TO LOAN AGREEMENT DATED OCTOBER 12, 2007 BETWEEN SKYE INTERNATIONAL, INC, AND TED MAREK FAMILY TRUST
EXHIBIT
10.14
EXHIBIT "A"
TO
LOAN AGREEMENT DATED OCTOBER 12, 2007 BETWEEN
SKYE
INTERNATIONAL, INC, AND XXX XXXXX FAMILY TRUST
THE SALE, TRANSFER
OR OTHER DISPOSITION OF THIS NOTE, OR OF THE SIIARES OF
COMMON
STOCK 1SSUABLE UPON CONVERSION HEREOF, IS RESTRICTED.
15%
CONVERTIBLE SECURED PROMISSORY NOTE
1-YEAR
MATURITY (OPTIONAL 2-YEAR MATURITY)
| US $100,000.00 |
October 12,
0000
|
| Xxxxxxx, Xxxxxxx, XXX |
FOR
VALUE RECEIVED, Skye International,
Inc.. a Nevada corporation with offices at 0000 Xxxx Xxxx Xxxx,
Xxxxx 0, Xxxxxxxxxx, Xxxxxxx 00000 (the "Company"), hereby promises
unconditionally, as of October 12, 2007 (the "Effective Date"), to pay to the
order of Xxx Xxxxx Family Trust dated May 28, 1999, Xxxxxxx X. Xxxxx and
Xxxxxxxx Xxxxx Xxxxx, Trustees, with offices at 00000 Xxxxx 00xx
Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000 ("Holder"), the
principal amount of One Hundred Thousand Dollars (US $100,000.00) together with
interest on the principal balance outstanding from time to time under this
instrument ("Note"), from and including the date hereof, until, but excluding,
the date of payment, at a per annum rate equal to the "Stated Interest Rate"
specified in Section
1(a) or, to the extent applicable, at the "Default Interest Rate"
specified in Section
1(b), in accordance with the following terms and conditions:
1. Contracted For Rate of Interest.
The contracted for rate of interest of the indebtedness evidenced by this
Note shall include and consist of the following, as
applicable:
(a) Stated Interest Rate. The "Stated
Interest Rate" shall equal Fifteen Percent (15%) per annum. calculated on the
basis of the actual number of days elapsed. assuming a 365-day year, applied to
the outstanding principal balance of this Note from time to time. The principal
balance outstanding hereunder shall bear interest at the Stated Interest Rate
from the date of issuance of this Note through the date that is one day prior to
the first to occur of the following events: (i) the unpaid principal balance,
together with all
accrued interest and other amounts payable hereunder, have been paid in
full; (ii) the unpaid principal balance, together with all accrued interest and
other amounts payable hereunder. have been converted into shares of the
Company's common stock as permitted in accordance with Section
7: or (iii) the passage of ten (10) days following the occurrence of one
or more uncured Events of Default as defined in Section
4.
(b) Default
Interest Rate.
The "Default Interest Rate" shall equal Eighteen Percent (18%) per annum,
calculated on the basis of the actual number of days elapsed, assuming a 365-day
year, applied to the outstanding principal balance of this Note from time to
time. The principal balance outstanding hereunder shall hear interest at the
Default Interest Rate beginning eleven (11) days after the date of occurrence of
any uncured Event of Default, as defined in Section 4, and
continuing until the first to occur of the following events: (i) the unpaid
principal balance, together with all accrued interest and other amounts payable
hereunder. have been paid in full: or (ii) the unpaid principal balance,
together with all accrued interest and other amounts payable hereunder, have
been converted into shares of the Company's common stock as permitted in
accordance with Section
7.
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(c) Monthly Payments of Interest Only;
Payment in Full on Maturity Date (or Extended Maturity Date). Interest
accrued on the principal balance of this Note shall be due and payable to Holder
monthly, on the first day of each calendar month, beginning at the start of the
first full calendar month following the Effective Date and
continuing on the first day of each month thereafter until all obligations of
the Company under this Note have been paid in full. The outstanding principal
balance of this Note, together with all accrued but unpaid interest and all
additional amounts payable hereunder, shall be due and payable in full on the
date that is exactly one (1) year after the Effective Date (the "Maturity
Date"); provided,
however, that the Company shall not be required to repay such outstanding
principal, interest or additional amounts if and to the extent that this Note
has been converted by Holder, at Holder’s sole option, into shares of the
Company's Common Stock as permitted under Section 7; and provided further,
that the Holder unilaterally shall have the right to extend the Maturity Date by
one (1) year (the “Extended Maturity Date”), upon written notice of such
extension given by Holder to Company on or prior to the Maturity Date; and in
the event of such extension, the Note shall be deemed for all purposes to have
been issued originally with a two-year period of maturity.
