EXHIBIT 10.22
SECURED LOAN AGREEMENT
THIS
SECURED LOAN AGREEMENT ("Loan Agreement") is made and entered
into
effective as of the 11th day of May 2006 (the "Effective Date"), by
and between
DynaSig Corporation, an Arizona corporation, with a place of
business at 1711 W.
Greentree Dr., Suite 116, Tempe, AZ 85284 ("Maker") and Richard C.
Kim, an
individual, with an address of 1334 E. Chandler Blvd., Ste 5 PMB
D-45, Phoenix,
AZ 85048
("Lender").
RECITALS
A.
Maker desires to obtain working capital funding in anticipation
of
additional equity funding.
B.
Maker is a wholly owned subsidiary of Dynamic Biometric
Systems,
Inc. which in accordance with certain of the Loan and Security
Documents, as
defined below, has agreed to guarantee the Secured Promissory Notes
issued under
this Loan Agreement and pledge its assets to support such guarantee
("Guarantor"
as defined below).
C.
Lender may be willing to provide the additional financing needed
by
Maker up to the Maximum Loan Amount, as defined below, on a secured
basis,
pursuant to the terms and conditions of this Loan Agreement.
D.
As a
necessary precondition for Lender to enter into this Loan
Agreement, the Maker must execute this Loan Agreement and other
agreements as
specified below as the "Loan and Security Documents," as defined
below,
including an agreement granting security interests in favor of the
Lender in all
personal property and select other property owned by Maker or the
Guarantor.
AGREEMENTS
In consideration of the above recitals, the following
representations,
warranties, covenants and conditions, and other good and valuable
consideration,
the receipt of which is acknowledged, the parties agree as
follows:
ARTICLE I
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DEFINITIONS
Unless otherwise defined, the capitalized terms throughout this
Loan
Agreement and in any of the Loan and Security Documents have the
specified
meanings in the Article.
1.1
"Additional Sums" means all fees, additional interest, charges,
points,
loan origination fees, goods, things in action or any other sums or
things of
value, including any compensating balance requirements or other
contractual
obligations.
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1.2
"Arizona Courts" means the Superior Court of Maricopa County, State
of
Arizona, or any successor to said court, and the United States
District Court
for the District of Arizona, or any successor to said court.
1.3
"Authorized Option Pool" means incentive or non-statutory options
either
issued at the Effective Date of this Loan Agreement or agreed by
the Parties to
be set aside for future issuance under the Guarantor's Qualified
Stock Option
Plan.
1.4
"Collateral" means any and all property pledged under the Loan
and
Security Documents which shall serve as security for all Secured
Promissory
Notes or Other Lender Liabilities.
1.5
"Common Stock" means the common stock, $.001 par value per share,
of the
Issuer.
1.6
"Conversion Price" means that the price of the Securities
established
herein, and as may be adjusted form time to time in accordance with
the Loan
Agreement or the documents authorizing the Securities, as such
price is used to
determine the number of units of Securities to be issued to a Note
Holder upon
conversion of any Secured Promissory Note or any accrued interest
there under.
1.7
"Default Rate" means the annual interest rate to be applied to
the
principal balance of Secured Promissory Notes that are in default.
Such rate
shall be eight percent (8%) above the Stated Rate.
1.8 "Equipment" means that
term as defined in the Security Agreement.
1.9
"Excluded Warrants" means those certain Series A through F warrants
of
the Issuer originally distributed under the Visitalk.com, Inc.
Reorganization
Plan.
1.10
"Excluded Securities" means (i) a firmly underwritten stock
offering
with proceeds exceeding $10,000,000; or (ii) the issuance of shares
of Common
Stock upon the exercise of the Excluded Warrants; or (iii) shares
issued from
the Authorized Option Pool.
1.11
"Final Maturity Date" means October 30, 2006 unless extended in
a
written agreement between the Lender and, if applicable, any Note
Holders and
the Maker.
1.12
"Funding Date" means the day funds are advanced and the date a
Secured
Promissory Note is dated.
1.13
"Lender" means Richard C. Kim, an individual.
1.14
"General Intangibles" means that term as defined in the
Security
Agreement.
1.15
"GAAP" means generally accepted accounting principals
consistently
applied.
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<PAGE>
1.16
"Guarantor" means Dynamic Biometric Systems, Inc., a Nevada
corporation, with the same address as Maker and Guarantor's
signature on this
Loan Agreement acknowledges all the terms hereunder.
1.17
"Inventory" means that term as defined in the Security
Agreement.
