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 PERRY D.
LOGAN and ROSE LOGAN, husband and wife, as joint tenants with the
right of survivorship, P.O. Box 35080, Las Vegas, Nevada 89133
(together, “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
TH
