Item 1.01 Entry into a Material Agreement
As previously disclosed, Altitude International Holdings, Inc. (the "Company")
entered into that certain Purchase and Sale Agreement effective as of April 25,
2022 (the "Property PSA"), as amended, for the purchase by the Company of the
216-acre Port St. Lucie, Florida property formerly operated under the name "Club
Med Sandpiper Bay" (the "Property") from Sandpiper Resort Properties, Inc. and
Holiday Village of Sandpiper, Inc. (collectively, "Sandpiper"). Pursuant to the
terms of the Property PSA the Company was allowed to assign is rights under the
Property PSA.
Specifically, on September 2, 2022, the Company assigned to Altitude Hospitality
LLC, its newly formed wholly owned subsidiary ("Altitude Hospitality") its
rights under the Property PSA and Altitude Hospitality agreed to designate STORE
Capital Acquisitions, LLC, a Delaware limited liability company ("STORE") as the
grantee under the deed from Sandpiper Resort Properties, Inc. and Holiday
Village of Sandpiper, Inc. (collectively, "Sandpiper") through the entrance into
that certain Purchase and Sale Agreement between Altitude Hospitality and STORE
(the "STORE PSA"). The purchase price paid by STORE under the STORE PSA for
payment to Sandpiper under the Property PSA was $55,000,000.
The title to the Property was conveyed to STORE through the Property PSA in a
simultaneous closing. Concurrently with the sale of, Altitude Hospitality
entered into a Lease Agreement with STORE for Altitude Hospitality's lease and
use of the Property through September 30, 2042, with five-year extension options
through 2062.
The Property PSA and STORE PSA contain customary representations, warranties,
covenants, indemnification and other terms for transactions of a similar nature.
Through the Agreements described below, Altitude Hospitality will operate the
resort as "Sandpiper Bay Resort" under the "Trademark Collection® by Wyndham"
and will expand and develop the Property as described below. The Property will
also serve as the Company's world headquarters for the Company and its wholly
owned subsidiaries, including, but not limited to, the sports academies (which
have operated from the Property for the past thirteen years), Rush Soccer,
Altitude International, the resort operations and the Company's other
operations.
Lease Agreement
Concurrently with the assignment of the Property PSA and the ultimate purchase
of the Property by STORE,Altitude Hospitality entered into a Lease Agreement
(the "Lease") with STORE for Altitude Hospitality's lease and use of the
Property through September 30, 2042, with five-year extension options through
2062. The base annual rental under the Lease is $4,400,000, subject to certain
adjustments, and the security deposit required is $6,600,000. Additionally,
Altitude Hospitality is required to establish a Capital Replacement Reserve
Account into which Altitude Hospitality will deposit monthly an amount between
2-4% of the gross revenue of the Property for the preceding month. If no event
of default is occurring under the Lease, then Altitude Hospitality shall have
the right to withdraw certain Approved Expenditures (as defined therein) from
the Capital Replacement Reserve Account (as defined therein) to be used to pay
for the cost of furniture, fixtures and equipment for the Property or other real
property improvements to the Property, subject to certain requirements of STORE.
The Company agreed to unconditionally guarantee the payment and performance of
Altitude Hospitality under the Lease until all obligations are paid under the
Lease. Any debt of the Company is and will be subordinated to the indebtedness
of Altitude Hospitality to STORE under the Lease.
After forty-eight months, and if the property improvements have occurred as
required by the Franchisor (as defined below), and until one hundred nine months
following the Effective Date of the Lease, Altitude Holdings shall have the
option (the "Purchase Option") to give STORE written notice to purchase the
Property for a price equal to the greater of (i) 110% of STORE's total
investment; or (ii) the then current base annual rental divided by the
applicable cap rate. The closing for such Purchase Option must occur within
ninety (90) days following STORE's receipt of the Purchase Option notice.
Altitude Hospitality's rights under the Purchase Option shall terminate if the
Lease terminates or if the initial term expires before the exercise of the
Purchase Option, except if the Lease terminates prior to the end of the initial
term or any extension term, then Altitude Hospitality may elect to exercise the
Purchase Option if written notice is given to Lessor at least ten days prior to
such termination. The Purchase Option may not be assigned.
Altitude Hospitality also has a right of first refusal to purchase the Property
if STORE desires to the sell the Property and receives a bona fide written offer
from a third party purchaser. Altitude Hospitality must purchase the Property on
the same terms as the third party offer and must notify STORE of its election to
complete the purchase within ten days of receiving notice of the sale from
STORE.
The Lease contains customary representations, warranties, covenants,
indemnification and other terms for transactions of a similar nature.
2
Membership Agreement
Altitude Hospitality entered into a Membership Agreement (the "Membership
Agreement") with TMH Worldwide, LLC (the "Franchisor"), through which Altitude
Hospitality was granted franchise rights to operate under the "Trademark
Collection® by Wyndham" brand. Pursuant to the Membership Agreement, Altitude
Hospitality agreed to make certain property improvements. The term of the
Membership Agreement is twenty years. Fees due to the Franchisor under the
Membership Agreement include a "Combined Fee" of up to 6% of gross revenue
during the term of the Membership Agreement. Pursuant to the terms of the
Membership Agreement, Altitude Hospitality agreed to pay the Franchisor a
nonrefundable fee of $101,000 as an "Affiliation Fee."
