Document:

exhibit_10-13.htm

    
      

    
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”):

    
      
         

      

      
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    (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;

    
      
         

      

      
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    (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.

     

     

    
      
        
        

      

      
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    (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.

    
      
         

      

      
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    (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.

     

     

    
      
        
        

      

      
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    (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 right, power or remedy at
the sole
option of Secured Party, and in the sole and absolute discretion of Secured
Party. In addition, if under the terms of this Agreement, Secured Party is given
two or more alternative courses of action, Secured Party may elect any
alternative or combination of alternatives at its option and in its sole and
absolute discretion. All monies advanced by Secured Party under the terms of
this Agreement and all amounts paid, suffered or incurred by Secured Party in
exercising any authority granted in this Agreement, including reasonable
attorneys’ fees, shall be added to the Secured Obligations, shall be secured by
the Collateral, shall bear interest at the highest rate payable on any of the
Secured Obligations until paid, and shall be due and payable by Debtor to
Secured Party immediately without demand.

     

    5.    Payments and Collection. Any
payments with respect to or other proceeds of Collateral
received by Debtor shall be held by Debtor in trust for Secured Party in the
same form in which received, shall not be commingled with any assets of Debtor,
and shall be delivered into the possession of Secured Party not later than the
next business day following the day of receipt. All payments with respect to and
other proceeds of Collateral received by Secured Party directly or from Debtor
shall be applied to the Secured Obligations in such order and manner and at such
time as Secured Party, in its sole and absolute discretion, determines. Secured
Party, after the occurrence of an Event of Default and without notice to Debtor,
may demand, collect, and sue on the Collateral (either in Debtor’s or Secured
Party’s name), enforce, compromise, settle or discharge the Collateral, and
endorse Debtor’s name on any instruments or documents included in or pertaining
to the Collateral.

     

    6.    Collateral in the Possession of
Secured Party.

     

    (a)           Care. Secured Party shall use
such reasonable care in handling, preserving and protecting Collateral in the
possession of Secured Party as Secured Party uses in handling similar property
for the account of Secured Party. Secured Party, however, shall have no
liability for the loss, destruction or disappearance of any Collateral unless
there is affirmative and persuasive proof of a lack of due care. A lack of due
care shall not be implied solely by virtue of any loss, destruction or
disappearance.

     

    (b)           Preservation of Collateral.
Debtor shall be solely responsible for taking any and all actions to preserve
rights under this Agreement against all persons other than Secured Party.
Secured Party shall not be obligated to take any such actions whether or not the
Collateral is in Secured Party’s possession. Debtor waives presentment and
protest with respect to any instrument included in the Collateral on which
Debtor is in any way liable and waives notice of any action taken by Secured
Party with respect to any instrument, document or chattel paper included in any
Collateral that is in the possession of Secured Party.

     

    7.    Events of Default;
Remedies.

     

    (a)   Events of Default. The
occurrence of any of the following events or conditions
shall constitute an “Event of Default” under this Agreement:

     

    (i)    The
occurrence of a breach, a default, an event of default, a Default,
or an Event of Default under (or as defined in) the Loan Agreement, any Note, or
any of the other Loan Documents.

    
      
         

      

      
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    (ii)           The
abandonment by Debtor of all or any part of the Collateral.

     

    (iii)          The
loss, theft or destruction of, or any substantial damage to, any material
portion of the Collateral that is not adequately covered by
insurance.

     

    (iv)          Any
representation or warranty of Debtor in this Agreement was materially false or
misleading as of the date made or deemed made, or any statement made by Debtor
in connection with this Agreement is not true and correct in any material
respect.

     

    (v)           The
failure of Debtor to comply with any other provision of this
Agreement.

     

    (b)   Remedies. Upon the occurrence
of any Event of Default, and at any time while
such Event of Default is continuing, Secured Party shall have the following
cumulative rights and remedies and may do any one or more or all of the
following:

     

    (i)           Declare
all or any part of the Secured Obligations to be immediately due and payable,
and the same, with all costs and charges, shall be collectible thereupon by
action at law.

     

    (ii)           Without
further notice or demand and without legal process, take possession of the
Collateral wherever found and, for this purpose, enter upon any property
occupied by or in the control of Debtor or that Debtor has the right to enter or
occupy. Debtor, upon demand by Secured Party, shall assemble the Collateral and
deliver it to Secured Party or to a place designated by Secured Party that is
reasonably convenient to both parties.

