Exhibit 10.18
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FIRST AMENDMENT TO
LINE OF CREDIT AGREEMENT
This First Amendment to Line of Credit Agreement (this "Amendment"), is
entered into and effective as of the 10th day of November, 2006, by and between
Dos Lagos, LLC, an Idaho limited liability company ("Lender") and Speaking Roses
International, Inc., a Utah corporation ("Borrower" and collectively with
Lender, the "parties"). Each capitalized term not otherwise defined herein shall
have the respective meaning ascribed to such term in the Line of Credit
Agreement by and between the parties, dated May 11, 2006 (the "Credit
Agreement").
WHEREAS, the parties entered into the Credit Agreement pursuant to
which Lender established for a period extending to December 31, 2006, a Credit
Line for and on behalf of Borrower equal to the Credit Limit, and Borrower
executed and delivered to Lender a Secured Promissory Note in a principal amount
equal to the Credit Line (the "Credit Note");
WHEREAS, the principal amount, together with accrued interest there on,
due and owing on the Credit Note and Credit Agreement is Two Million Fifty Eight
Thousand Five Hundred Thirty Nine Dollars and Eighty Cents ($2,058,539.80), as
of November 10, 2006.
WHEREAS, the parties desire to amend the Credit Agreement as set forth
herein, and to amend and restate in its respective entirety the Credit Note;
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
1. Amendments to Credit Agreement.
(a) Borrower has no obligation to make monthly interest payments
until January 1, 2008, however, on the first day of each month the accrued but
unpaid interest shall be added to the principal balance due hereon. The
principal balance, together accrued but unpaid interest, is agreed to be Two
Million Fifty Eight Thousand Five Hundred Thirty Nine Dollars and Eighty Cents
($2,058,539.80), as of November 10, 2006. No default will be declared for these
amounts exceeding the Credit Limit.
(b) Section 1 of the Credit Agreement is hereby amended to delete
therefrom the date "December 31, 2006" and to substitute therefor the date
"January 10, 2012."
(c) Section 2 of the Credit Agreement is hereby amended to add the
following language:
Notwithstanding anything in this Section 2 previously stated, Borrower
shall have no further rights to request any Advances or receive any
Advances on this Line of Credit Agreement.
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(d) Section 3 of the Credit Agreement is hereby amended to delete
the Section in its entirety and replace it with the following:
Interest; Default Interest. The principal balance outstanding of Two
Million Fifty Eight Thousand Five Hundred Thirty Nine Dollars and
Eighty Cents ($2,058,539.80) shall bear interest from November 10, 2006
at a variable rate equal to the Loan Index Rate plus a margin of 200
basis points. The Loan Index Rate is defined as that certain rate of
interest published as the "Prime Rate" in the "Money Rates" column in
the Western Edition of the Wall Street Journal. The interest rate will
be adjusted quarterly on the first business day of each January, April,
July and October. The interest shall be computed monthly on the basis
of a 360-day year. The initial Interest Rate hereunder is ten and
one-quarter percent (10.25%). Notwithstanding the foregoing, upon the
occurrence of an event of default hereunder by Borrower, the principal
amounts outstanding hereunder shall bear an interest rate of fifteen
percent (15%) per annum and commencing from the date a respective
Advance was made, and shall continue at such rate until the event of
default is cured.
(e) Section 4 of the Credit Agreement is hereby amended to delete
therefrom the first sentence thereof and to substitute therefore the following
sentences:
As of January 1, 2008 the monthly principal payments shall commence and
shall be calculated by dividing the principal balance then due to
Lender by 48 ("Principal Payment"). Commencing on January 1, 2008, and
on the first day of each month thereafter, Borrower shall pay to Lender
the Principal Payment together with accrued but unpaid interest which
has not been previously added to Principal.
2. Additional Shares. In further consideration of the transactions
contemplated hereby, Borrower shall issue, transfer and convey to Lender, on the
date hereof, 2,058,540 shares and on each of January 10, 2008, 2009, 2010, 2011
and 2012 (each "Issuance Date"),one (1) common share of Borrower for each dollar
of all accrued but unpaid interest on each Issuance Date. As a condition to the
issuance of the common shares, Borrower will be required to execute a definitive
stock purchase agreement and such other documents as Lender may reasonably
request in connection with such issuance, and Borrower hereby agrees to so
execute such agreements.
3. Security Agreement. The Credit Note is made in connection with and
as part of, and is entitled to the benefits and subject to the terms and
conditions of, the Patent Security Agreement by and between Borrower and Lender
dated October 30, 2006 (the "Security Agreement").
4. Effective Date. This Amendment shall be deemed effective as of the
date first written above, as if executed on such date.
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5. Waiver of Prior Claims. Borrower fully, finally, and forever
releases and discharges Lender and its participants, successors, assigns,
directors, officers, employees, agents, and representatives from any and all
actions, causes of action, claims, debts, demands, liabilities, obligations, and
suits of whatever kind or nature, in law or equity, that Borrower has or in the
future may have, whether known or unknown, (i) in respect of the Loan, the Loan
Documents, or the actions or omissions of Lender in respect of the Loan or the
Loan documents, and (ii) arising from events occurring prior to the date hereof.
