LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is
made and entered into as of October 12, 2007 (the "Effective Date")
by and between: SKYE INTERNATIONAL, INC., a Nevada corporation with
offices at 7701 East Gray Road, Suite 4, Scottsdale, Arizona 85260
("Borrower"); and TED MAREK FAMILY TRUST dated May 28, 1999,
Beverly A. Marek and Thaddeus Frank Marek, Trustees, with offices
at 12210 North 76 th Place, Scottsdale, Arizona 85260
("Lender").
WHEREAS, Borrower desires to borrow
from Lender, and Lender has agreed upon the terms and conditions
herein to lend to Borrower, from time to time, cash in varying
amounts and at varying times; and in consideration thereof, and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged the parties hereby agree as
follows:
1.
Loan. Borrower
desires to borrow from Lender, from time to time, varying amounts
of funds on an "as needed" basis (any individual amount of funds
loaned, and all such funds together, being referred to herein as a
"Loan"). Lender agrees to consider, upon Borrower's request the
possibility of making any one or more Loans to Borrower. If Lender
lends to Borrower, each resulting Loan shall be subject to this
Agreement and be evidenced by the execution and delivery by
Borrower of a secured convertible promissory note substantially in
the form attached hereto as Exhibit "A" and incorporated herein by
this reference (each, a "Note"; and collectively, "Notes"). The
proceeds from each Loan shall be used by Borrower for general
corporate purposes, as directed by Borrower's Board of
Directors.
2.
Mandatory Issuance to Lender of Shares of Restricted Common
Stock of Borrower; Issuance of Additional Shares Upon Optional
Extension of Maturity Date. As a portion of the consideration to be paid by
Borrower to Lender for the making of any Loan (i.e.. in addition to
all of Borrower's additional obligations under this Agreement and
under each Note), Borrower hereby covenants to issue to Lender one
(1) share of the common stock. $.001 par value per share, of
Borrower, for every Two Dollars ($2.00) of principal amount of each
Loan (i.e. each time an additional Note is made by Borrower in
favor of Lender. Borrower concomitantly shall issue common shares
to Lender), the parties hereby acknowledging and agreeing that each
and all such newly issued shares shall be: (i) deemed to be
"restricted securities" as defined in applicable federal and state
securities laws; (ii) issued to Lender immediately upon the
execution and delivery of each corresponding Note: and (iii) shall,
when issued, be deemed for all purposes to be shares that are fully
paid-up and non-assessable. The parties further acknowledge and
agree that, in accordance with Section 1(c) of each Note, Lender
unilaterally shall have the right to extend the Maturity Date
thereof by one (1) year, upon written notice of such extension
given by Lender to Borrower on or prior to the original Maturity
Date, and that, immediately upon the giving of such notice, if at
all, Borrower shall issue to Lender additional shares of Borrower's
common stock, also at the rate of one (1) share of common stock.
$.001 par value per share of Borrower. for every Two Dollars
($2.00) of the original principal amount of the corresponding Note
(i.e., without any increase in the corresponding Loan amount), such
additional shares also to be deemed to be restricted securities
that are fully paid-up and non-assessable immediately upon their
issuance.
3.
Certain Prerequisites to Loans. Lender shall have no
obligation to make any Loan or Loans whatsoever to Borrower. If and
to the extent that Borrower seeks any Loan and Lender desires to
make a Loan or Loans, from time to time, then Borrower first shall
ensure that the following conditions to the making of any Loan
hereunder shall have been satisfied: (i) this Agreement and each
corresponding Note shall have been duly executed and delivered to
Lender, all in form and substance satisfactory to Lender; (ii)
Borrower shall have furnished to Lender such financial statements
and other corporate information of Borrower, financial and
otherwise, as Lender may have requested; (iii) no Event of Default
shall have occurred and be continuing under this Agreement; (iv)
all representations and warranties contained in this Agreement or
in any Note shall be true and correct; (v) Borrower shall have
delivered to Lender such authorizations and other documents as may
be requested by Lender to evidence Borrower’s authority to
execute, deliver and perform this Agreement and each Note,
including, without limitation, a Unanimous Consent of the
Company’s Board of Directors approving the Loan, this
Agreement and the Notes, all in form and substance satisfactory to
Lender at Lender’s sole discretion; (vi) Borrower shall have
provided to Lender evidence satisfactory to Lender of the existence
of insurance coverage on Borrower’s properties, assets and
business in such amounts and against such risks as Lender may deem
appropriate in its sole discretion, with endorsements to all such
insurance policies of Borrower naming Lender as a loss payee or an
additional named insured; and (vii) Borrower shall have paid all of
Lender’s costs and expenses, including reasonable fees of
legal counsel, incurred in the preparation of this Agreement and
each Note and any and all additional instruments and other
documents that may be related hereto and thereto.
4.
