 1.8750% 0.468%
Tal Kimmel $1.00 1.8750% 0.468%
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Totals $7.00 100% 25%
PURCHASE OF SOUTH BEACH RESORTS, LLC
On December 21, 2006, we entered into a Purchase Agreement with SBR Holding
Company, LLC ("SBR") which is owned by Frederick Pauzar, a Director of us and
our President, and Malcolm J. Wright, our Chairman and Chief Executive Officer
(the "Purchase Agreement"). Pursuant to the Purchase Agreement, we purchased
100% of the outstanding membership interests in South Beach Resorts, LLC, a
Florida limited liability company from SBR ("Resorts"). The Purchase price for
Resorts was equal to 75% of the Net Proceeds (as defined above) realized by us
upon the planned disposition the Property (as defined above), up to a maximum of
$3,000,000. The ownership of Resorts was transferred to us in connection with
our entry into the Purchase Agreement pursuant to an Assignment of Interest, and
the consideration payable to SBR in connection with the sale of the Property
will be paid immediately after the disposition of the Property.
We also entered into a note with Roger Maddock a significant shareholder of us,
to evidence $3,590,811 in loans and advances Mr. Maddock had previously made to
Resorts (the "Maddock Note"), the payment of which was guaranteed by us pursuant
to a Guaranty Agreement.
The Maddock Note bears interest at the rate of 12% per annum until paid,
provided that any amount not paid when due shall bear interest at the rate of
the lesser of 18% per annum or the highest rate of interest allowable by law.
The Maddock Note is due and payable by us, together with any accrued and unpaid
interest on December 31, 2008. Accrued interest is due quarterly in arrears
under the Maddock Note, on the last day of each calendar quarter. We have the
right to prepay the Maddock Note at any time prior to the due date of the note
without penalty.
On January 11, 2007, Resorts (which we now own) defaulted on a $7,700,000 loan
which it sold to Marathon Structured Finance Fund L.P. ("Marathon") in June
2005, in connection with its original purchase of the Property. To date, the
loan principal is $7,498,900; there is accrued interest of $79,910.15 plus other
fees that amount to $567,968. Marathon has a mortgage interest on the Property
in connection with the June 2005 loan. We are currently working to secure new
financing to replace the Marathon loan; however can we can provide no assurances
that such financing will be raised on favorable terms, if at all. The Marathon
loan bears interest at the rate of the greater of (a) ten percent (10%) or (b)
the London Interbank Offered Rate (LIBOR) plus seven percent (7%). The note also
required a $180,000 exit fee to be paid at the time the loan was repaid, which
amount has not been paid to date(and which is included in the other fees of
$567,968 noted above). Marathon may also require us to pay a 5% late payment fee
in connection with our failure to repay the loan amount. We are required to pay
the default rate of interest on the Marathon loan while obtaining a replacement
loan. The default rate of interest is LIBOR plus twelve precent (12%), which was
equal to approximately 17.32%, with the LIBOR at 5.32% as of the filing of this
Report.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On December 21, 2006, we entered into a Purchase Agreement with SBR Holding
Company, LLC to purchase 100% of the outstanding membership interests in South
Beach Resorts, LLC, a Florida limited liability company, which transaction is
described in greater detail above under "Item 1.01 Entry into a Material
Definitive Agreement."
ITEM 3.02 UNREGISTERED SHARES OF EQUITY SECURITIES.
In November 2006, we agreed to issue Malcolm J. Wright, our Chairman and Chief
Executive Officer and aggregate of 162,600 warrants to purchase shares of common
stock in connection with his guaranty of the RC Credit Agreement and Amended RC
Credit Agreement (as defined and described above), which warrants have an
exercise price of $1.02 per share. We will claim an exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended, since the
foregoing issuance will not involve a public offering, the recipient will take
the securities for investment and not resale and we will take appropriate
measures to restrict transfer. No underwriters or agents will be involved in the
foregoing issuance and no underwriting discounts or commissions will be paid by
us.
On December 22, 2006, pursuant to a Warrant Participation Agreement, we agreed
to grant Sanford International Bank Limited, and six of its assigns, warrants to
purchase up to a 25% participation interest in the net proceeds (defined as the
proceeds realized upon the disposition or refinancing of the Property, less our
cost basis, excluding any operating losses or profits) realized by us upon the
disposition of the real property located at 740 Ocean Drive, Miami Beach,
Florida, known as the Boulevard Hotel (the "Property"). We claim an exemption
from registration afforded by Section 4(2) of the Securities Act of 1933, as
amended, since the foregoing issuance did not involve a public offering, the
recipient took the securities for investment and not resale and we took
appropriate measures to restrict transfer. No underwriters or agents were
involved in the foregoing issuance and no underwriting discounts or commissions
were paid by us.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
10.1* Credit Agreement - $4,300,000 credit facility(1)
10.2* Second Renewed, Amended and Increased Promissory Note issued by Reedy
Creek Development Company, LLC
10.3* Second Mortgage Modification Agreement and Future Advance Certificate
10.4* Modification and Reaffirmation of Guaranty and Environmental Indemnity
Agreement (November 2006)
10.5* Amendment No. 1 to $4.3 Million Credit Agreement(1)
10.6* Third Renewed, Amended and Increased Promissory Note issued by Reedy
Creek Development Company, LLC
10.7* Modification and Reaffirmation of Guaranty and Environmental Indemnity
Agreement (December 2006)
10.8* Third Mortgage Modification Agreement and Future Advance Certificate
10.9* Credit Agreement - $6,200,000 credit facility(2)
10.10* Amendment No. 1 to $6.2 Million Credit Agreement(2)
10.11* Purchase Agreement (South Beach Resorts, LLC)
10.12* Assignment of Interests in South Beach Resorts, LLC
10.13* Promissory Note payable to Roger Maddock
10.14* Guaranty Agreement in connection with Maddock Promissory Note
10.15* Warrant and Participation Agreement(1)
10.16(3)* Form of Warrant
10.17* Promissory Note (South Beach Resorts, LLC)
* Filed herewith.
(1) While we believe these documents to be final and in effect, and we have
received the entire amount of the funds required to be loaned pursuant to each
of these agreements, we been unable to obtain the signatures of SIBL on such
documents.
(2) While we believe these documents to be final and in effect, as of the filing
of this report, we have been unable to obtain the signatures of Stanford on such
documents.
(3) We granted Stanford International Bank Limited ("SIBL") and six of its
assigns, including Daniel T. Bogar ("Bogar"), William R. Fusselmann
("Fusselmann"), Osvaldo Pi ("Pi"), Ronald M. Stein ("Stein"), Charles M. Weiser
("Weiser") and Tal Kimmel ("Kimmel") warrants to purchase up to a 25%
participation interest in the net proceeds (defined as the proceeds realized
upon the disposition or refinancing of the Property, less our cost basis,
excluding any operating losses or profits) realized by us upon the disposition
of the real property located at 740 Ocean Drive, Miami Beach, Florida, known as
the Boulevard Hotel (the "Property"). The warrants are identical other than as
to the party the warrant was granted to and the participation interest in the
Net Proceeds granted. As such, we have only attached a form of warrant. Each
warrant has an aggregate exercise price of $1.00, and the participation
interests in the Net Proceeds granted to each grantee is as follows: SIBL 12.5%,
Bogar 2.891%, Fusselmann 2.891%, Pi 2.891%, Stein 2.891%, Weiser 0.468%, and
Kimmel 0.468%.
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.
AMERICAN LEISURE HOLDINGS, INC.
By: /s/ Malcolm J. Wright
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Malcolm J. Wright
Chief Executive Officer
Dated: January 16, 2007