EXHIBIT 10.16
April 15, 2003
Imagis Technologies Inc.
1630 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: Mr. Xxxxx Xxxxx
Dear Sirs:
Amended and Restated Loan Agreement: Revolving Line of Credit
Further to the loan agreement made between Imagis Technologies Inc. and Xxxxx
Xxxxxxxx dated February 21, 2003 (the "Loan Agreement"), Xxxxx Xxxxxxxx (the
"Lender") wishes to increase the maximum amount of credit available to Imagis
Technologies Inc. (the "Borrower) under the Loan Agreement and hereby
establishes in favour of the Borrower an amended and restated loan agreement
(the "Amended and Restated Loan Agreement") for a revolving line of credit (the
"Extended Line of Credit") on the following terms and conditions:
Maximum Credit Amount: Cdn. $500,000 (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
paid to and received are applied to any outstanding balance of the Extended Line
of Credit.
Purpose: The Borrower will use the proceeds of the Extended Line of Credit to
assist in its cash flow management and general working capital.
Term: The term of the Extended Line of Credit shall commence on April 15, 2003
and expire on the earlier of May 31, 2003 or on completion of an equity
financing and the Borrower will repay the Extended 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 Extended 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 Extended 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 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.
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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 Extended
Line of Credit, the Borrower will deliver to the Lender an amended and restated
grid promissory note (the "Note") in the principal amount of $500,000. The
Lender is hereby authorized to record on the Note all advances by the Lender
under the Extended 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 Extended Line of Credit from time
to time. The Note will amend and restate the grid promissory note dated February
21, 2003, created and issued by the Borrower to the Lender.
Security: As security for its obligations to the Lender in connection with the
Extended Line of Credit, the Borrower will deliver to the Lender a General
Security Agreement (the "Security Agreement") creating a security interest over
all of the Borrower's present and after-acquired personal property and an
uncrystalized floating charge on land, subject only to the existing security
interests held by Royal Bank of Canada as security for corporate Visa credit
cards for a maximum credit amount of $56,000 ("Permitted Encumbrances"), which
security interests are currently in good standing and not in default and the
Borrower has not received any notice of default thereunder.
Additional Security: As additional collateral security for the obligations to
the Lender, the Borrower will execute and deliver to the Lender the Source Code
Escrow Agreement dated April 15, 2003.
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 Extended 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.
Mutual Covenants: The Borrower and Lender will within 5 business days from the
date hereof, execute and deliver to the Escrow Agent appointed pursuant to the
provisions of the Source Code Escrow Agreement hereinabove referred to, a
Licence Agreement in favour of the Lender and his assigns, to be held by the
Escrow Agent in accordance with the terms, conditions and
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instructions set out in the Source Code Escrow Agreement. The Licence Agreement
will consist of an appropriate form of licence containing the essential terms
described in Schedule A hereto.
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;
(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, effective control 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 Extended 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 - 1075 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
Fax: (000) 000-0000
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(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 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.
Amendment and Restatement: This agreement amends and restates the Loan
Agreement.
Yours truly,
Signed, Sealed and Delivered by XXXXX )
XXXXXXXX in the presence of: )
)
)
------------------------------------ ) [Signed by Xxxxx Xxxxxxxx]
Witness (Signature) ) -----------------------------------
) XXXXX XXXXXXXX
)
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Name (please print) )
)
)
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Address )
)
)
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City, Province )
We acknowledge and accept the foregoing terms and conditions.
IMAGIS TECHNOLOGIES INC.
Per: Signed "Xxxxx Xxxxx"
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Authorized Signatory
SCHEDULE A
to the Amended and Restated Loan Agreement
ESSENTIAL TERMS OF LICENCE AGREEMENT
1. The Borrower will grant to the Lender and his assigns, the absolute right
and authority to use, manufacture and distribute products based on, the
Source Codes and all Updates, the particulars of which are more fully
described in the Source Code Escrow Agreement.
2. The Borrower will permit the Lender and his assigns to use, manufacture and
distribute the Source Codes and all Updates, on a non-exclusive world-wide
basis.
3. The Licence Agreement will have a minimum term of five (5) years,
commencing on the date that the Licence Agreement and the Source Codes and
all Updates are released from escrow, in accordance with the provisions of
the Source Code Escrow Agreement.
4. The Licence Agreement will provide that no royalty is or will become
payable thereunder during the term thereof.