1.18
"Issuer" means Dynamic Biometric Systems, Inc., a Nevada
corporation,
with the same address as Maker.
1.19
"Loan Agreement" means this Loan Agreement.
1.20
"Loan and Security Documents" means some or all of the
following
documents as may be executed pursuant to this Loan Agreement and,
if executed,
attached as Exhibits hereto:
(a)
Security Agreement;
(b)
Secured Promissory Note(s);
(c)
UCC
filing(s):
(d)
Guarantee(s);
(e)
Stock Pledge Agreement(s) and stock powers;
(f)
Life
Insurance Pledge and assignment agreements;
(g)
Any
warrants or common stock equivalent agreements or rights
regarding such securities; and
(h)
any
other documents executed between the parties or any information
supplied to the Lender.
1.21
"Maker" means DynaSig Corporation, an Arizona corporation which
is
a wholly owned subsidiary of Guarantor.
1.22
"Maximum Loan Amount" means the maximum aggregate amount of the
Secured
Promissory Notes issued under this Loan Agreement, excluding any
accrued
interest. Such amount
shall not be greater than $100,000.
1.23
"Note Holders" means Lender or subsequent assignee of any
Secured
Promissory Note.
1.24
"Note Maturity Date(s)" means be the date of the Secured
Promissory
Note(s) but in no event shall such date be beyond October 30,
2006.
1.25
"Other Lender Liabilities" means any and all advances made by
the
Lender or any of Lender's affiliates to the Maker or to the
Guarantor under any
other agreements with such parties.
1.26
"Party or Parties" means Lender and Maker.
1.27
"Receivables" means that term as defined in the Security
Agreement.
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1.28
"Secured Assets" means and includes but is not limited to
Receivables,
Inventory, Equipment and any other personal or other property
pledged under the
Loan and Security Documents.
1.29
"Secured Promissory Note(s)" means the Secured Promissory Notes in
the
form of Exhibit A attached and made part hereto.
1.30
"Securities" means shares of the Series A Preferred stock of the
Issuer
initially priced at $1.00 per share but subject to adjustment
hereunder. Such
Securities are convertible into Common Stock in accordance with the
terms of the
Certificate of Designation filed by the Issuer with the state of
Nevada and
attached hereto as Exhibit B.
1.31
"Stated Rate" means the per annum interest rate that the
parties
mutually agree for each Secured Promissory Note.
ARTICLE II
----------
REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
Maker represents, warrants, and covenants that:
2.1
The
Maker has been duly incorporated and organized and is existing
as a corporation in good standing under the laws of its
jurisdiction of
incorporation and is duly qualified and in good standing as a
foreign
corporation in those jurisdictions where the conduct of its
business or the
ownership of its properties requires qualification. The Maker has the power and
authority to (a) own the Collateral; (b) to enter into and perform
this Loan
Agreement; and (c) to enter into and perform any other document or
instrument
delivered in connection herewith including all of the Loan and
Security
Documents.
2.2
The
Maker has good title to the Collateral and is the legal and
beneficial owner thereof. The Maker warrants and will, at
its own expense,
defend Lender's security interest in and to the Collateral against
the claims of
any other person. The
Maker has not otherwise assigned, transferred or granted
a security interest in any of the Collateral or any other right or
interest
therein and has not executed any other instrument, and is not
subject to any
restriction, which might prevent or limit Lender from enjoying the
benefits of
this Loan Agreement.
2.3
The
Maker will not further assign, transfer or grant or suffer to
exist a security interest in the Collateral or any other right,
encumbrance,
charge or other interest therein, except to Lender or an affiliate
thereof or in
connection with a transaction as a result of which all the Secured
Promissory
Notes, the interest thereon and any other amounts and Other Lender
Liabilities
are repaid in full and this Loan Agreement terminated.
2.4
This
Loan Agreement has been duly authorized, executed and
delivered, constitutes the valid and binding obligation of Maker
and is
enforceable in accordance with its terms.
2.5
The
Maker will promptly (but not later than three days after
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<PAGE>
receipt thereof) deliver to Lender copies of all written notices
received with
respect to the Collateral.
2.6
The
Maker shall execute, acknowledge, deliver, record and file such
further instruments and do such further acts (including delivery of
financing
statements) as Lender in its sole and absolute judgment deems
necessary,
desirable or proper to carry out the purposes of this Loan
Agreement and to
create any of the security interests created hereby and subject any
property
intended to be covered hereby.
2.7
The
Maker shall insure for loss or damage all the Secured Assets to
the extent of their replacement cost and list the Lender as a loss
payee on any
policy.
