EXHIBIT 10.6
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT ("Agreement") is made and entered into this 23rd
day of September, 2003, by and between RAPIDTRON, INC., a Nevada corporation,
("Debtor"); AXESS AG ("Secured Party"); and DESIGNA ACCESS CORPORATION, an agent
of Axess AG ("Agent").
For valuable consideration, receipt of which is acknowledged, Debtor grants
to Secured Party a security interest in the property described in Schedule I
attached hereto and incorporated by this reference (herein called "Collateral").
TOGETHER WITH all proceeds of the Collateral.
TO SECURE THE FOLLOWING OBLIGATIONS (collectively, the "Obligations"):
(a) The payment and performance of Debtor's indebtedness and obligations to
Secured Party under that certain Purchase Order dated May 16, 2003, with a
requested delivery date of July 7, 2003, between Secured Party and Debtor, as
amended by that certain Letter Agreement between Debtor and Secured Party dated
September 23, 2003, and any and all extensions, renewals, modifications,
amendments and replacements thereof (collectively, the "Purchase Order");
(b) The payment and performance of all Debtor's indebtedness and
obligations to Secured Party under (i) this Security Agreement, (ii) any and all
agreements, instruments or documents now or hereafter evidencing or securing an
Additional Debt (as defined below), and (iii) any and all agreements,
instruments or documents now or hereafter evidencing or securing the Purchase
Order; and
(c) The payment and performance of any other debts, obligations or
liabilities, with interest thereon, of Debtor (or any successor in interest to
Debtor as the owner of the Collateral) to Secured Party heretofore, now or
hereafter made, incurred or created when Debtor (or such successor) executes an
agreement, instrument or document which specifically states that such debts,
obligations or liabilities are secured by this Agreement (an "Additional Debt").
1. Representations and Warranties. Debtor represents, warrants and
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covenants to Secured Party as follows:
(a) Debtor is the owner of the Collateral free from any adverse lien,
security interest or encumbrances. Debtor will defend against all claims and
demands of all persons at any time claiming the same or an interest therein.
(b) Except as stated on Schedule I hereto, no Financing Statement
covering any Collateral or any proceeds thereof is on file in any public office.
At the request of Secured Party, Debtor will join with Secured Party in
executing one or more Financing Statements, pursuant to the Uniform Commercial
Code, naming Agent as the secured party in a form satisfactory to Secured Party
and will pay the cost of filing the same or filing or recording this Agreement
in all public offices wherever filing or recording is deemed by Secured Party to
be necessary or desirable.
(c) Debtor shall keep separate, accurate and complete records of the
Collateral and provide Secured Party with such books, records and such other
reports and information relating to the Collateral as Secured Party may request
from time to time.
2. Default. Debtor shall be in default under this Agreement upon the
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happening of any of the following events or conditions:
(a) Default by Debtor in the payment of any or all of the Obligations
secured hereby, or failure by Debtor to perform any agreement herein contained
or referred to herein or secured hereby.
(b) Any warranty, representation or statement, made or furnished to
Secured Party by or on behalf of Debtor, that proves to have been false in any
material respect when made or furnished;
(c) Termination of existence, dissolution, insolvency, business
failure, appointment of a receiver of any part of the property of, assignment
for the benefit of creditors by, or the commencement of any proceedings under
any bankruptcy or insolvency laws by, or against, Debtor.
