Docstoc

Security Agreement - RAPIDTRON INC - 4-15-2005

Document Sample
Security Agreement - RAPIDTRON INC - 4-15-2005 Powered By Docstoc
					SECURITY AGREEMENT

This Security Agreement (the "Agreement") is made and entered into on December 1, 2004, by and between
Rapidtron, Inc., a Nevada corporation (the "Debtor"), and Oceanus Value Fund, L.P.(the "Secured Party").

A. Debtor and Secured Party have entered into a Securities Purchase Agreement dated concurrently herewith
(the "Securities Purchase Agreement").

B. Pursuant to the Securities Purchase Agreement, Debtor has, among other things, delivered to Secured Party a
$400,000 15% Secured Convertible Promissory Note (the "Note").

C. The parties now enter into this Agreement as security for Debtor's obligations under the Note.

NOW, THEREFORE, in consideration of their respective promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:

1. Definitions. Capitalized terms used in this Agreement and not defined elsewhere herein or in the Securities
Purchase Agreement shall have the meanings set forth below:

"Accounts" means and includes all of Debtor's presently existing and hereafter arising accounts receivable,
contract rights, rights of payment, instruments, notes, drafts, documents, chattel paper, and all other forms of
obligations owing to Debtor arising out of the sale or lease of goods or the rendition of services by Debtor,
whether or not earned by performance, and any and all letters of credit, credit insurance, guaranties, and other
security therefor, and all merchandise returned to or reclaimed by Debtor, and all proceeds and products of any
of the foregoing, and all of Debtor's Books (as defined below) relating to any of the foregoing.

"Collateral" means and includes all of the following: (i) the Accounts, Equipment, General Intangibles, Inventory,
Negotiable Collateral, and such other assets of Debtor as to which Secured Party may from time-to-time be
granted a security interest and (ii) the proceeds of any of the foregoing, including, but not limited to, proceeds of
insurance covering the foregoing or any portion thereof, and any and all money, deposit accounts or other
tangible and intangible property of Debtor resulting from a sale or other disposition of the foregoing or any
portion thereof; provided, however, that notwithstanding anything to the contrary contained in this Agreement, the
Collateral does not include any "infectious waste," "restricted hazardous waste," or "hazardous waste" as those
terms are defined under 42 U.S.C. Section 6903(5), as such section may be from time to time amended, or
under any regulations thereunder.

"Debtor's Books" means and includes all of Debtor's books and records, including, but not limited to, all records,
ledgers and computer programs, disk or tape files, printouts and other computer-prepared information indicating,
summarizing or evidencing the Collateral.
"Equipment" means and includes all of Debtor's present and hereafter acquired equipment wherever located,
including but not limited to, machinery and machine tools with motors, controls, attachments, parts, tools and
accessories incidental thereto, all present and future furniture, furnishings, fixtures, motor vehicles, tools, drawings,
blueprints, catalogs and computer programs; and all attachments, accessories, accessions, replacements,
substitutions, additions and improvements thereto, wherever located, as well as Debtor's Books relating to any of
the foregoing.

"Event of Default" means the occurrence of any one of the events set forth in Section 7 of this Agreement.

"General Intangibles" means and includes all of Debtor's presently existing and hereafter acquired or arising
general intangibles and other personal property (including, without limitation, any and all choses in action, licenses,
leasehold interests, equity interests (including equity interests in subsidiaries, partnerships and joint ventures),
goodwill, intellectual property of any kind (including patents, copyrights, trademarks, trade names and service
marks), blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds,
monies due or recoverable from factors, route lists, infringement claims, software source codes, computer
programs and disks, literature, reports, catalogs, deposit accounts, tax refunds and tax refund claims, together
with the proceeds and products of any of the foregoing, as well as Debtor's Books relating to any of the
foregoing.

"Inventory" means and includes all of Debtor's present and hereafter acquired inventory in which Debtor has any
interest, including goods held for sale or lease or to be furnished under a service contract, and all of Debtor's
present and future goods, parts, raw materials, work in process, finished goods and supplies that are or might be
used in connection with the manufacture, packing, shipping advertising, selling or finishing of such goods, as well
as Debtor's Books relating to any of the foregoing.

"Negotiable Collateral" means and includes all of Debtor's presently existing and hereafter acquired or arising
letters of credit, advices of credit, promissory notes, drafts, instruments, documents, leases of personal property
and chattel paper, as well as Debtor's Books relating to any of the foregoing

"Obligations" means and includes any and all liabilities and indebtedness owing by Debtor to Secured Party
pursuant to the Note, including, without limitation, all interest and other payments required thereunder that are not
paid when due, and all of the Secured Party Expenses which Debtor is required to pay or reimburse by this
Agreement, by law, or otherwise.

"Secured Party Expenses" means and includes (i) all costs or expenses required to be paid by Debtor under this
Agreement that are instead paid or advanced by Secured Party; (ii) all costs and expenses incurred to correct
any default or enforce any provision of this Agreement, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale and/or advertising to sell the Collateral, irrespective of
whether a sale is consummated; and (iii) all costs and expenses (including reasonable attorney's fees) incurred by
Secured Party in enforcing or defending this Agreement, irrespective of whether suit is brought.

