Exhibit 10.13

SBA Loan #

PLP ###-###-####

SBA Loan Name

Crystal Magic, Inc.

Approval Date

10/04/00

A.

THE GUARANTEE FEE IS $5,625.00. Lender must pay the guarantee fee within 90 days of the date of this Authorization. Failure to timely pay the guarantee fee will result in cancellation of the SBA guarantee. The 90-day deadline may not be extended. Lender must send the guarantee fee to the Small Business Administration, Denver CO 80259-0001. The remittance check should show the Loan number. No part of the guarantee fee is refundable if Lender has made any disbursement Lender may collect this fee from Borrower after initial disbursement of Loan- Borrower may use Loan proceeds to reimburse Lender for the guarantee fee.

B.

ONGOING SERVICING FEE - Lender agrees to pay an ongoing fee equal to one-half of one percent per year of the guaranteed portion of the outstanding balance. Lender may not charge this fee to Borrower.

C.

 

2.

Obtain valid and enforceable Loan documents, including obtaining the signature or written consent of any obligor’s spouse if such consent or signature is necessary to bind the marital community or create a valid lien on marital property.

 

3.

Retain all Loan closing documents. Lender must submit these documents, along with other required documents, to SBA for review if Lender requests SBA to honor its guarantee on the Loan, or at any time SBA requests the documents for review.

 

1.

Lender may use its own forms except as otherwise instructed in this Authorization. Lender must use the following SBA forms for the Loan:

 

2.

Lender may use computer-generated versions of mandatory SBA Forms, as long as these versions are exact reproductions.

 

3.

Lenders must submit completed SBA Forms 159 and 2004 for non-PLP loans to the SBA immediately after final disbursement.

E.

CONTINGENCIES - SBA issues this Authorization in reliance on representations in the Loan application, including supporting documents. The guarantee is contingent upon Lender:

 

1.

Having and complying with a valid SBA Loan Guarantee Agreement (SBA Form 750 or SBA Form 750B for short-term loans) and any required supplemental guarantee agreements, between Lender and SBA;

 

2.

Complying with the current SBA Standard Operating Procedures (SOP);

 

3.

Making initial disbursement of the Loan no later than 3 months, and completing disbursement no later than 6 months, from the date of this Authorization, unless SBA extends the time in writing;

 

4.

Having no evidence since the date of the Loan application, or any preceding disbursement, of any unremedied adverse change in the financial condition, organization, operations, or fixed assets of Borrower which would warrant withholding or not making any further disbursement, and;

 

5.

Satisfying all of the conditions in this Authorization.

 

2.

Repayment Terms: Lender must insert onto SBA Note, Form 147, to be executed by Borrower, the following repayment terms, without modification. Lender must complete all blank terms on the Note at time of closing:

2.  

$30,000.00 to purchase inventory.

3.  

$20, 000.00 for working capital

 

1.

First Perfected Security Interest, subject to no other liens, in the following personal property (including any proceeds and products), whether now owned or later acquired, wherever located- Equipment; Fixtures; Inventory. Accounts; Instruments; Chattel Paper, General Intangibles;

 

a.

Lender must obtain a written agreement from all Lessors (including sublessors) agreeing .to: (I) Subordinate to Lender Lessor’s interest, if any, in this property; (2) Provide Lender written notice of default and reasonable opportunity to cure the default; and (3) Allow Lender the right to take possession and dispose of or remove the collateral.

 

b.

Lender must obtain a list of all equipment and fixtures that are collateral for the Loan. For items with a unit value of $500 or more, the list must include a description and serial number, if applicable.

c.  

Lender must obtain an appropriate Uniform Commercial Code lien search evidencing all required lien positions. If UCC search is not available, another type of lien search maybe substituted.

 

 

 

a.

Personal Property Hazard Insurance coverage on all equipment, fixtures or inventory that is collateral for the Loan, in the amount of full replacement costs. If full replacement cost insurance is not available, coverage should be for maximum insurable value. This policy must contain a LENDER’S LOSS PAYABLE CLAUSE in favor of Lender. This clause must provide that any act or neglect of the debtor or owner of the insured property will not invalidate the interest of Lender. The policy or endorsements must provide for at least 10 days prior written notice to Lender of policy cancellation.

 

b.

Life Insurance, satisfactory to Lender

 

c.

Liability Insurance in an amount and with an insurance company satisfactory to Lender.

 

d.

Workers’ Compensation Insurance in an amount meeting state law requirements and with an insurance company satisfactory to Lender.

 

a.

Prior to closing, Lender must obtain from Borrower, Guarantor and Operating Company a current copy of each of the following as appropriate:

 

(1)

Corporate Documents - Articles or Certificate of Incorporation (with amendments), any By-laws, Certificate of Good Standing (or equivalent), Corporate Borrowing Resolution, and, if a foreign corporation, current authority to do business within this state.

 

(2)

Limited Liability Company (LLC) Documents - Articles of Organization (with amendments), Fact Statement or Certificate of Existence, Operating Agreement, Borrowing Resolution, and evidence of registration with the appropriate authority.

 

(3)

General Partnership Documents - Partnership Agreement, Certificate as to Partners, and Certificate of Partnership or Good Standing (or equivalent), as applicable.

 

(4)

Limited Partnership Documents - Partnership Agreement, Certificate as to Partners, and Certificate of Partnership or Good Standing (or equivalent), as applicable. Certificate of Limited Partnership, and evidence of registration with the appropriate authority.

