Exhibit 10.15
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AGREEMENT TO EXTEND DEBT OBLIGATIONS
This Agreement is executed effective as of November 10, 2006 (the
"Effective Date") between Xxxxxx X. Xxxxxx ("Xxxxxx"), Xxxxx X. Xxxx ("Xxxx"),
and Speaking Roses International, Inc., a Utah corporation ("XXXX").
RECITALS
A. On July 10, 2005, Xxxxxx and XXXX entered into a "United States
Regional Development Agreement," under which Xxxxxx deposited
$750,000 with XXXX in connection with certain franchise
development rights granted to Xxxxxx.
B. Pursuant to the "United States Regional Development Agreement"
described above, XXXX is required to return the amount deposited
by Xxxxxx, together with interest at a rate of 12% per annum,
which obligation remains outstanding in the aggregate amount of
$870,000 and for which Xxxxxx has made demand.
C. On February 6, 2006, XXXX issued two notes of $255,178.08 to
Xxxxxx, to be due on December 31, 2006. Xxxxxx later sold and
assigned one of the notes to Xxxx.
D. SRII desires that Xxxxxx withdraw his demand for the $870,000
described in Recital B above in exchange for a promissory note,
and that Xxxxxx and Xxxx agree to extend the due dates of the
notes in Recital C above to a longer term; and Xxxxxx and Xxxx
agree to do so subject to the terms and conditions of this
Agreement.
AGREEMENT
NOW THEREFORE, for valuable consideration, Xxxxxx, Xxxx and XXXX agree as
follows:
1. As of the Effective Date, Xxxxxx xxxxx terminates, and releases
XXXX from its obligations under, the United States Regional
Development Agreement in exchange for the following consideration:
a. XXXX will issue to Xxxxxx a promissory note in the
principal amount of $870,000 in the form attached hereto as
Exhibit A, effective as of the Effective Date, in full
satisfaction of SRII's obligations under the United States
Regional Development Agreement.
b. In consideration for withdrawing Xxxxxx'x demand for
payment and extending the obligation via the new promissory
note, as of the Effective Date, XXXX will issue to Xxxxxx
2,200,000 (1,700,000 plus 500,000) common shares of XXXX,
in an offering the parties intend to comply with Rule 506
of Regulation D of the Securities Act of 1933, as amended
(the "Act").
c. Notwithstanding the maturity date of the promissory note
described in Section 1(a): (i) if such promissory note is
not fully satisfied on or before January 10, 2008, XXXX
shall issue on January 10, 2008, to the holder of such
promissory note as of such date, one common share of XXXX
for each dollar (including accrued interest) outstanding
under such promissory note as of such date; and (ii) if
such promissory note is not fully satisfied on or before
January 10, 2009, XXXX shall issue on January 10, 2009, to
the holder of such promissory note as of such date, one
common share of XXXX for each dollar (including accrued
interest) outstanding under such promissory note as of such
date.
d. The promissory note will carry an option for Xxxxxx, at any
time after February 10, 2007, and at his sole option and
upon written notice, to convert the note to XXXX common
shares at a price of thirty cents ($.30) per share, subject
to adjustments set forth in such note.
e. In the event that XXXX pays off the notes contemplated by
Sections 1(a) and 2(a) hereof in full in cash to the
holders of such notes on or before February 10, 2007,
Xxxxxx agrees to return to XXXX all but 500,000 common
shares of XXXX issued pursuant to Section 1(b) above in
consideration for early payoff of the notes.
2. As of the Effective Date, Xxxxxx and Xxxx hereby cancel and
deliver to XXXX their notes that are due on December 31, 2006 in
exchange for the following consideration:
a. XXXX will issue to Xxxxxx and Xxxx new promissory notes in
the principal amounts of $281,538 in the forms attached
hereto as Exhibits B-1 and B-2, effective as of the
Effective Date.
b. In consideration for Xxxxxx and Xxxx canceling their notes
via the new promissory notes, as of the Effective Date,
XXXX will issue to both Xxxxxx and Xxxx 281,538 common
shares of XXXX in an offering the parties intend to comply
with Rule 506 of Regulation D of the Act.
