SECURED DEMAND LOAN AGREEMENT
SECURED
DEMAND
LOAN AGREEMENT
THIS
SECURED DEMAND LOAN AGREEMENT
(the
“Agreement”) is made and entered into effective as of the 31st day of August,
2006 between, by and among QI Systems, Inc. of 000 Xxxxx Xxxxxxx Xxxx, Xxxxx
#000, Xxxxxxxxxxx, Xxxxx 00000, a corporation registered in the State of
Delaware ("Debtor"), and Xx. Xxxxx X. Xxxxx, 0000 Xxxxxxxx Xx., Xxxx Xxxxxxxxx,
XX 00000, a private individual ("Secured Party"), pursuant to the terms and
conditions set forth herein. Xx. Xxxxx and QI Systems Inc. are collectively
referred to herein as the “Parties” and individually as a “Party”.
WITNESSETH:
WHEREAS,
Xx.
Xxxxx
X. Xxxxx is a private investor interested in providing secured funding to QI
Systems Inc.,
WHEREAS,
QI
Systems Inc. is a public corporation interested in securing operating
capital,
NOW,
THEREFORE
for and
in consideration of the premises and the mutual covenants and conditions
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:
1.
THE
LOAN AMOUNT: For
true
value received promise to pay to the order of Xx. Xxxxx X. Xxxxx, the sum of
One
Hundred Thousand Dollars ($100,000.00 USD). The entire principal shall be fully
and immediately payable UPON DEMAND of the Secured Party thereof on or after
90
days from the date of signing shown below. The Secured Party shall have at
its
discretion the right to extend the note in increments of thirty (30) additional
days upon the request of the Debtor. At such time an extension is granted to
the
Debtor by the Secured Party simple interest shall begin accruing at the rate
of
two and one half percent (2½%) per month from the date of the extension. Upon
mutual agreement of the Debtor and the Secured Party indefinite extensions
may
be granted. At the due date of the loan should the Secured Party elect to
exercise the right of calling the note, the Debtor shall have ninety (90) days
from the date that the Secured Party’s written notice is received by the Debtor
to pay, settle and totally discharge the note without additional penalty or
interest.
2.
USE OF
FUNDS: The Debtor pledges to use the funds provided by the Secured Party herein
defined for the purposes of growing, enhancing, developing and strengthening
the
corporation according to acceptable and established business practices. The
Debtor further pledges that funds will not be used as compensation for the
Board
of Directors or to fund activities not authorized or endorsed by the
corporation’s Senior Management.
3.
FINANCING FEE: As a financing fee for completing the transaction herein stated
by this document, the Secured Party shall receive Two Hundred Fifty Thousand
(250,000) shares of QI Systems Inc. common stock payable upon receipt of funds
by the Debtor.
4.
SECURITY
INTEREST:
Debtor
grants to Secured Party a security interest in all inventory, equipment,
appliances, furnishings, and fixtures now or hereafter placed upon the premises
known as QI Systems Inc., located at 000-0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxx X0X 0X0 and 000 Xxxxx Xxxxxxx Xxxx, Xxxxx #000, Xxxxxxxxxxx,
Xxxxx 00000 (the "Premises") or used in connection therewith and in which Debtor
now has or hereafter acquires any right and the proceeds therefrom. As
additional collateral, Debtor assigns to Secured Party, a security interest
in
all of its right, title, and interest to any trademarks, trade names, contract
rights, and leasehold interests in which Debtor now has or hereafter acquires.
The Security Interest shall secure the payment and performance of Debtor's
promissory note of even date herewith in the principal amount of One Hundred
Thousand Dollars ($100,000.00 USD) and the payment and performance of all other
liabilities and obligations of Debtor to Secured Party of every kind and
description, direct or indirect, absolute or contingent, due or to become due
now existing or hereafter arising.
5.
COVENANTS:
Debtor
hereby warrants and covenants: (a) the collateral will be kept at the Premises
and that the collateral will not be removed from the Premises other than in
the
ordinary course of business. (b) The Debtor's place of business is 000-0000
Xxxxxxx Xxxx, Xxxxxxxx, XX, Xxxxxx X0X 0X0 and 000 Xxxxx Xxxxxxx Xxxx, Xxxxx
#000, Xxxxxxxxxxx, Xxxxx 00000 and Debtor will immediately notify Secured Party
in writing of any change in or discontinuance of Debtor's place of business.
(c)
The parties intend that the collateral is and will at all times remain personal
property despite the fact and irrespective of the manner in which it is attached
to realty. (d) he Debtor will not sell, dispose, or otherwise transfer the
collateral or any interest therein without the prior written consent of Secured
Party, and the Debtor shall keep the collateral free from unpaid charges
(including rent), taxes, and liens. (e) The Debtor shall execute alone or with
Secured Party any Financing Statement or other document or procure any document,
and pay the cost of filing the same in all public offices wherever filing is
deemed by Secured Party to be necessary. (f) Debtor shall maintain insurance
at
all times with respect to all collateral against risks of fire, theft, and
other
such risks and in such amounts as Secured Party may require. (g) The Debtor
shall make all repairs, replacements, additions, and improvements necessary
to
maintain any equipment in good working order and condition. At its option,
Secured Party may discharge taxes, liens, or other encumbrances at any time
levied or placed on the collateral, may pay rent or insurance due on the
collateral and may pay for the maintenance and preservation of the collateral.