     

    (iii)          Exercise
its rights under the Loan Agreement and under any and all Notes and the other
Loan Documents. Secured Party shall not be liable for any depreciation, loss,
damage or injury to the Collateral or other property of Debtor as a result of
such action except if such depreciation, loss, damage, or injury is caused by
the negligence of Secured Party or any of its agents or representatives. Debtor
hereby waives any claim of trespass or replevin arising as a result of such
action.

     

    (iv)          Pursue
any legal or equitable remedy available to collect the Secured Obligations, to
enforce Secured Party’s title in and right to possession of the Collateral, and
to enforce any and all other rights or remedies available to it.

     

    (v)           Upon
obtaining possession of the Collateral or any part thereof, after written notice
to Debtor as provided in this Agreement, sell such Collateral at public or
private sale either with or without having such Collateral at the place of sale.
The proceeds of such sale, after deducting therefrom all expenses of Secured
Party in taking, storing, repairing, and selling the Collateral (including
reasonable attorneys’ fees) shall be applied to the payment of the Secured
Obligations, and any surplus thereafter remaining shall be paid to Debtor or any
other person that may be legally entitled thereto. In the event of a deficiency
between such net proceeds from the sale of the Collateral and the total amount
of the Secured Obligations, Debtor, upon demand, shall promptly pay the amount
of such deficiency to Secured Party.

    
      
         

      

      
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    (c)           Purchase of Collateral.
Secured Party, so far as may be lawful, may purchase all or any part of the
Collateral offered at any public or private sale made in the enforcement of
Secured Party’s rights and remedies under this Agreement.

     

    (d)           Notice. Any demand or notice
of sale, disposition or other intended action under or in connection with this
Agreement, whether required by the UCC or otherwise, shall be deemed to be
commercially reasonable and effective if such demand or notice is provided to
Debtor at least fifteen (15) days prior to such sale, disposition or other
intended action, in the manner provided in this Agreement for the giving of
notices.

     

    (e)           Costs and Expenses. Debtor
shall pay all reasonable costs and expenses of Secured Party, including costs of
uniform commercial code searches, court costs, and reasonable attorneys’ fees,
incurred by Secured Party in enforcing payment and performance of the Secured
Obligations or in exercising the rights and remedies of Secured Party. All such
reasonable costs and expenses shall be secured by this Agreement and by other
lien and security documents securing the Secured Obligations. In the event of
any court proceedings, court costs and attorneys’ fees shall be set by the court
and not by jury and shall be included in any judgment obtained by Secured
Party.

     

    (f)           Additional Remedies. In
addition to any remedies provided in this Agreement for an Event of Default,
Secured Party shall have all the rights and remedies afforded a secured party
under the UCC and all other legal and equitable remedies allowed under
applicable law. No failure on the part of Secured Party to exercise any of its
rights under this Agreement arising upon any Event of Default shall be construed
to prejudice its rights upon the occurrence of any other or subsequent Event of
Default. No delay on the part of Secured Party in exercising any such rights
shall be construed to preclude Secured Party from the exercise thereof at any
time while that Event of Default is continuing. Secured Party may enforce any
one or more rights or remedies under this Agreement successively or
concurrently. By accepting payment or performance of any of the Secured
Obligations after its due date, Secured Party shall not thereby waive the
agreement contained in this Agreement that time is of the essence, nor shall
Secured Party waive either its right to require prompt payment or performance
when due of the remainder of the Secured Obligations or its right to consider
the failure to so pay or perform an Event of Default.

     

    8.    Termination and Release of
Collateral. If (a) no Default or Event has occurred and is
continuing under any of the Loan Documents and (b) all Obligations arising under
one or more of the Notes have been paid in full in cash, then, upon request from
Debtor, Secured Party shall release all of its interests in all or any portion
of the Collateral that Debtor purchased with the proceeds of such Note(s). This
Agreement and the Security Interest granted hereby then shall terminate, and
Secured Party then shall release all of its interests in the Collateral, upon
the payment or other satisfaction of all Secured Obligations arising under the
Notes or any of the other Loan Documents. Upon termination of this Agreement,
Secured Party shall, at the request and expense of Debtor, execute and deliver
to Debtor a proper instrument or instruments acknowledging the satisfaction and
termination of this Agreement and all obligations arising hereunder and under
the Notes, and will duly assign, transfer, and deliver to Debtor that portion of
the Collateral or the proceeds thereof that remains in the possession of Secured
Party and that has not otherwise been sold, transferred, applied or released
pursuant to this Agreement.