2. Application of Payments. All
payments received by Holder with respect to the indebtedness evidenced hereby
shall be applied: (i) first to Additional Sums (as hereinafter defined) and to
any other non-interest charges and costs provided for in this Note; (ii) next,
to accrued but unpaid interest at the Default Interest Rate, if and to the
extent applicable; (iii) next, to accrued but unpaid interest at the Stated
Interest Rate; and (iv) finally, to the unpaid principal balance outstanding
hereunder from time to time.
3. Prepayments. Payments of
principal hereof may be made at any time, or from time to time, in whole or in
part, prior to the Maturity Date (or the Extended Maturity Date, as applicable),
without penalty, provided that all interest and other charges accrued through
the date of prepayment are also paid in full, in accordance with Section 2.
Notwithstanding any prepayment of principal hereof: (i) there shall be no change
to the Maturity Date (or, if applicable, to the Extended Maturity Date) or to
the amount of payments due hereunder unless Holder, in its sole and absolute
discretion, agrees in writing to such change; and (ii) no terms and conditions
of this Note shall be changed or affected in any manner whatsoever; and (iii)
the Company's obligations hereunder shall continue in effect, and this Note
shall remain outstanding, unless and until this Note is converted into shares of
the Company's Common Stock as permitted under Section 7, or until
the principal balance outstanding hereunder, together with all accrued interest
and other amounts payable hereunder, are paid in full, upon which, Holder shall
deliver to the Company the original executed copy of this Note, marked "PAID" in
bold lettering in a conspicuous location on the first page and on the signature
page hereof.
4. Events of Default;
Acceleration. The occurrence of any one or more of the following events
shall constitute an "Event of Default" hereunder, and upon any such Event of
Default, the entire principal balance outstanding hereunder, together with all
accrued interest and other amounts payable hereunder, at the election of Holder,
shall become immediately due and payable, without any notice to the Company, and
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Company:
(a) Nonpayment
of principal, interest or other amounts when the same become due and payable
hereunder, if the Company does not cure such failure to pay within ten (10) days
after the date such payment is due;
(b) The
dissolution, winding-up or termination of the existence of the Company or the
sale or disposition of substantially all of the assets of the Company’s
business;
(c) The
making by the Company of an assignment for the benefit of its
creditors;
(d) The
appointment of (or application for appointment of) a receiver for the Company,
or the involuntary filing against or voluntary filing by the Company of a
petition or application for relief under federal bankruptcy law or under any
similar federal or state law, which is not stayed or dismissed within 90 days of
filing, or the issuance of any writ of garnishment, execution or attachment for
service with respect to the Company or any property of the Company;
or
(e) Any
other material breach by the Company of the terms and conditions of this
Note.
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5. Additional Sums. The Company
agrees to pay an effective, contracted for rate of interest equal to the rate of
interest resulting from all interest payable as provided in this Note plus the
additional rate of interest resulting from the “Additional Sums” as defined in
the next sentence. All fees, charges, goods, things in action and any other
sums or
things of value, other than the interest resulting from the Stated Interest Rate
and the Default Interest Rate, as applicable, paid or payable by the Company
(collectively, the "Additional Sums") pursuant to this Note, that may be deemed
to constitute interest for the purpose of any applicable laws that may limit the
maximum amount of interest to be charged by a lender, shall be payable by the
Company as, and shall be deemed actually to be, additional interest; and for
such purposes only, the agreed upon and "contracted for rate of interest"
payable under this Note shall be deemed increased by the rate of interest
resulting from the imposition of the Additional Sums. The Company understands
and believes that this transaction complies with all applicable laws of the
State of Arizona; however, if any interest or other charges in connection with
this Note are ever held by a court of competent jurisdiction to have exceeded
the maximum amount of interest permitted by law, then the Company agrees that:
(i) the amount of interest or charges payable pursuant under this Note shall be
reduced to the maximum amount permitted by law; and (ii) any excess amount
previously collected from the Company in connection with this Note that exceeded
the maximum amount permitted by law shall be credited against the principal
balance then outstanding hereunder.