2.8
The
Maker will obtain a key man life insurance policy for at least
the period until the Final Maturity Date and pledge and assign the
proceeds of
such policy to the Lender.
2.9
No
event has occurred (including, specifically, Maker's execution,
delivery of and performance under this Loan Agreement) which will
violate,
constitute (with notice and/or lapse of time) a default under, or
result in the
imposition of any lien or other encumbrance upon, the Collateral
pursuant to the
terms of (a) any judgment, decree, order, statute, ordinance, or
regulation
applicable to Maker or any of the Collateral or (b) any other
contract or
agreement to which Maker is a party or by which its assets are
bound.
2.10
The
Maker is fully familiar with all the terms and conditions of
this Loan Agreement.
2.11
The
Maker has not changed its name or the location of its chief
place of business or chief executive office disclosed herein as
Maker's Address
or the location of its records with respect to Receivables, the
location of any
Inventory or returns of Inventory, the location of the Equipment,
or the
location of any records and documents regarding the General
Intangibles or the
location of any other Collateral.
2.12
The
Maker will permit Lender, through its authorized attorneys,
accountants and representatives, access to all of its business
premises and
offices to inspect and examine the Collateral and the books,
accounts, records,
ledgers and assets of every kind and description of Maker with
respect thereto
at all reasonable times.
2.13
The
Maker has not filed and has not had filed against it a
petition for relief under Title 11 of the United States Bankruptcy
Code.
2.14
The
Maker has paid and is current on all payroll taxes and all
other taxes or assessments levied and assessed or imposed upon its
property or
income as well as all claims which, if unpaid, might by law become
a lien or
charge upon its property or income.
2.15
The
Maker will furnish to Lender a consolidated and consolidating
profit and loss statements and statements of shareholders' equity
of the Maker
and any subsidiaries, all in conformance with GAAP, for each year
of Maker's
operations and for each month that this Loan Agreement is in force
and a
consolidated balance sheet for the Maker and any subsidiaries, all
in
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conformance with GAAP, as of the last day of each fiscal year of
its operations
and as of the last day of each month that this Loan Agreement is in
force. All
such financial statements and balance sheets shall be properly
footnoted to the
satisfaction of Lender and each such financial statement shall be
certified as
being true and correct by the Chief Accounting Officer and Chief
Executive
Officer of Maker.
Maker shall furnish monthly statements, including the last
month of each year, within 15 days of the end of the month and
annual statements
within 45 days of the end of the year.
2.16
The
Maker will furnish to Lender such additional financial
statements and such data and information concerning the financial
condition of
Maker as may reasonably be requested by Lender, including but not
limited to a
detailed monthly listing of Inventory, accounts payable, a detailed
check and
deposit register and Receivables.
ARTICLE III
-----------
MAXIMUM AMOUNT OF NOTES
Until further notice, and on the condition that Maker not be in
default
with respect to any of the terms of this Loan Agreement, or with
respect to any
outstanding Secured Promissory Note evidencing any advance made
under this Loan
Agreement, Lender, in its sole discretion, may advance amounts to
Maker up to
the Maximum Loan Amount specified by this Loan Agreement.
ARTICLE IV
----------
TERMS OF NOTES
The
Maker may, from time to time, request Lender to loan or advance
amounts
to Maker and Lender may make such loan or advance using a Secured
Promissory
Notes up to the Maximum Loan Amount of this Loan Agreement,
specifically
provided that Maker has complied with all parts of Article Five
below. Lender
may waive any of the conditions in Article Five in its sole
discretion. Lender
is not required, but may decide at its discretion, to make such
loan or advance
to Maker. In the event
that Lender elects to make such loan or advance, at the
time of each such borrowing Maker shall execute and deliver to
Lender a new
Secured Promissory Note payable to Lender in order to evidence each
such new
loan or advance. Each
Secured Promissory Note shall be in the form of Exhibit A
---------
hereto, with blanks suitably filled, shall be dated on the Funding
Date and
shall mature on or before the Note Maturity Date. Such note may be extended as
provided below. All
amounts advanced or loaned by Lender hereunder and under
each Secured Promissory Note shall bear interest from the Funding
Date until
paid at the Stated Rate, however, in the event that applicable law
may limit the
amount of interest that may be charged under this Loan Agreement
and the Secured
Promissory Notes, the Stated Rate shall be at the highest rate
allowed by
applicable law. All
amounts are payable in lawful money of the United States.
Interest under each Secured Promissory Note shall accrue at the
Stated Rate
beginning on the Funding Date. Interest shall be due on the first
of each month
after the Secured Promissory Note is issued and the failure to pay
such interest
when due shall be an event of default as defined in Article IX
without the
requirement of notice.