    
      
         

      

      
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    9.    General
Provisions.

     

    (a)           Power of Attorney. At any time
or times that an Event of Default has occurred and is continuing, Debtor hereby
appoints Secured Party as the true and lawful attorney-in-fact of Debtor, with
full power of substitution to do the following: (a) to demand, collect, receive,
give receipt for, sue, and recover all sums of money or other property that may
now or hereafter become due, owing or payable from the Collateral; (b) to
execute, sign, and endorse any and all claims, instruments, receipts, checks,
drafts or warrants issued in payment for the Collateral; (c) to settle or
compromise any and all claims arising under the Collateral, and, in the place
and stead of Debtor to execute and deliver its release and security for the
claim; (d) to file any claim or claims or to take any action or institute or
take part in any proceedings, either in the name of Secured Party or in the name
of Debtor, or otherwise, which in the sole and absolute discretion of Secured
Party may seem to be necessary or advisable; and (e) to execute any documents
necessary to perfect or continue the Security Interest. This power is a power
coupled with an interest and is given as security for the Secured Obligations,
and the authority hereby conferred is and shall be irrevocable and shall remain
in full force and effect until renounced by Secured Party, if ever.

     

    (b)           Indemnification. Debtor agrees
to indemnify, defend, protect and hold harmless Secured Party and its agents,
representatives, successors and assigns (collectively, the “Indemnified
Parties”) for, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses, and
disbursements of any kind or nature whatsoever (including the fees and
disbursements of counsel for such Indemnified Parties in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnified Parties are designated parties thereto) that may
be imposed on, incurred by, or asserted against the Indemnified Parties, in any
manner relating to, or arising out of, the Loan Agreement, any one or more
Notes, this Agreement and the other Loan Documents (the “Indemnified
Liabilities”); provided, however,
that Debtor shall have no obligation to an Indemnified Party with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of that Indemnified Party.

     

    (c)           Secured Party’s Right of
Setoff. Debtor grants Secured Party, as further security for the Secured
Obligations, a security interest and lien in any credit balance and other money
now or hereafter owed to Debtor by Secured Party. Debtor agrees that Secured
Party may, without prior notice or demand, charge against any such credit
balance or other money in the amount owing upon the Secured Obligations, whether
due or not.

     

    (d)           Other Security. The acceptance
of this Agreement by Secured Party shall not be considered a waiver of or in any
way to affect or impair any other security that Secured Party may have, acquire
simultaneously herewith, or hereafter acquire for the payment or performance of
the Secured Obligations, nor shall the taking by Secured Party at any time of
any such additional security be construed as a waiver of or in any way to affect
or impair the Security Interest. Secured Party may resort, for the payment or
performance of the Secured Obligations, to its several securities therefor in
such order and manner as Secured Party may determine in the sole and absolute
discretion of Secured Party.

    
      
         

      

      
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    (e)           Actions by Secured Party.
Without notice or demand, without affecting the obligations of Debtor under this
Agreement, and without affecting the Security Interest or the priority thereof,
Secured Party, from time to time, may (a) extend the time for payment of all or
any part of the Secured Obligations, accept a renewal note therefor, reduce the
payments thereon, release any person liable for all or any part thereof, or
otherwise change the terms of all or any part of the Secured Obligations; (b)
take and hold other security for the payment or performance of the Secured
Obligations and enforce, exchange, substitute, subordinate, waive or release any
such security; (c) join in any extension or subordination agreement; (d) release
any part of the Collateral from the Security Interest; or (e) assign its rights
under this Agreement, the Secured Obligations, or the Collateral to any third
party.

     

    (f)           Waivers. Debtor waives and
agrees not to assert (a) any right to require Secured Party to proceed against
any guarantor, to proceed against or exhaust any other security for the Secured
Obligations, to pursue any other remedy available to Secured Party, or to pursue
any remedy in any particular order or manner; (b) the benefits of any legal or
equitable doctrine or principle of marshalling; (c) the benefits of any statute
of limitations affecting the enforcement of this Agreement; (d) demand,
diligence, presentment for payment, protest and demand, and notice of extension,
dishonor, protest, demand and nonpayment, relating to the Secured Obligations;
and (e) any benefit of, and any right to participate in, any other security now
or hereafter held by Secured Party.