"Senior Lender" means Silicon Valley Bank, in connection with that certain Accounts Receivable Purchase
Agreement dated as of June 29, 2004, as amended from time to time, and
its successors and assigns or any other person or entity who provides funds to Debtor to refinance, refund or
replace such Accounts Receivable Purchase Agreement.

"Senior Liens" means the liens, security interests and other encumbrances in favor of Senior Lender.

2. Construction. Unless the context of this Agreement clearly requires otherwise, references to the plural include
the singular and vice versa, to the part include the whole, "including" is not limiting, and "or" has the inclusive
meaning represented by the phrase "and/or." References in this Agreement to a "determination" by Secured Party
include reasonable, good faith estimates by Secured Party (in the case of quantitative determinations) and
reasonable, good faith beliefs by Secured Party (in the case "of qualitative determinations). The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Section references are to this Agreement, unless otherwise specified.

3. Creation of Security Interest.

3.1 Grant of Security Interest. In order to secure Debtor's timely payment of the Obligations and timely
performance of each and all of its covenants and obligations under this Agreement and any other document,
instrument or agreement executed by Debtor and/or delivered by Debtor to Secured Party in connection with the
Obligations (other than in connection with a conversion of the Note), Debtor hereby grants to Secured Party a
continuing security interest in all presently existing and hereafter acquired or arising Collateral. Such security
interest in the Collateral shall (i) be a first-priority security interest except as to the Senior Liens] and (ii) attach to
all Collateral without further act on the part of Secured Party or Debtor.

3.2 Rights as to Inventory and Accounts. Unless an Event of Default under this Agreement has occurred and is
continuing, Debtor may, subject to the provisions hereof and consistent herewith, (i) sell the Inventory and enter
into licenses with respect to its property, but in each case only in the ordinary course of Debtor's business, and
(ii) sell the Accounts to Senior Lender. A sale of Inventory in Debtor's ordinary course of business does not
include an exchange or a transfer in partial or total satisfaction of a debt owing by Debtor, nor does it include an
exchange for less than the lower of cost or fair market value.

4. Insurance. Debtor, at its expense, shall keep and maintain the Inventory and Equipment insured against loss or
damage by fire, theft, explosion, sprinklers and all other hazards and risks and in such amounts as are ordinarily
insured against by other owners of such properties in similar businesses. Debtor shall also keep and maintain
public liability and property damage insurance relating to Debtor's ownership and use of the Inventory and
Equipment and its other assets. At the request of Secured Party, all such policies of insurance (except those of
public liability and property damage) shall contain an endorsement, in a form satisfactory to Secured Party,
showing Secured Party as loss payee thereof (except to the extent necessary to reflect the Senior Liens), and all
proceeds payable thereunder shall be payable to

                                                             3
Secured Party (subject to the Senior Liens). At the request of Secured Party, each such insurer shall agree (by
endorsement upon the policy or policies of insurance issued by it to Debtor or by independent instruments) that it
will give Secured Party at least thirty (30) days written notice before any such policy or policies of insurance will
be altered or cancelled, and that no act or default of Debtor, or any other person, shall affect the right of Secured
Party to recover under such policy or policies of insurance or to pay any premium in whole or in part relating
thereto.

5. Further Assurances.

5.1 General. Following the Closing, Secured Party is authorized to file a UCC-1 Financing Statement with the
Secretary of State of the State of Nevada evidencing Secured Party' security interest in the Collateral. Debtor
also authorizes the filing by Secured Party of such other UCC financing statements, continuation financing
statements, fixture filings, security agreements, chattel mortgages, assignments and other documents as Secured
Party may reasonably require in order to perfect and maintain Secured Party's security interests in the Collateral
and in order to fully consummate all of the transactions contemplated under this Agreement; provided, however,
unless specifically required by this Agreement or the Note, (i) Debtor shall not be required to execute or deliver
(A) possession of any of the Collateral, (B) any agreements providing for control with respect to any of the
Collateral or (C) any agreements providing for acknowledgment by any third party, such as a bailee, of Secured
Party's security interests in the Collateral (other than the SVB Subordination Agreement and the Designa
Subordination Agreement) and (ii) Secured Party will make no filing or recordation with respect to the Collateral
with the United States Patent and Trademark Office or the United States Copyright Office. Subject to the
foregoing, if so requested by Secured Party at any time hereafter, Debtor shall promptly execute and deliver such
fixture filings, security agreements, chattel mortgages, assignments and other documents that Secured Party may
reasonably require from Debtor. Debtor hereby irrevocably makes, constitutes and appoints Secured Party (and
any of Secured Party's employees or agents designated by Secured Party ) as Debtor's true and lawful attorney
with power, upon Debtor's failure or refusal to promptly comply with its obligations in this Section 5.1, to sign the
name of Debtor on any of the above-described documents or on any other similar documents which need to be
executed, recorded and/or filed in order to perfect or maintain Secured Party's security interests in the Collateral.