All unpaid principal, interest and other amounts payable
in connection with the Secured Promissory Notes shall be due and
payable on the
Note Maturity Date but in no event after the Final Maturity
Date.
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ARTICLE V
---------
TERMINATION OF AGREEMENT
This
Loan Agreement, each of the Loan and Security Documents and each
of
the other related agreements, documents and instruments executed or
entered into
in connection herewith or therewith, and the rights and obligations
of each of
the parties hereunder and thereunder shall terminate and be of no
further force
or effect, with the exception of any rights granted to Lender
pursuant to the
terms of any of the Loan and Security Documents pertaining to
warrants or other
rights, on the earlier of (a) the date that all amounts due and
owing under this
Loan Agreement and/or each of the executed Secured Promissory Notes
or any of
the other Loan and Security Documents, including but limited to
principal,
interest, late charges, fees, costs or penalties have been paid in
full to
Lender. Upon such
termination, Lender shall (and Lender shall cause its
nominees, other loan participants and any affiliates that have any
rights under
this Loan Agreement or any of the Loan and Security Documents to)
execute,
acknowledge, deliver, record and/or file any and documents,
releases,
termination of security interest statements and the like, execute,
deliver,
record and/or file such documents of reassignment, reconveyance and
the like,
and take any and all actions reasonably requested by Maker as may
be necessary
or advisable to release all security interests, liens, charges and
the like on
the assets of Maker, any securities of Maker or which otherwise
arise under or
with respect to this Loan Agreement, the Loan and Security
Documents or any such
related agreements, documents or instruments.
ARTICLE VI
----------
CONDITIONS FOR LOANS AND ADVANCES
AND USE OF PROCEEDS
It
is specifically understood and agreed that not only does the Lender
have
total and sole discretion in making and loans or advances under
this Loan
Agreement but that Lender will only make loans and advance funds to
Maker if
Maker satisfies the following conditions and meets the following
benchmarks:
6.1
The
Maker is not in default under the terms and conditions of this
Loan Agreement or any of the other Loan and Security Documents.
6.2
No
condition exists which, but for the giving of notice or the
lapse of time or both, would constitute a default under the terms
and conditions
of this Loan Agreement or any of the other Loan and Security
Documents as
defined above.
6.3
The
Maker has not filed and has not had filed against it a petition
for relief under Title 11 of the United States Bankruptcy Code.
6.4
The
Maker utilized all funds from prior advances or loans made by
Lender in the manner presented to Lender at the time of the request
for an
advance.
6.5
The
Maker has furnished to Lender any and all financial statements,
data and other financial and operating information requested by the
Lender, all
properly certified as being true and correct by the Chief
Accounting Officer and
the Chief Executive Officer.
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6.6
The
Maker has paid and is current on all payroll taxes and is
current on all other taxes or assessments levied and assessed or
imposed upon
its property or income as well as all claims which, if unpaid,
might by law
become a lien or charge upon its property or income.
6.7
The
Maker has permitted Lender, through its authorized attorneys,
accountants and representatives, reasonable access to all of its
business
premises and offices to inspect and examine the Collateral and the
books,
accounts, records, ledgers and assets of every kind and description
of Maker.
ARTICLE VII
-----------
SECURITY FOR LOANS
All
funds advanced or loaned to Maker by Lender, including all
amounts
evidenced by any and all Secured Promissory Notes or Other Lender
Liabilities,
are secured by the Collateral pursuant to the Loan and Security
Documents. In
the event of any inconsistency between the terms of this Loan
Agreement, any
Secured Promissory Note and any of the other Loan and Security
Documents, the
terms of this Loan Agreement shall control; however, this provision
shall not be
deemed to limit, abrogate, restrict or impair any provision in any
one or more
of the Loan and Security Documents which provides for more
extensive or
expansive obligations, requirements or restrictions by or upon
Maker or more
extensive or expansive rights or remedies of Lender, than are
contained in this
Loan Agreement.
ARTICLE VIII
------------
CONVERSION AND EQUITY RIGHTS
8.1
Voluntary Conversion.
At any time prior to a Note Maturity Date,
but not thereafter unless the Secured Promissory Notes are unpaid,
Note
Holder(s) shall have the right to convert the principal and
outstanding interest
on any of the Secured Promissory Notes into the Securities in
accordance with
the following sections of this Article VIII. Maker will give Lender the
(10)
business days notice of intent to pay the Secured Promissory Notes.
In the
event that Lender does not