Debtor agrees to reimburse Secured Party on demand for any payment made, or
any
expense incurred by Secured Party pursuant to the foregoing authorization.
6.
DEFAULT:
The
Debtor shall be in default under this Agreement upon the happening of any of
the
following: (a) any misrepresentation in connection with this Agreement on the
part of the Debtor. (b) Any noncompliance with or nonperformance of the Debtor's
obligations under the Note or this Agreement. (c) if Debtor is involved in
any
financial difficulty as evidenced by (i) an assignment for the benefit of
creditors, or (ii) an attachment or receivership of assets not dissolved within
ninety (90) days, or (iii) the institution of Bankruptcy proceedings, whether
voluntary or involuntary, which is not dismissed within ninety (90) days from
the date on which it is filed. Upon default and at any time thereafter, Secured
Party may declare all obligations secured hereby immediately due and payable
and
shall have the remedies of a Secured Party under the Uniform Commercial Code.
Secured Party may require the Debtor to make it available to Secured Party
at a
place which is mutually convenient. No waiver by Secured Party of any default
shall operate as a waiver of any other default or of the same default on a
future occasion. This Agreement shall inure to the benefit up and bind the
heirs, executors, administrators, successors, and assigns of the parties. This
Agreement shall have the effect of an instrument under seal.
7.
ASSIGNMENT: This Agreement may not be assigned by any Party without the other
Party’s prior written approval.
8.
NOTICE: Any notice or communication required or permitted hereunder shall be
in
writing and (i) personally delivered, (ii) sent by United States registered
or
certified mail, postage prepaid, return receipt requested, (iii) sent by Federal
Express or similar nationally recognized overnight courier service, or (iv)
transmitted by facsimile with a hard copy sent within one (1) business day
by
any of the foregoing means. Such notice shall be deemed to have been given
upon
the date of actual receipt or delivery (or refusal to accept delivery) as
evidenced by the notifying Party’s receipt of written or electronic confirmation
of such delivery or refusal, if received by the Party to be notified between
the
hours of 8:00 a.m. and 5:00 p.m. Central Standard Time on any business day,
with
delivery made after such hours to be deemed received on the following business
day. For the purposes of notice, the address of the Parties shall be as
follows:
|
If
to Secured Party:
|
Xx.
Xxxxx X. Xxxxx
|
|
0000
Xxxxxxxx Xxxxx
|
|
|
Xxxx
Xxxxxxxxx, XX 00000
|
|
|
Phone:
000-000-0000
|
|
|
Fax:___________________
|
|
|
Email:
xxxxxx0@xxxxxxx.xxx
|
|
If
to Debtor:
|
Attention:
Xx. Xxxxxx X. Xxxxxx
|
|
000
Xxxxx Xxxxxxx Xxxx
|
|
|
Xxxxx
#000
|
|
|
Xxxxxxxxxxx,
Xxxxx 00000
|
|
|
Phone:
000-000-0000
|
|
|
Fax:
000-000-0000
|
|
|
xxxxxxx@xxxxxxxxx.xx
|
Any
address for notice may be changed by written notice so given.
9.
AMMENDMENTS: This Agreement may not be modified or amended except in writing
signed by all Parties hereto.
10.
ACCEPTANCE: The last party executing this Agreement shall have until 5:00 p.m.,
Central Standard Time, on the date which is ten (10) days after the date of
the
execution of this Agreement by the first Party to execute this Agreement, as
evidenced by the date shown on the signature page attached hereto, and return
a
fully executed original thereof to the first Party; otherwise, the offer set
forth in this Agreement shall be automatically revoked immediately upon the
expiration of such ten (10) day period.
11.
NO
THIRD-PARTY BENEFICIARY: This Agreement is not intended to give or confer any
benefits, rights, privileges, claims, actions or remedies to any person or
entity as a third party beneficiary, decree, or otherwise.
EXECUTED
to be
effective as of the date shown herein above, although executed by the parties
on
the dates indicated below next to their respective signatures.
|
By:
Xx. Xxxxx X. Xxxxx
|
/s/
Xxxxx X. Xxxxx
|
9-4-06 | |
|
Xxxxx
X. Xxxxx
|
Date
|
|
By:
QI Systems Inc.
|
/s/
Xxxxxx X. Xxxxxx
|
9-1-06
|
|
|
Xxxxxx
X. Xxxxxx
|
Date
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||
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President
& CEO
|
|||
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Signing
for QI Systems Inc.
|
THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
X.
Xxxxx DB For QI Systems Inc. SG
4