Representations and Warranties, and Certain Covenants, of
Borrower. To induce
Lender to enter into this Agreement, Borrower hereby represents and
warrants to Lender, at the commencement of each Loan, during the
term of each Loan, and throughout any and all renewals and
extensions thereof, as follows: (i) Borrower is and shall remain
duly incorporated, validly existing and in good standing under the
laws of the State of Nevada, and is and shall remain authorized to
conduct business in all jurisdictions in which Borrower’s
ownership of property and transaction of business legally requires
such authorization, except where the failure to be authorized to
conduct business would not result in a material adverse effect upon
Borrower’s business, and Borrower has and shall continue to
have full power, authority and legal right to own its property and
to transact business as presently transacted or proposed to be
transacted; (ii) the execution, delivery and performance of this
Agreement and of each Note by Borrower are and shall remain within
the powers of Borrower and have been duly authorized by
Borrower’s Board of Directors, and the same are not in
contravention of law or the terms of Borrower’s
organizational documents, or of any indenture, agreement or
undertaking to which Borrower is a party or by which Borrower or
any of Borrower’s assets are bound; (iii) this Agreement and
each Note, when duly executed and delivered, shall constitute
legal, valid and binding obligations of Borrower, and shall be
fully enforceable in accordance with their respective terms; (iv)
all financial statements and information that have been or may
hereafter be furnished to Lender in connection herewith do and
shall present fairly the financial condition of Borrower as of the
dates thereof, for the periods for which the same are furnished,
and shall be accurate, correct and complete in every material
respect; (v) there is no action, suit, investigation or proceeding
pending or, to Borrower’s knowledge, threatened against
Borrower, as of the Effective Date, and Borrower hereby undertakes
to notify Lender immediately in writing of the initiation of any
such action suit, investigation or proceeding against Borrower;
(vi) Borrower has timely filed and shall continue timely to file
all tax returns and all securities law filings that are required to
be filed (subject to permitted extensions), and has paid all taxes
and other fees and charges due in accordance with such returns and
other filings or otherwise due or pursuant to any assessment
received by Borrower, and shall continue to do the same; (vii)
Borrower holds and shall continue to hold all material licenses,
permits, certificates, consents and franchises, and all necessary
filings associated therewith have been made, in order for Borrower
to carry on its business as now being conducted and to own or lease
and operate its properties as now owned, leased or operated, and
all such material licenses, permits, certificates, consents and
franchises are and shall continue to be valid and in full force and
effect; (viii) there is no material fact that Borrower has not
disclosed to Lender that could have a material adverse effect on
the properties, business, prospects or condition (financial or
otherwise) of Borrower, and Borrower affirmatively undertakes to
notify Lender in writing of the occurrence of any such fact,
immediately upon occurrence; (ix) to Borrower’s knowledge,
Borrower is not in violation of any law, rule, regulation, order or
decree applicable to Borrower or its properties, and Borrower
affirmatively undertakes to comply at all times with all applicable
laws, rules and regulations; (x) no Event of Default has occurred
and is continuing; and (xi) Borrower has obtained the advice of
independent counsel, who has reviewed and negotiated this Agreement
and the form of Note on behalf of Borrower prior to the execution
and delivery hereof and thereof. All of the representations and
warranties, and the covenants, made by Borrower herein, shall
survive the delivery of this Agreement and of each Note, and any
renewal and extension of any Loan or Loans made hereunder. All
statements made by or on behalf of Borrower under or pursuant to
this Agreement or any Note, or otherwise in connection with the
transactions contemplated hereby, shall constitute representations
and warranties made by Borrower hereunder.
5.
Certain Events of Default. Each of the following
shall constitute an Event of Default hereunder and under each Note:
(i) any failure to pay when due any amount of principal or interest
in accordance with the terms of this Agreement or of any Note, and
the continuation of such default without cure for a period of ten
(10) calendar days after written notice by Lender of the occurrence
of such default; (ii) any failure to pay when due any other amount
payable to Lender under the terms of this Agreement or of any Note,
and the continuation of such default without cure for a period of
ten (10) calendar days after written notice by Lender of the
occurrence of such default; (iii) any default by Borrower in the
performance or observance of any covenant or agreement contained in
this Agreement or in any Note, or in any other agreement made in
connection herewith or therewith, or in any other agreement or
instrument delivered to Lender in connection with this Agreement or
any Note, and the continuation of such default without cure for a
period of ten (10) calendar days after written notice by Lender of
the occurrence of such default; (iv) any representation or warranty
made by Borrower to Lender, or any representation, statement,
certificate, schedule or report made or furnished to Lender on
behalf of Borrower, is false or erroneous in any material respect
at the time of its making or otherwise ceases to be accurate in any
material respect; (v) Borrower applies for or consents to the
appointment of a receiver, trustee or liquidator of its properties,
or admits in writing its inability to pay debts as they mature, or
makes a general assignment for the benefit of creditors, or any
material part of Borrower’s assets or properties is placed in
the charge of a receiver, trustee or other officer or
representative of a court or of creditors; (vi) Borrower is
adjudged a bankrupt, or any voluntary proceeding is instituted by
Borrower in insolvency or bankruptcy or for readjustment, extension
or composition of debts, or for any other relief of debtors; (vii)
any involuntary proceeding is instituted against Borrower in
insolvency or for readjustment, extension, or composition of debts,
which proceeding is not dismissed within ninety (90) days after the
filing of the same; (viii) entry by any court of a final judgment
against Borrower, or the institution of any levy, attachment,
garnishment or charging order against Borrower, which has a
material adverse effect, as determined by Lender in Lender’s
reasonable judgment, on the financial condition of Borrower; or
(ix) any default, event of default, or breach occurs with respect
to or otherwise on the part of Borrower under or in connection with
any other agreement between Lender and Borrower, including, without
limitation, that certain Loan Agreement and corresponding 15%
Convertible Debenture executed by Lender and Borrower as of
September 1, 2007 (the parties also hereby agreeing that any
default by Borrower under any Loan made hereunder shall create an
Event of Default with respect to all Loans made hereunder, and with
respect to all other agreements between Borrower and Lender,
including the September 1, 2007 Loan Agreement and
Debenture).