     

    (g)           Further Assurances. Debtor and
Secured Party each shall do all acts and things and make, execute, and deliver
such written documents and instruments as shall from time to time be reasonably
required by the other party to carry out the intent of this Agreement, including
but not limited to any acts and other things required under Arizona or other
applicable law to perfect the appointment of Secured Party as Debtor’s
attorney-in-fact.

     

    (h)           Governing Law; Consent to
Jurisdiction. This Agreement shall be construed as having been made in
State of Arizona, and Debtor agrees that, by entering into this Agreement,
Debtor has transacted business in Arizona. This Agreement is intended to take
effect and be governed by and construed in accordance with the laws of the State
of Arizona. Debtor agrees that any suit for the enforcement of this Agreement
may be brought in the courts of the State of Arizona or in the United States
District Court for the District of Arizona, and Debtor consents to the
jurisdiction of such courts and to service of process in any such suit being
made upon Debtor by mail at the address specified above. Debtor hereby waives
any objection that Debtor may now or hereafter have to the venue of any such
suit or any such court or that such suit was brought in an inconvenient court.
Each of the parties hereby waives the right to a jury trial and confirms their
intentions that the court shall bear any such case sitting without a
jury.

     

    (i)           Time of Essence. Time is of
the essence of this Agreement and each and every provision of this
Agreement.

     

    (j)     
     Conflicts; Inconsistency. In
the event any conflict or inconsistency between the provisions of this Agreement
and the provisions of the Loan Agreement or any Note, the provisions of the Loan
Agreement and the Note shall govern and control to the extent necessary to
resolve such conflict or inconsistency.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (k)          Amendments. No amendment,
modification, change, waiver, release of any provision of this Agreement shall
be effective unless evidenced by an instrument in writing and signed by the
party against whom enforcement is sought.

     

    (l)   
       Severability. If any provision
of this Agreement is invalid or unenforceable, the other provisions of this
Agreement shall remain in full force and effect and shall be liberally construed
in favor of Secured Party in order to effectuate the other provisions of this
Agreement.

     

    (m)          Entire Agreement. Any
schedules, exhibits or other attachments to this Agreement (as such schedules
may be modified, amended, or supplemented) are incorporated by reference into
this Agreement. This Agreement, including any attachments hereto (as such
attachments may be modified, amended, or supplemented), constitutes the entire
agreement between Debtor and Secured Party with respect to the subject matter of
this Agreement, supersedes all oral negotiations and prior and other writings
with respect to the subject matter of this Agreement, and is intended by Debtor
and Secured Party as the final, complete, and exclusive statement of the terms
agreed to by them with respect to such subject matter.

     

    (n)          Binding Nature of Agreement;
Assignment. This Agreement shall be binding upon Debtor and its
successors and assigns, and shall inure to the benefit of Secured Party and its
successors and assigns; provided, however,
that (i) Debtor shall not assign or otherwise transfer its obligations under
this Agreement and no such purported assignment shall be effective without
Secured Party’s prior written consent, which consent may be withheld in Secured
Party’s sole and absolute discretion; and (ii) no assignment or other transfer
by Debtor of any of its obligations under this Agreement shall relieve Debtor of
any of its obligations hereunder. Secured Party, at any time and from time to
time, may assign or transfer any or all of its rights under this Agreement to
any Person without notice to or consent of Debtor, and no such assignment or
transfer shall relieve Debtor of any of its obligations hereunder.

     

    (o)          Notices. All notices, demands,
requests, and other communications required or permitted hereunder shall be in
writing and shall be delivered by hand, telegram, facsimile or deposited with
the United States Postal Service postage prepaid, registered or certified mail,
return receipt requested, or delivered by courier or personal delivery, in each
case addressed as indicated on the first page of this Agreement. All notices
shall be deemed delivered five (5) days after deposit with the United States
Postal Service, or if delivered by personal delivery, then notice is deemed
delivered upon the date and time of actual receipt or refusal of delivery by the
representatives, agents, and employees of the party to which such notice is
addressed. Any party may designate a different address or person to whom such
notices should be sent by giving notice thereof as provided herein, which change
of address shall be effective upon receipt.

     

    (p)          Section Headings. The section
headings set forth in this Agreement are for convenience only and shall not have
substantive meaning under this Agreement or be deemed part of this
Agreement.