6. Waivers. Except as set forth
in this Note, to the extent permitted by applicable law, the Company waives and
agrees not to assert demand, diligence, grace, presentment for payment, protest,
or notice of nonpayment, nonperformance, extension, dishonor, maturity, protest,
acceleration or default. No failure to accelerate the indebtedness evidenced
hereby upon a default hereunder, no acceptance of a past-due installment, and no
other indulgence granted from time to time by Holder, shall be construed as a
novation of this Note or as a waiver of such right of acceleration or of the
right of Holder thereafter to insist upon strict compliance with the terms of
this Note or to prevent the exercise of such right of acceleration or any other
right granted hereunder or by applicable law. Holder may extend the time for
payment of, or renew, this Note; and any such extension, renewal, release or
other indulgence shall not alter or diminish the liability of the Company or any
other person or entity who is or may become liable on this Note except to the
extent expressly set forth in a writing executed by Holder and evidencing or
constituting such extension, renewal, release or other indulgence. No delay or
failure of Holder in exercising any right hereunder shall affect such right,
neither shall any single or partial exercise of any right preclude further
exercise thereof.
7. Optional Conversion of All or Part of the
Note into Common Stock of the Company.
(a) Conversion Option of the
Holder. The Holder may, at its option (the “Conversion Option”), convert
all or any lesser amount of the unpaid principal amount of this Note plus all
accrued but unpaid interest and Additional Sums outstanding hereunder into
shares of the Company's common stock, par value $.001 per share (the "Common
Stock"), at the conversion price ("Conversion Price") defined below. The right
of conversion described in this Section 7(a) shall be
exercisable by the Holder upon presentation by the Holder of written notice to
the Company, along with the surrender of this Note to the Company, in exchange
for the number of shares of Common Stock into which this Note is exchanged. The
option arising under this Section 7(a) shall
terminate only upon the Maturity Date or, if applicable, the Extended Maturity
Date.
(b) Conversion Price. Upon any
exercise by the Holder of the Conversion Option described in Section 7(a), the
outstanding principal amount of this Note, plus accrued and unpaid interest
thereon, plus all unpaid Additional Sums, shall be converted into shares of the
Company's Common Stock at the rate of Thirty-Five Cents (US $0.35) per share
(the "Conversion Price"), subject to adjustment as hereinafter
provided.
(c) Adjustment Based Upon Stock
Dividends, Combination of Shares or Recapitalization. In the event that
the Company, at any time prior to the termination of the Conversion Option: (i)
pays a stock dividend; (ii) subdivides its outstanding shares of Common Stock
into a greater number of shares, (iii) combines its outstanding shares of Common
Stock into a smaller number of shares, or (iv) issues by reclassification of its
shares of Common Stock any other special capital stock of the Company, the
Holder, upon surrender of this Note for conversion, shall be entitled to receive
the number of shares of Common Stock or other capital stock of the Company that
the Holder would have owned or would have been entitled to receive after the
occurrence of any of the events described above had this Note been converted
into the Common Stock immediately prior to such event.
(d) Adjustment Based Upon Merger or
Consolidation. In case of any consolidation or merger to which the
Company is a party (other than a merger in which the Company is the surviving
entity and that does not result in any reclassification of or change in the
outstanding Common Stock of the Company), or in case of any sale or
conveyance to another person of the property of the Company as an entirety or
substantially as an entirety, the Holder shall have the right to convert this
Note into the kind and amount of securities and property receivable upon such
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock into which such Note would have been convertible immediately prior
thereto.
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(e) Corporate Status of Shares to be
Issued. All shares of the Company's Common Stock that are issued upon the
conversion of this Note shall, upon issuance, be fully paid and
non-assessable.
(f) Issuance of Stock Certificate.