6. Cross-Default. As an additional Event of Default, the Parties agree
that any default of Borrower's $181,000 Promissory Note due or the $1 Million
Line of Credit, both due and owing to Lender, shall also be a default of this
Agreement.
7. Jurisdiction and Venue. The Parties hereby agree to jurisdiction and
venue for any disputes concerning the Credit Agreement and the Credit Note be in
the Third Judicial District Court in and for Salt Lake County, State of Utah.
8. General. This Amendment will be binding upon and inure to the
benefit of each party, and its respective successors and assigns, except that
neither party shall assign or transfer its respective rights or delegate its
respective duties hereunder without the prior written consent of the other
party; provided, however, that Lender may assign its respective rights and
duties hereunder to an entity controlled by or under common control with Lender.
This Amendment and all documents and instruments associated herewith will be
governed by and construed and interpreted in accordance with the laws of the
State of Utah. This Amendment will be deemed to express, embody, and supersede
any previous understanding, agreements, or commitments, whether written or oral,
between the parties with respect to the general subject matter hereof. This
Amendment may not be amended or modified except in writing signed by the
parties.
9. No Other Effect. Except as expressly set forth herein, the Credit
Agreement shall not by implication or otherwise be supplemented or amended by
virtue of this Amendment, but shall remain in full force and effect, as amended
hereby, and each of the parties hereby ratifies and affirms the Credit
Agreement, as amended pursuant to the terms of this Amendment.
10. Counterparts. This Amendment may be executed in any number of
counterparts (including facsimile signatures) and each of such counterparts
(including facsimile signatures) shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date and year first above written.
Dos Lagos, LLC Speaking Roses International, Inc.
By: By:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Manager ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
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EXHIBIT A
AMENDED AND RESTATED PROMISSORY NOTE
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AMENDED AND RESTATED PROMISSORY NOTE
FOR VALUE RECEIVED, Speaking Roses International, Inc., a Utah
corporation ("Borrower") unconditionally promises to pay to Dos Lagos, LLC
("Lender") or its order, at its address set forth in the books and records of
Borrower, in lawful money of the United States of America, the principal sum of
Two Million Fifty Eight Thousand Five Hundred Thirty Nine Dollars and Eighty
Cents ($2,058,539.80) or the aggregate unpaid principal amount of all advances
made by Lender to Borrower pursuant to the terms of a Line of Credit Agreement
dated May 11, 2006, as amended pursuant to the First Amendment to Line of Credit
Agreement between Borrower and Lender of even date herewith (the "Credit
Agreement"), whichever is less, together with any interest thereon in accordance
with the Credit Agreement, as amended, until paid in full, both before and after
judgment.
The principal balance outstanding of Two Million Fifty Eight Thousand
Five Hundred Thirty Nine Dollars and Eighty Cents ($2,058,539.80) shall bear
interest from November 10, 2006 at a variable rate equal to the Loan Index Rate
plus a margin of 200 basis points. The Loan Index Rate is defined as that
certain rate of interest published as the "Prime Rate" in the "Money Rates"
column in the Western Edition of the Wall Street Journal. The interest rate will
be adjusted quarterly on the first business day of each January, April, July and
October. The interest shall be computed monthly on the basis of a 360-day year.
The initial Interest Rate hereunder is ten and one-quarter percent (10.25%).
Notwithstanding the foregoing, upon the occurrence of an event of default
hereunder by Borrower, the principal amounts outstanding hereunder shall bear an
interest rate of fifteen percent (15%) per annum and commencing from the date a
respective Advance was made, and shall continue at such rate until the event of
default is cured.
Borrower has no obligation to make monthly interest payments until
January 1, 2008. However, on the first day of each month the accrued but unpaid
interest shall be added to the principal balance due hereon. As of January 1,
2008 the monthly principal payments shall commence and shall be calculated by
dividing the principal balance then due to Lender by 48 ("Principal Payment").
Commencing on January 1, 2008, and on the first day of each month thereafter,
Borrower shall pay to Lender the Principal Payment together with accrued but
unpaid interest which has not been previously added to Principal. The entire
unpaid principal balance, together with accrued but unpaid interest thereon,
shall become due and payable on January 10, 2012, unless converted into common
shares of Borrower in accordance with the Credit Agreement. All payments
received shall be applied first to unpaid costs and fees, then to accrued but
unpaid interest and the balance, if any, to the reduction of principal. Borrower
agrees to pay to Lender all reasonable costs and attorneys' fees incurred in
collecting the balance due under this Secured Promissory Note.
The Parties hereby agree to jurisdiction and venue for any disputes
concerning this Agreement be in the Third Judicial District Court in and for
Salt Lake County, State of Utah.
Any default of any other obligation owing by Borrower to Lender shall
be a default of this Note.
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This Note is made in connection with and as part of, and is entitled to
the benefits and subject to the terms and conditions of, the Credit Agreement
and the Patent Security Agreement by and between Borrower and Lender dated
October 30, 2006.
Speaking Roses International, Inc.
By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