x. Xxxxxx, Xxxx and XXXX will enter into a Security Agreement,
the form of which is attached hereto as Exhibit C, securing
the obligations of XXXX pursuant to the promissory notes
issued in accordance with Sections 1(a) and 2(a) hereof.
d. Notwithstanding the maturity date of each promissory note
described in Section 2(a): (i) if such respective
promissory note is not fully satisfied on or before January
10, 2008, XXXX shall issue on January 10, 2008, to the
holder of such promissory note as of such date, one common
share of XXXX for each dollar (including accrued interest)
outstanding under such promissory note as of such date; and
(ii) if such respective promissory note is not fully
satisfied on or before January 10, 2009, XXXX shall issue
on January 10, 2009, to the holder of such promissory note
as of such date, one common share of XXXX for each dollar
(including accrued interest) outstanding under such
promissory note as of such date.
e. The promissory notes will carry an option for Xxxxxx and
Xxxx, at any time after February 10, 2007, and at their
respective sole option and upon written notice, to convert
the notes to XXXX common shares at a price of thirty cents
($.30) per share, subject to adjustments set forth in such
notes.
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3. Each of Xxxxxx and Xxxx hereby severally represents and warrants
to XXXX that:
a. As of the Effective Date, all outstanding debt owed by XXXX
to such party will be reflected in the promissory notes
issued to such party pursuant to Sections 1(a) and 2(a)
hereof;
b. Such party qualifies as an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D of the Act,
has substantial experience in evaluating transactions and
securities of the type contemplated by this Agreement so
that such party is capable of evaluating the merits and
risks of his respective investment in the notes to be
issued to such party and has the capacity to protect his
own interests; and understands that the securities being
issued pursuant to this transaction have not been, and will
not be, registered under the Act by reason of an exemption
from the registration provisions of the Act; and
c. Such party has had an opportunity to discuss SRII's
business, management and financial affairs with SRII's
management, has had the opportunity to review SRII's
financial condition, facilities and business plans, has had
an opportunity to ask questions of officers of XXXX, which
questions were answered to his satisfaction, and has
reviewed the public information and reports XXXX has filed
with the Securities and Exchange Commission.
4. Effective as of the Effective Date, Xxxxxx and Xxxx will enter
into, and deliver to, and be entitled to receive from, Dos Lagos,
LLC, an Intercreditor Agreement in form and substance mutually
agreed upon by Hanson, Isom, XXXX and Dos Lagos, LLC.
5. If Xxxxxx or Xxxx loans any additional funds to XXXX following the
date hereof (other than as reflected on the promissory notes
issued pursuant to Sections 1(a) or 2(a) hereof), which matures on
a date beyond the first anniversary of such loan, XXXX shall issue
to such party the number of common shares of XXXX equal to the
principal amount of such loan, in an offering the parties intend
to comply with Rule 506 of Regulation D of the Act. The principal
amount of such loan, together with any accrued interest thereon,
shall be convertible into the number of common shares of XXXX
determined in accordance with Section 2(e) hereof.
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6. Xxxxxx and Xxxx hereby severally agrees to defend, indemnify and
hold harmless XXXX and its directors, officers, shareholders,
employees, representatives and agents against all losses or
expenses in any way suffered, incurred or paid by XXXX as a result
of or in any way arising out of, following or consequential to
such party's breach of any of his respective representations and
warranties set forth in Section 3 of this Agreement (including
without limitation, reasonable attorneys fees and expenses).
7. This Agreement may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be deemed an original
but all of which shall together constitute one and the same
agreement. This Agreement shall be governed by the laws of the
State of Utah, without giving any effect to any choice or conflict
of law, rule or regulation which would cause the application of
any law, rule or regulation other than of the State of Utah. This
Agreement and all rights and obligations hereunder shall be
binding upon the respective parties and their respective
successors and assigns. If any term or provision of this Agreement
or the application thereof to any circumstance shall, in any
jurisdiction and to any extent, be invalid or unenforceable, such
term or provision shall be ineffective as to such jurisdiction to
the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable such term or provision in
any other jurisdiction, the remaining terms and provisions of this
Agreement or the application of such terms and provisions to
circumstances other than those as to which it is held invalid or
enforceable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of November 10, 2006.