3. Remedies. Upon any such default, Secured Party, at its option, without
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demand upon or notice to Debtor, declare all Obligations secured hereby to be
immediately due and payable, and Secured Party shall have all the rights and
remedies provided a secured party under the Uniform Commercial Code as enacted
in California and may proceed to foreclose the security interest created hereby
according to law, and may, at its option, and it is hereby empowered, with or
without foreclosure action, to enter upon the business premises of Debtor or
other premises where the Collateral or any part thereof may be and take
possession thereof and remove the Collateral or any part thereof. In addition,
Secured Party may require Debtor to assemble the Collateral and make it
available to Secured Party at a place to be designated by Secured Party which is
reasonably convenient to both parties. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Secured Party will give Debtor reasonable notice of the time
and place of any public sale thereof or of the time after which any private sale
or other intended disposition is to be made. The requirements of reasonable
notice shall be met if such notice is mailed, postage prepaid, to the address of
Debtor shown above at least ten (10) days before the time of the sale or
disposition. The Collateral may be sold in one or more lots and at one or more
sales, which may be held on different days and need not be held within view of
the Collateral being sold. Secured Party shall deduct and retain from the
proceeds of such sale or sales all costs and expenses paid or incurred in the
taking, removal, holding, preparing for sale or sales of the Collateral,
including any reasonable attorneys' fees and legal expenses incurred or paid by
Secured Party; the balance of the proceeds shall be applied by Secured Party
upon the Obligations secured hereby, in such order and manner as Secured Party
may determine, and the surplus, if any, shall be paid to Debtor or to the person
or persons lawfully entitled to receive the same.
Secured Party, at its option, shall have the right to commence any action
or proceeding against a third party or appear in or defend any action or
proceeding brought by a third party purporting to affect the rights, duties or
liabilities of the parties hereto, including, without limiting the generality of
the foregoing, an action to foreclose the security interest created hereby, and
in connection therewith to incur costs, expenses and attorneys' fees in any such
action or proceeding in which the Secured Party shall appear, all of which
costs, expenses and attorneys' fees will be paid or reimbursed to Secured Party
by Debtor together with interest from the date of expenditure at the maximum
rate permitted by law.
In the event of any default hereunder, Secured Party shall be entitled,
without notice and without regard to the adequacy of the Collateral and of any
other security for the indebtedness hereby secured, to the appointment of a
receiver to take possession of all or any part of the Collateral and to exercise
such powers as the Court shall confer upon him.
At any public sale or sales made under this Paragraph or authorized herein
or by law, or at any sale or sales made upon judicial foreclosure of this
security interest, Secured Party (or its representative) may bid for and
purchase any Collateral being sold and, in the event of such purchase, shall
hold such property thereafter discharged of all rights of redemption.
4. Agency. Debtor hereby recognizes Agent as agent of Secured Party
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authorized to act on behalf of Secured Party pursuant to this Agreement. Any
right granted to Secured Party hereunder may be enforced by Agent and any act
permitted to be taken by Secured Party hereunder may be taken by Agent on behalf
of Secured Party.
5. Assignment. The words "Secured Party" and "Debtor", as used herein, shall
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be construed to include the heirs, legatees, devisees, administrators,
executors, successors and assigns, respectively, of Secured Party and Debtor.
This Agreement shall bind and inure to the benefit of such third persons.
Whenever the context so requires, the masculine gender includes the feminine and
neuter, the singular number includes the plural, and vice versa. References to
the Uniform Commercial Code refer to the Uniform Commercial Code as adopted by
the State of California.
6. Attorney Fees. In the event suit is brought to enforce or interpret any
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part of this Agreement, the prevailing party shall be entitled to recover as an
element of its cost of suit, and not as damages, a reasonable attorneys' fee to
be fixed by the Court.
7. Release. Upon performance of the obligation and payment of the debt
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secured hereby, Secured Party shall execute such documents as Debtor may request
to release and relinquish the security interest created hereby.
The parties hereto have executed this Agreement the day and year first
written above.
"Debtor" "Secured Party"
RAPIDTRON, INC., AXESS AG
a Nevada corporation
By: /s/ Xxxx Xxxxx By: /s/ Wolfram Kocznar
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Xxxx Xxxxx, President & CEO Print Name: Wolfram Kocznar
Its: CEO
"Agent"
DESIGNA ACCESS CORPORATION
By: /s/ W. Xxxxxx Xxxxxxxx
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Print Name: W. Xxxxxx Xxxxxxxx
Its: Treasurer
SCHEDULE I
DESCRIPTION OF COLLATERAL
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The first One Hundred Thousand Dollars (US$100,000) collected by Debtor,
beginning on September 23, 2003, pursuant to Debtor's contract rights, rights to
the payment of money (whether due or to become due and whether or not earned by
performance), in the following accounts receivable:
(Please attach Aging Detail Report)
