American Leisure Holdings, Inc. Form 8-K June 26, 2007
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): June 26, 2007
AMERICAN
LEISURE HOLDINGS, INC.
(Exact
name of registrant as specified in its charter)
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Nevada
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333-48312
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75-2877111
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(State
or other jurisdiction
File
Number)
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(Commission
Identification
No.)
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(IRS
Employer of incorporation)
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2460
Sand Lake Road, Orlando, FL, 32809
(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):
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[
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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[
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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[
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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ITEM
1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Amendments
to April 2007 Kennedy Funding
On
April
20, 2007, certain of American Leisure Holdings, Inc.’s (“our,” “we,” “us” and
the “Company’s”) wholly owned subsidiaries which are engaged in the construction
and development of the Sonesta Resort, including Costa Blanca Real Estate II,
LLC, Costa Blanca III Real Estate, LLC, TDS Town Homes (Phase 1), LLC, and
TDS
Town Homes (Phase 2), LLC (the “Borrowers”), entered into a Loan and Security
Agreement with Kennedy Funding, Inc. as agent for certain lenders (collectively
“Kennedy” and the “Loan Agreement”). Pursuant to the Loan Agreement, Kennedy
agreed to make a loan to the Borrowers of up to $24,900,000, evidenced by a
Promissory Note (the “Kennedy Note”). The outstanding balance of the Kennedy
Note was secured by a security interest granted to Kennedy by the Borrowers
in
substantially all of their personal property and assets.
On
June
26, 2007, Kennedy and the Borrowers entered into a First Amendment to Loan
and
Security Agreement and Other Loan Documents (the “First Amendment to Loan”) in
connection with the Loan Agreement, whereby the parties agreed to add as an
event of default under the Loan Agreement, a default under the Second Kennedy
Note (as defined below); agreed that the amount secured by the Kennedy Note
would be cross collateralized with the Second Kennedy Note, and that any default
under the Second Kennedy Note of the Second Kennedy Agreements (as defined
below), would constitute an event of default under the Loan Agreement, as
amended. The First Amendment to the Loan also provided that Kennedy has the
right to assign the Kennedy Note; that Kennedy is required to consent to any
amendment of the Kennedy Note, or related documents entered into in connection
with the Kennedy Loan Agreement (the “Kennedy Agreements”), and/or consent to
any release of collateral secured by the Kennedy Loan; that Kennedy is able
to
advertise the fact that it made a loan to us, and/or erect signs on our
properties publicizing Kennedy’s role in our funding, with our consent, which
will not be unreasonable withheld; changed the prepayment requirements related
to the Borrower’s prepayment of the Kennedy Note; and provided Kennedy a
security interest in any and all deposits received by the Borrowers in
connection with the purchase of any of our condominiums and/or townhouses on
the
Mortgaged Property, among other things (the “Amendments”).
We
also
entered into a First Amendment to Mortgage and Security Agreement and an Amended
and Restated Promissory Note with Kennedy to confirm and reflect the Amendments.
Additionally, we entered into a Reaffirmation of Guaranty, to reaffirm our
previous guaranty of, and security interest granted in connection with the
Kennedy Note and the Kennedy Agreements as amended.
June
2007 Kennedy Funding
On
June
26, 2007, Costa Blanca I Real Estate, LLC, a wholly owned subsidiary of our
wholly owned subsidiary, Tierra Del Sol Resort (Phase 1), Ltd. (“Costa Blanca”),
entered into a Loan and Security Agreement and related agreements (the “Second
Kennedy Agreements”) with Kennedy, whereby Kennedy agreed to loan Costa Blanca
$4,450,000 (the “Second Loan Agreement”).
In
connection with the Second Loan Agreement, Costa Blanca provided Kennedy a
Promissory Note in the amount of $4,450,000 (the “Second Kennedy Note”). The
Second Kennedy Note, and any accrued and unpaid interest is due and payable
on
June 25, 2010. The Second Kennedy Note does not contain a pre-payment penalty.
The Second Kennedy Note bears interest at varying rates of interest over the
course of the note term, which interest is due and payable monthly, in arrears,
including:
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(a)
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12%
per annum for the first month that the Second Kennedy Note is
outstanding;
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(b)
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The
greater of 12% or the Prime Rate then in effect plus 3 and 3/4% per
annum
during the period from July 2007 through June 2008;
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(c)
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The
greater of 16% or the Prime Rate then in effect plus 7 and 3/4% per
annum
during the period from July 2008 through June 2009;
and
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(d)
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The
greater of 18% or the Prime Rate then in effect plus 9 and 3/4% per
annum
during the period from July 2009, through the maturity date of the
Second
Kennedy Note.
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Any
amounts not paid under the Second Kennedy Note when due bear interest at the
rate of 24% per annum until paid in full. Additionally, any payment of interest
not paid within five (5) days of the date it is due is charged a one-time
penalty equal to the lesser of: (i) ten percent (10%) of such payment or (ii)
the maximum amount permitted by law.