Speaking Roses International, Inc.
By: ________________________ ________________________________
Xxxxxx X. Xxxxxx
______________________________
Its __________________________ _________________________________
Xxxxx X. Xxxx
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Promissory Note
$870,000.00 November 10, 0000
Xxxx Xxxx Xxxx, Xxxx
SPEAKING ROSES INTERNATIONAL, INC., with its principal office located at 000
Xxxxxxxx Xxxxx, Xxxx Xxxx Xxxx, Xxxx, 00000 (Maker) promises to pay to the order
of XXXXXX X. XXXXXX (Holder) or assigns at 00000 XX Xxxxx Xxxxxx, Xxxxxxxx,
Xxxxxx 00000, or at such other place designated by Holder of this Note, the sum
of Eight Hundred Seventy Thousand ($870,000.00) together with interest at a rate
of Twelve Percent (12%) per annum on or before January 10, 2010 (the "Maturity
Date"). Interest will accrue from date above. Any part hereof may be paid at any
time without premium or penalty. If this Note is placed in the hands of an
attorney for collection following a default by Maker hereunder, Maker promises
and agrees to pay Holder's reasonable attorney's fees and collection costs, even
though no suit or action is filed thereon. If a suit or action is filed, the
amount of such reasonable attorney's fees shall be fixed by the court or courts
in which the suit or action, including any appeal therein, is tried, heard, or
decided. In the event of a bankruptcy of the Maker which is not dismissed or
stayed within ninety (90) consecutive days, Holder may at its option call the
Note immediately due and payable.
At Holder's option, at any time after February 10, 2007, and prior to acceptance
of payment of this Note, Holder may elect to convert all or part of the
principal and accrued interest of this Note into the number of Maker's common
shares equal to the principal amount, including any accrued but unpaid interest
thereon, of this Note being converted, divided by the Conversion Price. The term
"Conversion Price" shall mean thirty cents ($.30), subject to adjustment as set
forth below.
In order to exercise the conversion privilege, Holder shall surrender this Note,
duly endorsed, to Maker's address set forth above, and shall give written notice
of conversion to Maker stating Holder's election to convert this Note or the
portion thereof specified in said notice. As promptly as practicable after the
surrender of this Note as described above, Maker shall issue and shall deliver
to Holder a certificate or certificates for the number of common shares of Maker
issuable upon the conversion of this Note or portion thereof registered in the
name of Holder in accordance with the provisions of this paragraph. If this Note
is surrendered for partial conversion, Maker shall execute and deliver to
Holder, without charge, a new Note in an aggregate principal amount equal to the
unconverted principal amount of the surrendered Note. Each conversion shall be
deemed to have been effected on the date on which this Note shall have been
surrendered and the conversion notice shall have been received by Maker, and
Holder shall be deemed to have become on such date the holder of record of the
common shares of Maker issuable upon such conversion.
In the event of default of payment of this Note, Holder may, at its option,
demand, in lieu of cash payment, Maker's common shares at the above-described
Conversion Price for all or part of the principal and accrued interest on this
Note, to be issued to Holder upon demand in accordance with the preceding
paragraph.
If Maker subdivides its outstanding common shares into a greater number of
common shares, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced. Conversely, if Maker combines its
outstanding common shares into a lesser number of common shares, the Conversion
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Price in effect immediately prior to such combination shall be proportionally
increased. In case of a subdivision or combination, the adjustment of the
Conversion Price shall be made as of the effective date of the applicable event.
Notwithstanding the Maturity Date: (i) if this Note is not fully satisfied on or
before January 10, 2008, Maker shall issue, on January 10, 2008, to the holder
of this Note as of such date, one common share of Maker for each dollar
(including accrued interest) outstanding hereunder as of such date; and (ii) if
this Note is not fully satisfied on or before January 10, 2009, Maker shall
issue, on January 10, 2009, to the holder of this Note as of such date, one
common share of Maker for each dollar (including accrued interest) outstanding
hereunder as of such date.
By execution of this Note by Maker and acknowledgement of this Note by Holder,
Maker and Holder hereby terminate the United States Regional Retail Development
Agreement executed by Holder and Maker on July 10, 2005, and neither Maker nor
Holder shall have any further obligations to the other party with respect to the
United States Regional Retail Development Agreement following the date hereof.