Upon any conversion of this Note, the Company promptly shall issue to the Holder
a certificate or certificates representing the number of shares of its Common
Stock to which the conversion relates.
(g) Status of Holder of Note. This
Note shall not entitle the Holder to any voting rights or other rights as a
stockholder of the Company or to any rights whatsoever except the rights herein
expressed, and no dividends shall be payable or accrue in respect of this Note
or the shares issuable upon the conversion hereof unless and until this Note is
converted. Upon any conversion of this Note, the Holder shall, to the extent
permitted by law, be deemed to be the holder of record of the shares of Common
Stock issuable upon such conversion, notwithstanding that the stock transfer
books of the Company may be closed or that the certificates representing such
shares of Common Stock may not yet actually have been delivered.
(h) Reserve of Shares. The Company
shall reserve at all times out of its authorized shares of Common Stock a number
of shares sufficient to enable it to comply with its obligation to issue shares
of Common Stock upon the conversion of this Note.
(i)
Status Under Securities
Laws.
(i) Restricted Securities. This
Note is, and the shares of Common Stock issuable upon conversion hereof shall
be, "restricted securities" within the meaning of SEC Rule 144 promulgated under
the Securities Act of 1933 (the "1933 Act"). Holder acknowledges and agrees that
it is acquiring this Note and, upon conversion, the shares of Common Stock,
without a view to the public distribution or resale of the Note or such shares
in violation of applicable federal or state securities laws.
(ii) No Registration. This Note has
not been, and the shares of Common Stock issuable upon conversion hereof will
not be, registered under the 1933 Act or under the securities laws of any other
jurisdiction; and therefore, Holder must be able to hold the Note or the shares
indefinitely without any transfer, sale or other disposition, unless they are
subsequently registered under the 1933 Act and under the securities laws of
other applicable jurisdictions or, in the opinion of counsel to the Company,
registration is not required under such Act or laws as the result of an
available exemption from registration.
(iii) Legend. There shall be
endorsed on the certificates evidencing any shares issued upon the conversion of
this Note a legend substantially to the following effect:
"THE
SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED; AND AS A RESULT, SUCH SHARES ARE 'RESTRICTED
SECURITIES' AS DEFINED BY SEC RULE 144 PROMULGATED UNDER THAT ACT. THE SHARES
MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT REGISTERING THE SHARES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR, IN LIEU THEREOF, WITHOUT AN OPINION OF COUNSEL FOR THIS
COMPANY TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER THAT ACT. WITHOUT
LIMITING THE FOREGOING, THE SHARES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF WITHOUT AN OPINION OF COUNSEL FOR THE COMPANY TO THE EFFECT THAT
SUCH
TRANSFER, SALE OR OTHER DISPOSITION DOES NOT VIOLATE THE SECURITIES LAWS OF ANY
JURISDICTION OR THE RULES AND REGULATIONS THEREUNDER."
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8. General
Provisions.
(a)
Severability. If any provision
hereof is invalid or unenforceable, the other provisions hereof shall remain in
full force and effect and shall be construed so as to effectuate the other
provisions hereof.
(b)
Amendment. This Note may not
be changed, modified or terminated, neither shall any provision of this Note be
waived, except by an agreement in writing signed by the party to be
charged.
(c)
Binding
Nature of Note; Assignment. The provisions of this Note shall be binding
upon the Holder and the Company, and shall inure to the benefit of and bind the
respective successors and assigns of the Holder and the Company. Neither the
Company nor the Holder may assign or transfer this Note or assign or delegate
any of his or its respective rights or obligations hereunder without the prior
written consent of the other party in each instance.
(d)
Waiver of Jury Trial; Enforcement
Costs and Expenses to be Borne by the Company. The Company and the Holder
hereby mutually and irrevocably waive their right to a jury trial of any dispute
that may arise out of or in connection with this Note, the parties instead
irrevocably agreeing that any such dispute shall be resolved by a court of
competent jurisdiction sitting without a jury. The Company agrees to pay all
costs of enforcement of this Note, including, without limitation, attorneys’
fees and other costs incurred by Holder in addressing its claims against the
Company hereunder, regardless of whether a lawsuit is actually filed; and the
Company agrees to pay all of Holder’s costs of preparation for suit, and
proceeding with a suit, plus any and all additional attorney and other fees and
costs Holder may incur in any proceeding under any bankruptcy or other similar
federal or state law in connection with the obligations evidenced hereby. In the
event of any court proceeding, court costs and attorneys’ fees shall be set by
the court and not by a jury and shall be included in any judgment obtained by
the Holder.