 

(5)

Limited Liability Partnership (LLP) Documents - Partnership Agreement, Certificate as to Partners, Certificate of Partnership or Good Standing (or equivalent) as applicable, and evidence of registration with the appropriate authority.

 

(6)

Trustee Certification - A Certificate from the trustee warranting that:

 

(a)

The trust will not be revoked or substantially amended for the term of the Loan without the consent of SBA;

 

(b)

The trustee has authority to act;

 

(c)

The trust has the authority to borrow funds, guarantee loans, and pledge trust assets;

 

(d)

If the trust is an Eligible Passive Company, the trustee has authority to lease the property to the Operating Company;

 

(e)

There is nothing in the trust agreement that would prevent Lender from realizing on any security interest in trust assets;

 

(f)

The trust agreement has specific language confirming the above; and

 

(g)

The trustee has provided and will continue to provide SBA with a true and complete list of all trustors and donors.

 

(7)

Trade Name – Documentation that Borrower has complied with state requirements for registration of Borrower’s trade name (or fictitious name), if one is used.

a.

Verification of Financial Information - Lender must submit IRS Form 4506 to the Internal Revenue Service to obtain federal income tax information on Borrower or, if the Borrower is an EPC, then the Operating Company for the last 3 years (unless Borrower or Operating Company is a start-up business). If the business has been operating for less than 3 years, lender must obtain the information for all years in operation. This requirement does not include tax information for the most recent fiscal year if the fiscal year-end is within 6 months of the application date. Lender must compare the tax data received from the IRS with the financial data or tax returns submitted with the Loan application, and relied upon in approving the Loan. Borrower must resolve any significant differences to the satisfaction of Lender and SBA, Failure to resolve differences may result in cancellation of the Loan.

b.

If Lender has not submitted IRS Form 4506 prior to the date of this Authorization, it must submit the Form no later than 10 business days from this date. If the Lender does not receive a response from the IRS within 10 business days of submitting the SBA version of IRS Form 4506, then Lender may disburse prior to completing this verification. At the time the information is received, Lender must still perform the verification and resolve any significant differences discovered, even if the loan is fully disbursed.

c.

Authority to Conduct Business - Evidence that the Borrower has an Employer Identification Number and all insurance, licenses, permits and other approvals necessary to lawfully operate the business.

d.

Flood Hazard Determination - A completed Standard Flood Hazard Determination (FEMA Form 81-93).

e.

Lease - Current lease(s) on all business premises where collateral is located with term, including options, at least as long as the term of the Loan.

4.

 

(1)

Receipt of Authorization - Borrower has received a copy of this Authorization and SEA Form 793, Notice to New SBA Borrower, from Lender; and acknowledges that:

 

(a)

The Authorization is not a commitment by Lender to make a loan to Borrower;

 

(b)

The Authorization is between Lender and SBA and creates no third party rights or benefits to Borrower;

 

(c)

The Note will require Borrower to give Lender prior notice of intent to prepay.

 

(d)

If Borrower defaults on Loan, SBA may be required to pay Lender under the SBA guarantee. SBA may then seek recovery of these funds from Borrower. Under SBA regulations, 13 CFR Part 101, Borrower may not claim or assert against SBA any immunities or defenses available under local law to defeat, modify or otherwise limit Borrower’s obligation to repay to SBA any funds advanced by Lender to Borrower.

 

(e)

Payments by SBA to Lender under SBA’s guarantee will not apply to the Loan account of Borrower, or diminish the indebtedness of Borrower under the Note or the obligations of any personal guarantor of the Note,

 

(2)

Child Support - No principal who owns at least 50% of the ownership or voting interest of the company is delinquent more than 60 days under the terms of any (a) administrative order, (b) court order, or (c) repayment agreement requiring payment of child support.

 

(3)

Current Taxes - Borrower is current on all federal, state, and local taxes, including but not limited to income taxes, payroll taxes, real estate taxes, and sales taxes.

 

b.

Lender must require Borrower to certify that it will:

 

(1)

Reimbursable Expenses-Reimburse Lender for expenses incurred in the making and administration of the Loan.

 

(2)

 

(a)

Keep proper books of account in a manner satisfactory to Lender;

 

(b)

Furnish year-end statements to Lender within 120 days of fiscal year end;

 

(c)

Furnish additional financial statements or reports whenever Lender requests them;

 

(d)

Allow Lender or SBA, at Borrower’s expense, to:

 

[1]

Inspect and audit books, records and papers relating to Borrower’s financial or business condition; and

 

[2]

Inspect and appraise any of Borrower’s assets; and

 

[3]

Allow all government authorities to furnish reports of examinations, or any records pertaining to Borrower, upon request by Lender or SBA.

 

(3)

Equal Opportunity - Post SBA Form 722, Equal Opportunity Poster, where it is clearly visible to employees, applicants for employment and the general public, and comply with the requirements of SBA Form 793, Notice to New SBA Borrowers.

 

(4)

American-made Products - To the extent feasible, purchase only American-made equipment and products with the proceeds of the Loan.

 

(5)

Taxes - Pay all federal, state, and local taxes, including income, payroll, real estate and sales taxes of the business when they come due.

c.

Lender must require Borrower to certify that it will not, without Lender’s prior written consents

(1)

Distributions-Make any distribution of company assets that will adversely affect the financial condition of Borrower.

(2)

Ownership Changes - Change the ownership structure or interests in the business during the term of the Loan.

(3)

Transfer of Assets - Sell, lease, pledge, encumber (except by purchase money liens on property acquired after the date of the Note), or otherwise dispose of any of Borrowers property or assets, except in the ordinary course of business.