The
$3,950,000 initial advance under the Second Kennedy Note, which was advanced
on
or around June 26, 2007, included $464,000 which was paid to Kennedy as a
closing fee; $445,000 which is to be credited against interest payments due
under the Second Kennedy Note; and approximately $178,000 in closing costs,
brokers fees and legal fees in connection with the loan. The remaining $500,000
in loan funds was held back from the initial advance, and will be disbursed
to
Costa Blanca from time to time to construct one of the swimming pools in the
Sonesta Resort, subject to the Borrowers complying with the representations
and
warranties described in the Second Loan Agreement, and subject to the
loan-to-value ratio of amounts loaned by Kennedy, not exceeding 60% of the
then
value of the Sonesta Resort. Additionally, Costa Blanca agreed to pay all of
Kennedy’s out of pocket expenses incurred in connection with the Second Kennedy
Note and funding. The net proceeds of loan are being utilized by Costa Blanca
for construction costs and working capital associated with the Sonesta
Resort.
Events
of
default under the Second Loan Agreement include, among other things, if one
or
more judgments are entered against any Costa Blanca or any guarantor of the
Second Loan Agreement, in excess of $25,000, which are not fully paid or covered
by insurance, and which have not been discharged, stayed or bonded pending
appeal within ninety days of the entry thereof. Additionally, the default of
any
provision of the April 2007, Kennedy Note, triggers a cross-default of the
Second Kennedy Note.
The
Second Loan Agreement provided that Costa Blanca can not create, incur or suffer
any indebtedness other than the Kennedy Note and the Second Kennedy Note, other
than up to $25,000,000 in additional loans which may be obtained from Stanford
International Bank Limited and/or Resorts Funding Group, LLC, which shall be
subordinate to the Second Kennedy Note and security interests granted
therewith.
Additionally,
assuming that no Event of Default has occurred under the Second Kennedy Note,
in
the event that Costa Blanca or any of the Borrowers repays an amount equal
to at
least $16,000,000 of the amount due under the Kennedy Note and Second Kennedy
Note by the six (6) month anniversary of the Second Loan Agreement closing
date,
the Borrowers will receive a credit of $150,000 against the amount then owed.
Similarly, in the event that Costa Blanca or the Borrowers repays $18,000,000 of
the amount due within the six (6) month anniversary of the Second Loan Agreement
closing date, they will receive a credit of $200,000 against amounts then owed.
Finally, assuming that the terms and conditions of the Second Kennedy Note
are
complied with in full, and no Event of Default has occurred, Costa Blanca will
receive a refund of $50,000 of the prepaid interest held on the Second Kennedy
Note.
The
outstanding balance of the Second Kennedy Note was secured by a security
interest granted to Kennedy by Costa Blanca in substantially all of its personal
property and assets, including certain real property in Polk County, Florida,
pursuant to the parties’ entry into a Mortgage and Security Agreement. As
additional security, American Leisure Holdings, Inc., TDS Amenities, Inc.,
a
Florida corporation, which is owned by Tierra del Sol Resort, Inc., and Malcolm
J. Wright, our Chief Executive Officer and Chairman, entered into a Guaranty
Agreement in favor of Kennedy, which guaranteed the repayment of the Second
Kennedy Note. Furthermore, Costa Blanca agreed to assign its rights to several
of its licenses, leases, permits and approvals to Kennedy to secure the
repayment of the Second Kennedy Note. Mr. Wright earned a fee equal to 133,500
warrants to purchase shares of our common stock at an exercise price of $1.02
in
connection with his guaranty of the Kennedy Note.
ITEM
3.02 UNREGISTERED SHARES OF EQUITY SECURITIES.
In
June
2007, we granted Malcolm J. Wright, our Chief Executive Officer and Chairman
an
aggregate of 133,500 warrants to purchase shares of our common stock at an
exercise price of $1.02 per share, in connection with Mr. Wright’s guaranty of
the Second Kennedy Note (defined above), pursuant to a Debt Guaranty Agreement
previously entered into with Mr. Wright. We relied on an exemption from
registration set forth in Section 4(2) of the Securities Act of 1933, as
amended, in issuing the securities as the issuance of the securities did not
involve a public offering, the recipient acquired the securities for investment
purposes and we took appropriate measures to restrict transfer. No underwriters
or agents were involved in the foregoing issuance and no underwriting discounts
were paid by us.
ITEM
9.01 FINANCIAL STATEMENTS AND EXHIBITS.
| Exhibit
Number |
Description
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10.1(1)
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Loan
and Security Agreement with Kennedy ($24,900,000 loan)
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10.2(1)
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Promissory
Note with Kennedy ($24,900,000 loan)
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10.3(1)
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Guaranty
Agreement with Kennedy
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10.4(1)
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Environmental
Indemnity Agreement
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10.5(1)
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Mortgage
and Security Agreement
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10.6*
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First
Amendment to Loan and Security Agreement
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10.7*
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Amended
and Restated Promissory Note
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10.8*
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First
Amendment to Mortgage
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10.9*
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Reaffirmation
Agreement
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10.10*
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Loan
and Security Agreement
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10.11*
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Promissory
Note
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10.12*
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Guaranty
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10.13*
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Mortgage
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10.14(1)
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Malcolm
J. Wright Warrant Agreement
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10.15*
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Malcolm
J. Wright Warrant Agreement
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(1)
Filed
as exhibits to the Company’s Report on Form 8-K, filed with the Commission on
May 1, 2007, and incorporated herein by reference.
*
Filed
herewith.
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.
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AMERICAN
LEISURE HOLDINGS, INC.
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Dated: July
10, 2007
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By:
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/s/ Malcolm
J. Wright
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Malcolm
J. Wright
Chief
Executive Officer
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