(e)
Time of Essence. Time is of
the essence of this Note and each and every provision hereof.
(f)
Controlling Law; Jurisdiction;
Venue. This Note and all questions relating to its validity,
interpretation, performance, and enforcement shall be governed by and construed
in accordance with the laws of the State of Arizona, notwithstanding any
conflicts-of-law provisions to the contrary. Any suit, action or proceeding
against the Company with respect to this 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 Holder, in Holder’s sole
discretion, may elect; and the Company hereby submits to the non-exclusive
jurisdiction of such courts for the purpose of any such suit, action or
proceeding. The Company hereby irrevocably waives any objections the Company may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Note that may be brought in any such courts,
and the Company further irrevocably waives any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.
(g) Notices. All notices,
requests, demands and other communications required or permitted under this Note
shall be in writing and shall be deemed to have been duly given, made, and
received: (i) when delivered against receipt; (ii) upon receipt of a facsimile
transmission; (iii) one day following the day of deposit thereof, with delivery
charges prepaid, with a national overnight delivery service; or (iv) three
business days following the day of deposit thereof, with the United States
Postal Service, by regular first class, certified or registered mail, return
receipt requested, postage prepaid, in each case addressed as set forth in the
first paragraph of this Note. Either party may alter the address to which
communications or copies are to be sent by giving notice of such change of
address in conformity with the provisions of this Section 8(g) for the
giving of notice.
(h) Section Headings. The Section
headings in this Note are for convenience only; they form no part of this Note
and shall not affect its interpretation.
5
(i) Number
of Days. In computing the number of days for purposes of
this Note, all days shall be counted, including Saturdays, Sundays and holidays:
provided, however, that if the final day of any time period falls on a Saturday,
Sunday or holiday, then the final day shall be deemed to be the next day that is
not a Saturday, Sunday or holiday.
(j) Loss or Destruction of Note. Upon receipt by
the Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Note, or in the case of loss, theft or destruction of an
indemnity satisfactory to it, and in the case of mutilation, upon surrender and
cancellation of this Note, the Company shall execute and deliver a new Note of
like tenor and date.
(k) Construction.
The Company and Holder
participated in the drafting of this Note, and this Note was reviewed by the
respective legal counsel for the Company and Holder. Any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied to the interpretation of this Note. The language of this Note
shall be construed as a whole according to its fair meaning. The word
"include(s)" means "include(s), without limitation." and the word "including"
means "including, without limitation." No inference in favor of, or against, the
Company or Holder shall be drawn from the fact that one party has drafted any
portion hereof.
(l) First
Priority Security Interest Granted in All the Company's Assets to Secure
Performance.
Performance of the
Company's obligations under this Note and under the Loan Agreement and
the other loan documents associated herewith and therewith has been secured by a
first priority security interest granted by the Company to the Holder with
respect to all the
assets of the Company, as more particularly specified in that certain
Security Agreement between the Company and Holder made and delivered of even
date with the Loan Agreement.
IN
WITNESS WHEREOF, the Company and the Holder have caused this Note to be
duly executed. delivered and accepted as of the Effective
Date.
| Company | |||
| SKYE INTERNATIONAL, INC., a | |||
|
Nevada
corporation
|
|||
|
|
By:
|
/s/ Xxxx X. Xxxxxxx | |
| Name: | Xxxx X. Xxxxxxx | ||
| Its: | Chairman | ||
| ACCEPTED AND AGREED: | |||
| Holder: XXX XXXXX FAMILY TRUST dated May 28, 1999 | |||
|
By:
|
/s/ Xxxxxxx X. Xxxxx | ||
| Xxxxxxx X. Xxxxx, Trustee | |||
| By: | /s/ Xxxxxxxx Xxxxx Xxxxx | ||
| Xxxxxxxx Xxxxx Xxxxx, Trustee | |||
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