     

    (q)          Execution in Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original as against any Party whose signature appears
thereon, and all of which shall together constitute one and the same instrument.
This Agreement shall become binding when one or more counterparts hereof,
individually
or taken together, shall bear the signatures of all of the parties reflected
hereon as the signatories. Signatures may be given by facsimile or other
electronic transmission, and such signatures shall be fully binding on the party
sending the same.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (r)        
  Construction. Each of the
parties to this Agreement acknowledges that it has had the opportunity to review
this Agreement and has had the opportunity to have its counsel review this
Agreement, and that the rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be applied to the
interpretation of this Agreement. This Agreement shall be construed as a whole,
in accordance with its fair meaning, and without regard to or taking into
account any presumption or other rule of law requiring construction against the
Party preparing this Agreement. As used in this Agreement, the word “include(s)”
means “include(s), without limitation,” and the word “including” means
“including, but not limited to.”

     

    (s)          No Setoffs by Debtor. No
setoff or claim that Debtor now has or may in the future have against Secured
Party shall relieve Debtor from paying or performing the Secured
Obligations.

     

    (t)        
  Copies. A
copy of this Agreement and any financing statement relating to this Agreement
shall be sufficient for filing and recording as a financing
statement.

     

    IN WITNESS WHEREOF, Debtor and
Secured Party have executed and delivered this Agreement as of the date first
written above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	 	
                                  DEBTOR:

                                	 
	 	 	 
	 	SKYE INTERNATIONAL, INC.,
      a Nevada	 
	 	corporation	 
	 	 	 	 
	
                                   

                                	
                                  By:
      

                                	/s/  Mark D.
      Chester	 
	 	 	Mark D. Chester,
      Chairman	 

                        

                      

                    

                  

                

              

            

          

        

      

    

     

     

    
      
        
          
            
              
                
                  
                    
                      
                        	 	
                                SECURED
      PARTY:

                              	 
	 	 	 	 
	 	 	 	 
	
                                 

                              	
                                By:
      

                              	/s/  Perry D.
      Logan	 
	 	Name:
      	Perry
      D. Logan	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ 
      Rose Logan	 
	 	Name: 	Rose
      Logan 	 

                      

                    

                  

                

              

            

          

        

      

    

     

    12exhibit_10-14.htm

    
      

    

    EXHIBIT
10.14

    
EXHIBIT
"A"

     

    TO
LOAN AGREEMENT DATED OCTOBER 12, 2007 BETWEEN

    SKYE
INTERNATIONAL, INC, AND TED MAREK FAMILY TRUST

     

      
        

      

    

     

    THE SALE, TRANSFER
OR OTHER DISPOSITION OF THIS NOTE, OR OF THE SIIARES OF

    COMMON
STOCK 1SSUABLE UPON CONVERSION HEREOF, IS RESTRICTED.

    
       

      SKYE
International, Inc.

    

     

    15%
CONVERTIBLE SECURED PROMISSORY NOTE

    1-YEAR
MATURITY (OPTIONAL 2-YEAR MATURITY)

     

    
    

     

    
      	US
      $100,000.00	
              October 12,
      2007

            
	Phoenix,
      Arizona, USA	 

    

     

    FOR
VALUE RECEIVED, Skye International,
Inc.. a Nevada corporation with offices at 7701 East Gray Road,
Suite 4, Scottsdale, Arizona 85260 (the "Company"), hereby promises
unconditionally, as of October 12, 2007 (the "Effective Date"), to pay to the
order of Ted Marek Family Trust dated May 28, 1999, Beverly A. Marek and
Thaddeus Frank Marek, Trustees, with offices at 12210 North 76th
Place, Scottsdale, Arizona 85260 ("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.

    

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (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.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (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."

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    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/  Mark D.
      Chester	 
	 	 	 	 
	 	Name:	Mark
      D. Chester	 
	 	 	 	 
	 	Its:	Chairman	 

                

                 

                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                
                                                                                                                  
                                                                                                                    
                                                                                                                      
                                                                                                                        
                                                                                                                          
                                                                                                                            
                                                                                                                              	ACCEPTED AND
      AGREED:	 
	 	 
	Holder:
      TED MAREK FAMILY TRUST dated May 28, 1999	 
	 	 	 	 
	 	 	 	 
	
                                                                                                                                      By:
      

                                                                                                                                    	/s/  Beverly A.
      Marek	 
	 	Beverly A. Marek,
      Trustee	 
	 	 	 
	By:	/s/  Thaddeus
      Frank Marek 	 
	 	Thaddeus Frank
      Marek, Trustee	 

                                                                                                                            

                                                                                                                          

                                                                                                                        

                                                                                                                      

                                                                                                                    

                                                                                                                  

                                                                                                                

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

                 

                
                  6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00156-of-00352.parquet"}]]