Speaking Roses International, Inc.
By ________________________________
Agreed and Accepted:
___________________________________
Xxxxxx X. Xxxxxx
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Promissory Note
$281,538.00 November 10, 0000
Xxxx Xxxx Xxxx, Xxxx
SPEAKING ROSES INTERNATIONAL, INC., with its principal office located at 000
Xxxxxxxx Xxxxx, Xxxx Xxxx Xxxx, Xxxx, 00000 (Maker) promises to pay to the order
of XXXXXX X. XXXXXX (Holder) or assigns at 00000 XX Xxxxx Xxxxxx, Xxxxxxxx,
Xxxxxx 00000, or at such other place designated by Holder of this Note, the sum
of Two Hundred Eighty-One Thousand Five Hundred Thirty-Eight Dollars
($281,538.00) together with interest at a rate of Twelve Percent (12%) per annum
on or before January 10, 2010 (the "Maturity Date"). Interest will accrue from
date above. Any part hereof may be paid at any time without premium or penalty.
If this Note is placed in the hands of an attorney for collection following a
default by Maker hereunder, Maker promises and agrees to pay Holder's reasonable
attorney's fees and collection costs, even though no suit or action is filed
thereon. If a suit or action is filed, the amount of such reasonable attorney's
fees shall be fixed by the court or courts in which the suit or action,
including any appeal therein, is tried, heard, or decided. In the event of a
bankruptcy of the Maker which is not dismissed or stayed within ninety (90)
consecutive days, Holder may at its option call the Note immediately due and
payable.
At Holder's option, at any time after February 10, 2007, and prior to acceptance
of payment of this Note, Holder may elect to convert all or part of the
principal and accrued interest of this Note into the number of Maker's common
shares equal to the principal amount, including any accrued but unpaid interest
thereon, of this Note being converted, divided by the Conversion Price. The term
"Conversion Price" shall mean thirty cents ($.30), subject to adjustment as set
forth below.
In order to exercise the conversion privilege, Holder shall surrender this Note,
duly endorsed, to Maker's address set forth above, and shall give written notice
of conversion to Maker stating Holder's election to convert this Note or the
portion thereof specified in said notice. As promptly as practicable after the
surrender of this Note as described above, Maker shall issue and shall deliver
to Holder a certificate or certificates for the number of common shares of Maker
issuable upon the conversion of this Note or portion thereof registered in the
name of Holder in accordance with the provisions of this paragraph. If this Note
is surrendered for partial conversion, Maker shall execute and deliver to
Holder, without charge, a new Note in an aggregate principal amount equal to the
unconverted principal amount of the surrendered Note. Each conversion shall be
deemed to have been effected on the date on which this Note shall have been
surrendered and the conversion notice shall have been received by Maker, and
Holder shall be deemed to have become on such date the holder of record of the
common shares of Maker issuable upon such conversion.
In the event of default of payment of this Note, Holder may, at its option,
demand, in lieu of cash payment, Maker's common shares at the above-described
Conversion Price for all or part of the principal and accrued interest on this
Note, to be issued to Holder upon demand in accordance with the preceding
paragraph.
If Maker subdivides its outstanding common shares into a greater number of
common shares, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced. Conversely, if Maker combines its
outstanding common shares into a lesser number of common shares, the Conversion
1
Price in effect immediately prior to such combination shall be proportionally
increased. In case of a subdivision or combination, the adjustment of the
Conversion Price shall be made as of the effective date of the applicable event.
Notwithstanding the Maturity Date: (i) if this Note is not fully satisfied on or
before January 10, 2008, Maker shall issue, on January 10, 2008, to the holder
of this Note as of such date, one common share of Maker for each dollar
(including accrued interest) outstanding hereunder as of such date; and (ii) if
this Note is not fully satisfied on or before January 10, 2009, Maker shall
issue, on January 10, 2009, to the holder of this Note as of such date, one
common share of Maker for each dollar (including accrued interest) outstanding
hereunder as of such date.
Upon execution of this Note, Holder and Maker agree to cancel the previous note
executed on February 6, 2006.