The Membership Agreement contains customary representations, warranties,
covenants, indemnification and other terms for transactions of a similar nature.
Disbursement Agreement
The Company executed a disbursement agreement (the "Disbursement Agreement")with
STORE through which STORE agreed to fund up to $25,000,000 to Altitude
Hospitality for construction costs to enable Altitude Hospitality, as lessee
under the Lease, to construct and renovate improvements to the Property and
complete the property improvement plan construction and remodel work required by
Franchisor under the Membership Agreement at the Premises. The terms of the
Disbursement Agreement are subject to certain conditions, including the funding
by Altitude Hospitality of at least $8,000,000 toward improvements at the
Property (including establishing a construction deposit of $3,000,000 in
segregated funds for such purpose), all of which may be reimbursed by STORE
under the Disbursement Agreement if certain conditions are met. The Disbursement
Agreement contains customary representations, warranties, covenants,
indemnification and other terms for transactions of a similar nature.
Loan Agreement
On September 2, 2022, the Company, Altitude Hospitality and Trident Water, LLC,
a Florida limited liability company (collectively, the "Borrowers") entered into
a Loan Agreement with FVP Servicing, LLC, a Delaware limited liability company,
in its capacity as administrative agent ("FVP"), among others (the "Loan
Agreement"), and ancillary documents including an Exclusivity Agreement, Revenue
Share Agreement, Security Agreement, and Payment Guaranty (each as defined in
the Loan Agreement) under which the Borrowers borrowed Fifteen Million Dollars
($15,000,000) with an interest rate per annum of SOFR (with a 2% floor) +
thirteen percent (13%) and a maturity date of September 2, 2025 (with an option
to extend one additional year if certain conditions are met) (the "Loan"). As
additional consideration for the Loan, FVP or its designees will receive
102,754,802 restricted shares of common stock of the Company (the "Loan
Consideration Shares").
Pursuant to the Revenue Share Agreement, Altitude Hospitality agreed to pay FVP
an amount equal to twenty percent (20%) of all net operating income (the
"Revenue Share") for such calendar quarter (on a cumulative basis). The term of
the Revenue Share Agreement is ten years, however the Company has an option,
upon ten business days' prior written notice, to terminate the Revenue Share
Agreement upon the payment to FVP an amount equal to $2,500,000, plusthe amount
of all Revenue Share payments accrued through the proposed termination date.
Pursuant to the Exclusivity Agreement, the Company and its subsidiaries agreed
to use Feenix Payment Systems, LLC as the exclusive agent to provide credit card
processing and related services. The Exclusivity Agreement shall remain in
effect until one year after all obligations under the Loan Agreement have been
satisfied.
Pursuant to the Security Agreement and Payment Guaranty, theCompany's wholly
owned subsidiaries (except for Rush Education, LLC) have agreed to guarantee the
Borrowers' obligations under the Loan and have pledged their equity and granted
a security interest in all their assets.
The Loan contains customary representations, warranties, covenants,
indemnification and other terms for transactions of a similar nature.
FVP and Altitude Hospitality entered into two separate agreements related to the
Loan on September 2, 2022. A Consent Agreement with STORE allows Altitude
. . .
Item 3.02 Unregistered Sales of Equity Securities.
The relevant information in Item 5.02 on this Current Report on Form 8-K,
regarding the Loan Consideration Shares is incorporated herein by reference. The
shares of common stock underlying the Loan Consideration Shares were not
registered under the Securities Act of 1933, as amended (the "Securities Act")
but qualified for exemption under Section 4(a)(2) and/or Regulation D of the
Securities Act.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description
10.1 Purchase and Sale Agreement between Altitude Hospitality, LLC and
STORE Capital Acquisitions, LLC dated September 2, 2022
10.2* Disbursement Agreement between Altitude Hospitality, LLC and STORE
Capital Acquisitions, LLC dated September 2, 2022
10.3* Lease Agreement between Altitude Hospitality, LLC and STORE
Capital Acquisitions, LLC dated September 1, 2022
10.4* Membership Agreement between Altitude Hospitality, LLC and TMH
Worldwide, LLC dated September 2, 2022
10.5 Loan Agreement among Altitude International Holdings, Inc.,
Altitude Hospitality, LLC Trident Water, LLC and FVP Servicing, LLC
dated September 2, 2022
10.6 Security Agreement Altitude International Holdings, Inc., Altitude
Hospitality, LLC Trident Water, LLC FVP Servicing, LLC dated
September 2, 2022
10.7 Amended and Restated Exclusivity Agreement with Feenix Payment
Systems, LLC dated September 2, 2022
10.8 Revenue Share Agreement among Altitude International Holdings,
Inc., Altitude Hospitality, LLC and FVP Servicing, LLC dated
September 2, 2022
10.9* Three-Party Agreement between FVP Servicing , LLC, Altitude
Hospitality, LLC and TMH Worldwide, LLC dated September 2, 2022
10.10 Consent Agreement between Store Capital Acquisitions, LLC, FVP
Servicing, LLC and Altitude Hospitality, LLC dated September 2,
2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* Certain schedules to this exhibit have been omitted pursuant to Regulation S-K
Item 601(a)(5). The registrant agrees to furnish supplementally a copy of any
omitted schedule to the SEC upon request.
4
© Edgar Online, source Glimpses