EXHIBIT 10.15
February 21, 2003
Imagis Technologies Inc.
1630 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Mr. Xxxxx Xxxxx
Dear Sirs:
Revolving Line of Credit
On the basis of information provided by Imagis Technologies Inc. (the
"Borrower"), Xxxxx Xxxxxxxx (the "Lender") hereby establishes in favour of the
Borrower a revolving line of credit (the "Line of Credit") on the following
terms and conditions:
Maximum Credit Amount: The lesser of Cdn. $200,000 or the total of the current
outstanding Trade Account Receivables (as defined in the Security Agreement
(hereinafter defined) that are expected to be collectible within 60 days (the
"Maximum Credit Amount")
Borrowing and Repayment: The Borrower may borrow, repay and reborrow up to the
Maximum Credit Amount outstanding at any one time, provided that any amounts
received from the collection of Trade Account Receivables are applied to any
outstanding balance of the Line of Credit.
Purpose: The Borrower will use the proceeds of the Line of Credit to assist in
its cash flow management.
Term: The term of the Line of Credit shall commence on February 1, 2003 and
expire on the earlier of May 31, 2003 or on completion of an equity financing
and the Borrower will repay the Line of Credit and interest thereon in full on
the earlier of May 31, 2003 or receipt of funds pursuant to an equity financing.
Interest Rate: The Borrower shall pay interest on the outstanding daily balance
of the Line of Credit at a floating rate equal at all times to the Prime Rate
plus 2.0% per annum calculated monthly, not in advance, on the basis of a year
of 365 days. The interest rate shall fluctuate as and when the Prime Rate
fluctuates.
Default Interest Rate: Notwithstanding the previous paragraph, the Borrower
shall pay interest on any amount of principal or interest on the Line of Credit
which is not paid when due at the Prime Rate plus 5% per annum calculated
monthly not in advance, on the basis of a year of 365 days. The default interest
shall fluctuate as and when the Prime Rate fluctuates.
Prime Rate: In this agreement, "Prime Rate" means the floating commercial loan
reference rate of Royal Bank of Canada publicly announced from time to time as
its "prime rate" or "reference
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rate" (calculated on the basis of actual number of days elapsed over a year of
365 days), with any change in the Prime Rate to be effective on the date the
"prime rate" or "reference rate" changes. For the purposes of the Canada
Interest Act, the annual rate of interest to which an interest rate which is
calculated on the basis of a year of 365 days is equivalent is the interest rate
multiplied by the number of days in the year and divided by 365.
Payment of Business Interest: The Borrower shall pay interest accruing due in
each calendar month on the 10th business day of the next calendar month.
Evidence of Indebtedness: As evidence of the indebtedness under the Line of
Credit, the Borrower will deliver to the Lender a grid promissory note (the
"Note") in the principal amount of $200,000. The Lender is hereby authorized to
record on the Note all advances by the Lender under the Line of Credit, all
interest accrued thereon and all payments of principal and interest thereon made
by the Borrower. The Note will constitute prima facie evidence of the amounts of
all such advances, interest and payments and the indebtedness of the Borrower
under the Line of Credit from time to time.
Security: As security for its obligations to the Lender in connection with the
Line of Credit, the Borrower will deliver to the Lender a Security Agreement
(the "Security Agreement") creating a security interest over the Borrower's
trade account receivables, subject only to the security interests held by Royal
Bank of Canada and AIG Credit Corporation of Canada ("Permitted Encumbrances").
Reporting Requirements: The Borrower will deliver to the Lender a monthly report
of outstanding receivables with a reconciliation of payments made and received
to substantiate all amounts deposited by the Borrower into the Line of Credit.
Other Covenants: The Borrower will:
(a) not grant, create, assume or permit to exist any mortgage, charge,
lien, pledge, security interest or other encumbrance against any
assets or rights of the Borrower or guarantee or become liable for the
obligations of any other person, corporation or other entity except
those that are Permitted Encumbrances; and
(b) conduct its business in compliance with all applicable laws and
regulations, including without limitation laws and regulations
relating to the environment and hazardous, toxic or dangerous
substances.
Default: The following shall constitute events of default by the Borrower:
(a) non-payment within 10 business days after the due date thereof of
principal, interest and any other amounts due under this Agreement,
the Note or the Security Agreement;
(b) a breach or default by the Borrower under this Agreement, the Security
or any other agreement with the Lender which is not remedied within 14
days after the date of such occurrence;
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(c) if the Borrower defaults under any other obligation to repay borrowed
money;
(d) if in the opinion of the Lender there is a material adverse change in
the financial condition, ownership or operation of the Borrower;
(e) if proceedings for the dissolution, liquidation or winding-up of the
Borrower or for the suspension of the operations of the Borrower are
commenced, unless such proceedings are being actively and diligently
contested by the Borrower in good faith; or
(f) in the event of the bankruptcy, liquidation or insolvency of the
Borrower or if a receiver or receiver-manager is appointed for all or
any part of the business or assets of the Borrower; and
(g) if the Borrower ceases to carry on business.
Upon the occurrence of one or more events of default, the Lender may declare the
outstanding principal and accrued interest under the Line of Credit to be
immediately due and payable and the Lender may exercise its remedies under the
Security Agreement or otherwise available to the Lender at law or in equity.
Expenses: The Borrower will pay all costs and expenses incurred from time to
time in preparation, negotiation and execution of this Agreement and the
Security, and any costs and expenses incurred in the administration or
enforcement of this Agreement or any other agreement relating to this Agreement.
Notices: All notices and other communications under this Agreement shall be in
writing and shall be sent by delivery or by facsimile transmission addressed as
follows:
(a) if to the Lender, to:
Xxxxx Xxxxxxxx
1300 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Fax: (000) 000-0000
(b) if to the Borrower, to:
Imagis Technologies Inc.
1630 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Fax: (000) 000-0000
Attention: Mr. Xxxxx Xxxxx
Severability: If any provision of this Agreement is held by any court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall remain in full force and effect. Without limiting the
generality of the foregoing, if the default interest rate provided for in this
Agreement is held to be invalid, void or unenforceable, the Borrower shall pay
interest on
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any amount of principal or interest which is not paid when due at the Prime Rate
plus 2% per annum calculated monthly, not in advance, on the basis of a year of
365 days.
Assignment: No party hereto may assign its rights or obligations under this
Agreement without the prior written consent of the other party, such consent not
to be unreasonably withheld.
Acceptance: This offer expires on February 24, 2003 if not accepted by that
date. If this offer is acceptable, please sign the enclosed copy of this
Agreement and return it to us.
Yours truly,
Signed, Sealed and Delivered by XXXXX )
XXXXXXXX in the presence of: )
)
Signed "Xxxxx Xxxxxx" )
------------------------------------ ) Signed "Xxxxx Xxxxxxxx"
Witness (Signature) ) -----------------------------------
) XXXXX XXXXXXXX
Xxxxx Xxxxxx )
------------------------------------ )
Name (please print) )
)
0000 Xxxxxx Xxxxxx )
------------------------------------ )
Address )
)
Burnaby, B.C. )
------------------------------------ )
City, Province )
We acknowledge and accept the foregoing terms and conditions.
IMAGIS TECHNOLOGIES INC.
Per: [Signed by Xxxxx Xxxxx]
--------------------------------
Authorized Signatory