Speaking Roses International, Inc.
By ________________________________
Agreed and Accepted:
___________________________________
Xxxxxx X. Xxxxxx
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Promissory Note
$281,538.00 November 10, 0000
Xxxx Xxxx Xxxx, Xxxx
SPEAKING ROSES INTERNATIONAL, INC., with its principal office located at 000
Xxxxxxxx Xxxxx, Xxxx Xxxx Xxxx, Xxxx, 00000 (Maker) promises to pay to the order
of XXXXX X. XXXX (Holder) or assigns at 00000 Xxxxxxxx Xx., Xxxxxx Xxxxxx, XX
00000, or at such other place designated by Holder of this Note, the sum of Two
Hundred Eighty-One Thousand Five Hundred Thirty-Eight Dollars ($281,538.00)
together with interest at a rate of Twelve Percent (12%) per annum on or before
January 10, 2010 (the "Maturity Date"). Interest will accrue from date above.
Any part hereof may be paid at any time without premium or penalty. If this Note
is placed in the hands of an attorney for collection following a default by
Maker hereunder, Maker promises and agrees to pay Holder's reasonable attorney's
fees and collection costs, even though no suit or action is filed thereon. If a
suit or action is filed, the amount of such reasonable attorney's fees shall be
fixed by the court or courts in which the suit or action, including any appeal
therein, is tried, heard, or decided. In the event of a bankruptcy of the Maker
which is not dismissed or stayed within ninety (90) consecutive days, Holder may
at its option call the Note immediately due and payable.
At Holder's option, at any time after February 10, 2007, and prior to acceptance
of payment of this Note, Holder may elect to convert all or part of the
principal and accrued interest of this Note into the number of Maker's common
shares equal to the principal amount, including any accrued but unpaid interest
thereon, of this Note being converted, divided by the Conversion Price. The term
"Conversion Price" shall mean thirty cents ($.30), subject to adjustment as set
forth below.
In order to exercise the conversion privilege, Holder shall surrender this Note,
duly endorsed, to Maker's address set forth above, and shall give written notice
of conversion to Maker stating Holder's election to convert this Note or the
portion thereof specified in said notice. As promptly as practicable after the
surrender of this Note as described above, Maker shall issue and shall deliver
to Holder a certificate or certificates for the number of common shares of Maker
issuable upon the conversion of this Note or portion thereof registered in the
name of Holder in accordance with the provisions of this paragraph. If this Note
is surrendered for partial conversion, Maker shall execute and deliver to
Holder, without charge, a new Note in an aggregate principal amount equal to the
unconverted principal amount of the surrendered Note. Each conversion shall be
deemed to have been effected on the date on which this Note shall have been
surrendered and the conversion notice shall have been received by Maker, and
Holder shall be deemed to have become on such date the holder of record of the
common shares of Maker issuable upon such conversion.
In the event of default of payment of this Note, Holder may, at its option,
demand, in lieu of cash payment, Maker's common shares at the above-described
Conversion Price for all or part of the principal and accrued interest on this
Note, to be issued to Holder upon demand in accordance with the preceding
paragraph.
If Maker subdivides its outstanding common shares into a greater number of
common shares, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced. Conversely, if Maker combines its
outstanding common shares into a lesser number of common shares, the Conversion
1
Price in effect immediately prior to such combination shall be proportionally
increased. In case of a subdivision or combination, the adjustment of the
Conversion Price shall be made as of the effective date of the applicable event.
Notwithstanding the Maturity Date: (i) if this Note is not fully satisfied on or
before January 10, 2008, Maker shall issue, on January 10, 2008, to the holder
of this Note as of such date, one common share of Maker for each dollar
(including accrued interest) outstanding hereunder as of such date; and (ii) if
this Note is not fully satisfied on or before January 10, 2009, Maker shall
issue, on January 10, 2009, to the holder of this Note as of such date, one
common share of Maker for each dollar (including accrued interest) outstanding
hereunder as of such date.
Upon execution of this Note, Holder and Maker agree to cancel the previous note
executed on February 6, 2006.
Speaking Roses International, Inc.
By ________________________________
Agreed and Accepted:
___________________________________
Xxxxx X. Xxxx
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