6.
Remedies. Upon the occurrence of any one or more
Events of Default that have not been timely cured, Lender may, at
its sole option, exercise any and all of the following rights and
remedies, at Lender’s sole discretion, each and every one of
which shall be cumulative and in addition to each other and to the
additional rights arising on the part of Lender at law and in
equity: (i) declare all sums owing under this Agreement and the
corresponding Note or Notes to be immediately due and payable,
without the need to wait for the occurrence of any deadline or
other passage of time; (ii) terminate any or all of Lender’s
obligations hereunder; (iii) exercise a right of offset against any
and all property of Borrower in Lender’s custody or
possession; (iv) without notice of default or demand, pursue and
enforce any and all of Lender’s rights and remedies against
Borrower, including, without limitation, any and all rights of
Lender arising under this Agreement and any and all Notes; (v)
exercise all rights of Lender under that certain Security Agreement
made of even date herewith between Borrower and Lender, under which
Borrower has granted to Lender a security interest in all of
Borrower’s assets to secure performance of Borrower’s
obligations to Lender under this Agreement and under each Note (the
“Security Agreement”); and (vi) exercise any and all
additional rights and remedies of Lender at law or in equity.
Lender may waive any Event of Default, but only in a writing
executed by Lender. Any Event of Default waived in a writing
executed by Lender shall be deemed under this Agreement and under
each Note to have been cured and not to be continuing; but no
waiver shall waive the effect of any subsequent or different Event
of Default.
7.
General Provisions. Borrower and Lender further agree as
follows:
7.1
Modification; Construction. No failure to exercise and no delay in
exercising any right of Lender hereunder or under any Note shall
operate as a waiver hereof or thereof, neither shall any single or
partial exercise of any such right preclude any additional or
further exercise thereof. The rights of Lender hereunder and under
each Note shall be in addition to all other rights of Lender at law
and in equity and those arising under any other instrument or other
agreement, including the Security Agreement. No modification of any
provision of this Agreement or of any Note or of the Security
Agreement shall be effective unless made in a writing signed by
Lender and Borrower. No notice or demand given in any case shall
constitute a waiver of the right to take other action in the same,
similar or other instances without such notice or demand. Initially
capitalized terms used but not defined in this Agreement shall have
the meanings given to them, respectively, in the Note and in the
Security Agreement.
7.2
Notices. Any and
all notices and other communications required or permitted to be
given under this Agreement or under any Note shall be given in
writing and personally delivered or mailed by prepaid mail or
overnight courier to the address of such party as provided at the
beginning of this Agreement. Any such notice or other communication
shall be deemed to have been given on the date that is: three (3)
days after it has been mailed by prepaid certified or registered US
Mail; one (1) day after it has been sent by overnight courier; on
the same day on which it personally has been hand delivered; and if
sent by other means, when actually received. Any party may change
its address for notice purposes by giving notice of such change to
the other party as provided herein.
7.3
Governing Law; Jurisdiction; Forum. This Agreement has been executed, delivered and
accepted by Borrower and Lender in the State of Arizona; and the
substantive laws of Arizona and the applicable federal laws of the
United States of America shall govern the validity, construction,
enforcement and interpretation of this Agreement and of each Note.
Any suit, action or proceeding against Borrower with respect to
this Agreement or any Note may be brought in the Superior Court of
Arizona located in Maricopa County, Arizona, or in the United
States District Court for the District of Arizona, as Lender, in
Lender’s sole discretion, may elect; and Borrower hereby
submits to the non-exclusive jurisdiction of such courts for the
purpose of any such suit, action or proceeding. Borrower hereby
irrevocably waives any objections Borrower may now or hereafter
have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any Note that may
be brought in any such courts, and Borrower further irrevocably
waives any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient
forum.
7.4 No Oral
Agreements; Invalid Provisions; Multiple
Counterparts. THIS
AGREEMENT AND EACH NOTE ISSUED HEREUNDER REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER
HEREOF, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUE
