EXHIBIT
10.13
SECURITY AGREEMENT
THIS SECURITY 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
(“Debtor”); 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 (“Secured
Party”).
RECITALS
WHEREAS, contemporaneously with the execution and
delivery of this Agreement, Debtor and Secured Party are entering
into a certain Loan Agreement (“Loan Agreement”), under
which, from time to time, Debtor will execute and deliver to
Secured Party evidence of indebtedness in substantially the same
form as that certain form of Secured Convertible Promissory Note
attached to the Loan Agreement as Exhibit A thereto
(“Note”). All initially capitalized terms not defined
in this Agreement shall have the meanings ascribed thereto in the
Loan Agreement and in any Note, all of which shall be deemed
incorporated herein by this reference.
WHEREAS, as of the Effective Date, Debtor has executed
and delivered to Secured Party a Note in the original principal
amount of One Hundred Thousand Dollars (US $100,000.00), the
performance of which shall be secured by this Agreement.
WHEREAS, this Agreement secures on behalf of Secured
Party the performance of all of Debtor’s obligations under
the Loan Agreement, under each and every additional Note (together,
the “Notes”) that may be issued by Debtor from time to
time, and under this Agreement (each such obligation of Debtor, a
“Secured Obligation”; collectively, “Secured
Obligations”).
AGREEMENT
NOW ,
THEREFORE , in consideration of the foregoing recitals and
the mutual covenants contained in this Agreement, the parties
hereto hereby agree as follows:
1.
Collateral . For good and valuable consideration, and to
secure the full payment and other performance of the Secured
Obligations, Debtor hereby grants to Secured Party, pursuant to
Article 9 of the Arizona Uniform Commercial Code
(“UCC”), a first priority security interest
(“Security Interest”) in all of the assets that Debtor
owns or to which Debtor otherwise has any right, title or interest,
and in all additional assets with respect to which Debtor hereafter
may acquire any right, title or interest, whether present, future
or contingent, and in any and all of Secured Party’s
expectancy to acquire any such property, including, without
limitation, the following named asset classes (all such present or
future property of Debtor being referred to herein as
“Collateral”):
(a) All
accounts, contract rights, rights to payment, documents of title,
deposit accounts, certificates of deposit, investment property,
intellectual property, patents, trademarks, copyrights, licenses,
general intangibles, instruments, documents and chattel paper
(including all accounts receivable, notes, drafts, lease agreements
and security agreements), and all goods, if any, represented
thereby, whether now existing or hereafter acquired or created from
time to time;
(b) All
inventory now owned or hereafter acquired, including all goods held
for sale or lease in Debtor’s business, as now or hereafter
conducted, and all materials, work in process and finished goods
used or to be consumed in Debtor’s business (whether or not
represented by warehouse receipts or bills of lading or any other
document or instrument, and whether or not placed in transit or
delivered to a public warehouse);
(c) All
equipment now owned or hereafter acquired, including all furniture,
fixtures, furnishings, vehicles (whether titled or non-titled),
machinery, materials and supplies, wherever located, together with
all parts, accessories, attachments, additions thereto and
replacements therefor;
(d) All
negotiable and nonnegotiable documents of title;
(e) All
monies, securities, stocks, bonds, instruments, documents and
chattel paper now held by or hereafter delivered to Secured Party,
together with all property rights and security interests evidenced
thereby, all increases thereof (including, without limitation,
stock dividends), all profits therefrom and all transformations
thereof;
(f) All
tax refund claims, all policies and certificates of insurance
covering any of the Collateral, all contracts, agreements or rights
of indemnification, guaranty or surety relating to any of the
Collateral, and all claims, awards, loss payments, proceeds and
premium refunds that may become payable with respect to any such
policies, certificates, contracts, agreements or rights;
(g) All
ledger cards, invoices, delivery receipts, worksheets, books of
accounts, statements, correspondence, customer lists, files,
journals, data, ledgers and records in any form, written or
otherwise, including any computer readable memory and any computer
hardware or software necessary to utilize, create, maintain and
process such memory related to any of the Collateral;
(h) All
trademarks, tradenames, copyrights, patents, service marks, logos,
insignia and other distinctive marks or names;
(i) All
claims for loss or damage to or in connection with any of the
Collateral, all other claims in any form for the payment of money,
including tort claims, and all rights with respect to such claims
and all proceeds thereof;
(j) All
Debtor’s rights to any insurance policies or proceeds paid
from insurance policies on Debtor’s assets, including all
insured inventory;
(k) All
attachments, accessions, tools, parts, supplies, increases and
additions to and replacements, extensions, renewals, modifications
of and substitutions for any of the Collateral;
(l) All
products and proceeds of the Collateral, in any form, including all
proceeds received, due or to become due from any sale, lease
exchange or other disposition of any of the Collateral, whether
such proceeds are cash or noncash in nature or are represented by
checks, drafts, notes or other instruments for the payment of
money; and
(m) All
other things of value that Debtor has or holds or to which, in the
future, Debtor has or claims any right, title or
interest.
2. Secured
Obligations . The Collateral shall secure, in such order of
priority as Secured Party may elect, the Secured Obligations of
Debtor to Secured Party, including, without limitation, the
following:
(a) payment
and performance of all obligations of Debtor under the terms of the
Loan Agreement and under any and all Notes issued pursuant thereto,
together with all amendments, extensions, modifications,
substitutions and renewals thereof;
(b) payment
and performance of every obligation, covenant and agreement of
Debtor contained in this Agreement, together with all amendments,
extensions, modifications, substitutions and renewals
hereof;
(c) payment
and performance of every obligation, covenant, and agreement of
Debtor in favor of Secured Party contained in any other instrument
or other document, together with all amendments, extensions,
modifications, substitutions and renewals thereof; and
(d) payment
and performance of all other obligations and liabilities of Debtor
to Secured Party, whether now existing or hereafter incurred or
created and whether voluntary or involuntary, whether due or not
due, whether absolute or contingent, and whether incurred directly
or acquired by Secured Party by assignment or otherwise.
3. Certain
Representations and Warranties of Debtor . Debtor hereby
represents and warrants to Secured Party that:
(a)
Organization; Qualification . Debtor is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Nevada and is properly qualified and in good standing
as a foreign corporation and is duly authorized to do business in
each jurisdiction where the nature of its properties or business
requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business,
financial condition, assets or properties of Debtor.
(b)
Authority . Debtor has the requisite corporate power and
corporate authority to carry out the terms and conditions
applicable to Debtor under the Loan Agreement, each and all Notes,
this Agreement, and any additional documents to which Debtor is or
may become a party and that relate in any manner to the subject
matter hereof and thereof (together, the Loan Agreement, all Notes
(present and future), this Agreement, and any additional documents
relating in any manner hereto and thereto being referred to herein
as the “Loan Documents”). The execution, delivery and
performance by Debtor of the Loan Agreement, this Agreement, and
the other Loan Documents have been duly authorized by all requisite
corporate action on the part of Debtor, and have been duly executed
and delivered by Debtor.
(c)
No Conflict . The execution, delivery, and performance by
Debtor of this Agreement and the other Loan Documents do not and
will not conflict with or result in any breach of the terms and
conditions of or constitute a default under any other agreement or
instrument under which Debtor is a party or Debtor or its assets
are otherwise obligated. Debtor is not in default in the
performance or observance of any covenants, conditions or
provisions of any such other agreement or instrument.
(d)
Priority . The Security Interest in the Collateral granted
to Secured Party constitutes, and at all times hereafter shall
constitute, a first priority security interest.
(e)
Title . Debtor is and shall be the owner of, and has or
shall continue to have, good and marketable title to the
Collateral, free and clear of all security interests, liens and
other encumbrances of any kind or description whatsoever, except
the Security Interest arising under this Agreement. No financing
statement covering the Collateral is or will be filed or recorded
in any public office except with respect to the Security
Interest.
4. Certain
Covenants of Debtor .
(a)
Security Interests; Transfers . Debtor shall keep the
Collateral free of all security interests or other encumbrances,
other than the Security Interest arising under this Agreement.
Debtor shall not sell, transfer, assign or otherwise dispose of
(each, a “Transfer”) any Collateral or any interest
therein without first notifying Secured Party in writing providing,
in reasonable detail, a description of the Collateral to be
Transferred, the nature of the proposed Transfer, and the
anticipated proceeds of such Transfer. Secured Party shall have the
right to reject any Transfer.
(b)
Maintenance of Collateral . Debtor shall keep the Collateral
at the facilities of Debtor and shall keep and maintain the
Collateral in good condition and repair, except for ordinary wear
and tear. Debtor shall not use the Collateral in violation of any
provision of this Agreement or any of the other Loan Documents to
which Debtor is a party or any applicable statute, ordinance or
regulation or any policy of insurance insuring the
Collateral.
(c)
Maintenance of Corporate Name . Debtor shall not change its
corporate name or the name under which it does business, without
the prior written consent of Secured Party.
(d)
Insurance . Debtor shall at all times provide insurance
coverage of the Collateral on terms acceptable to Secured Party, at
Secured Party’s sole discretion.
(e)
Payments of Charges . Debtor shall pay when due all taxes,
assessments and other charges that may be levied or assessed
against the Collateral.
(f)
Fixtures . Debtor shall prevent any portion of the
Collateral that is not a fixture from being or becoming a
fixture.
(g)
Notices to Secured Party . Within ten (10) days after the
end of each fiscal quarter during the term of this Agreement,
Debtor shall provide to Secured Party written notice of any change
in the location of any of the Collateral. Debtor shall promptly
notify Secured Party of all other matters for which notice is
required under any of the other Loan Documents.
(h)
Inspections . Secured Party or the agents of Secured Party
may inspect the Collateral at reasonable times and may enter into
any premises where the Collateral is or may be located. Secured
Party or any representative of Secured Party may visit and inspect
Debtor’s other properties, examine its books of record and
account and discuss its affairs, finances and accounts with any of
its officers, directors, employees and agents.
(i)
Defense of Collateral . Debtor, at the sole cost and expense
of Debtor, shall protect and defend this Agreement, all of the
rights of Secured Party, and the Collateral, against all claims and
demands of other parties. Debtor shall pay all claims and charges
that in the opinion of Secured Party might prejudice, imperil or
otherwise affect the Collateral or the Security Interest. Debtor
shall promptly notify Secured Party of any levy or other seizure by
legal process or otherwise of all or any part of the Collateral and
of any threatened or filed claims or proceedings that might in any
way affect or impair the value of this Agreement to Secured
Party.
(j)
Perfection of Security Interest . The Security Interest, at
all times, shall be perfected and shall be prior to any and all
other interests in the Collateral. Debtor shall act and perform as
necessary and shall execute and file all security agreements,
financing statements, continuation statements, and other documents
requested by Secured Party to establish, maintain and continue the
perfected Security Interest. Notwithstanding the foregoing, Debtor
authorizes Secured Party to file an unlimited number of financing
statements and renewals thereof, without Debtor’s signature,
with respect to the Collateral. Debtor, on written demand, shall
promptly pay all reasonable costs and expenses of filing and
recording, including the reasonable costs of any searches, deemed
necessary by Secured Party from time to time to establish and
determine the validity and the continuing priority of the Security
Interest.
(k)
Payment of Charges . If Debtor fails to pay any taxes,
assessments, expenses or charges, or fails to keep all of the
Collateral free from other security interests, encumbrances or
claims, or fails to keep the Collateral in good condition and
repair, or fails to procure and maintain insurance thereon, or to
perform otherwise as required under this Agreement, Secured Party
may advance the monies necessary to pay the same, to accomplish
such repairs, to procure and maintain such insurance or to so
perform, all at the sole expense of Debtor. Secured Party is hereby
authorized to enter upon any property in the possession or control
of Debtor for such purposes.
(l)
Rights and Powers . All rights, powers, and remedies granted
to Secured Party in this Agreement, or otherwise available to
Secured Party, are for the sole benefit and protection of Secured
Party, and Secured Party may exercise any such