5.2 Additional Matters. Without limiting the generality of Section 5.1, Debtor will (i) at the reasonable request of
Secured Party, appear in and defend any action or proceeding which may affect Debtor's title to, or the security
interests of Secured Party in, the Collateral (other than action brought by Senior Lender) and (ii) promptly furnish
to Secured Party, from time to time, such reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail, including reports describing the Equipment and Inventory, specifying
the locations at which the Equipment and Inventory are based and setting forth the then current location of
Debtor's Books pertaining to the Collateral.

5.3 Accounts and Negotiable Collateral. In the event that any portion of the Collateral, including proceeds, is
evidenced by or consists of Accounts and/or Negotiable Collateral as to which no Senior Lien exists, Debtor
shall, immediately upon request therefore

                                                          4
from Secured Party, endorse (where appropriate) and assign such Accounts and/or Negotiable Collateral over to
Secured Party, and deliver actual physical possession of the Accounts and/or Negotiable Collateral to Secured
Party in order to perfect fully the security interest therein (subject to the Senior Liens).

6. Warranties, Representations and Covenants. Debtor warrants, represents, covenants and agrees as follows:

6.1 No Other Encumbrances. Debtor has good and marketable title to the Collateral, free and clear of any liens,
claims, encumbrances and rights of any kind except the Senior Liens.

6.2 Merchantable Inventory. Except for defects arising in the ordinary and usual course of business, all Inventory
is now and at all times hereafter shall be of good and merchantable quality.

6.3 Storage of Inventory. The Inventory is not now and shall not at any time hereafter be stored with a bailee,
warehouseman or similar party, unless Debtor has given fifteen (15) days prior written notice to Secured Party
specifying the name and address of such entity and, in such event, Debtor shall, unless a Permitted Interest therein
then exists, concurrently therewith, cause any such bailee, warehouseman or similar party to issue and deliver to
Secured Party (in a form acceptable to Secured Party) warehouse receipts in Secured Party's name evidencing
the storage of the Inventory.

6.4 Inventory Records. Debtor now keeps, and at all times hereafter shall keep, correct and accurate records
itemizing and describing the kind, type, quality and quantity of the Inventory and Debtor's cost therefor. All of
such records shall be available upon demand to any of Secured Party's agents and employees for inspection and
copying during normal business hours and upon reasonable advance notice.

6.5 Right to Inspect Inventory and Equipment. Secured Party shall have the right, during Debtor's usual business
hours and upon reasonable advance notice, to inspect and examine the Inventory and the Equipment and to
check and test the same as to quality, quantity value and condition. Debtor agrees that any reasonable expenses
incurred by Secured Party in connection with this
Section 6.5 shall constitute Secured Party Expenses.

6.6 Title to Equipment. Upon Secured Party's request, Debtor shall immediately deliver to Secured Party,
properly endorsed, any and all evidences of ownership of or title to any items of Debtor's Equipment (provided
no Senior Liens shall then exist ).

6.7 Maintenance of Equipment. Debtor shall keep and maintain the Equipment in good operating condition and
repair, and shall make all necessary replacements thereto, so that the value and operating efficiency thereof shall
at all times be maintained and preserved consistent with reasonable business practices.

                                                         5
6.8 Negative Covenants. Debtor shall not (i) sell, lease, or otherwise dispose of, relocate or transfer, whether by
sale or otherwise, any of Debtor's assets other than transfers of Accounts to the Senior Lender and/or sales of
Inventory and licenses of property in the ordinary course of Debtor's business,
(ii) allow any liens on the Collateral except the Senior Liens and liens created by this Agreement or (iii) change
Debtor's name or add any new fictitious name without providing Secured Party with forty-five (45) days prior
written notice.

6.9 Relocation of Principal Place of Business. The principal place of business of Debtor is at the address
indicated in Section 10, and Debtor shall not, during the term of this Agreement, without prior written notification
to Secured Party, relocate such principal place of business.

6.10 Further Information. Debtor shall promptly supply Secured Party with such information concerning Debtor's
business as Secured Party may reasonably request from time to time hereafter, and shall promptly notify Secured
Party of any material adverse change in Debtor's financial condition or any event which constitutes an Event of
Default.

6.11 Solvency. Debtor is now and shall be at all times hereafter able to pay its debts (including trade debts) as
they mature.

6.12 Secured Party Expenses. Debtor shall within ten (10) days of written demand, reimburse Secured Party for
all sums expended by Secured Party which constitute Secured Party Expenses and, in the event that Debtor does
not pay Secured Party Expenses payable to a third party within ten (10) days after notice thereof, then Secured
Party may immediately and without further notice pay such Secured Party Expenses on Debtor's behalf, and
Debtor hereby authorizes and approves all advances and payments by Secured Party for items constituting such
Secured Party Expenses.

6.13 Reliance by Secured Party; Representations Cumulative. Each warranty, representation and agreement
contained in this Agreement shall be conclusively presumed to have been relied on by Secured Party regardless
of any investigation made or information possessed by Secured Party. The warranties, representations and
agreements set forth herein shall be cumulative and in addition to any and all other warranties, representations and
agreements which Debtor shall now or hereafter give, or cause to be given, to Secured Party.

7. Events of Default. The occurrence of any Event of Default under the Note, after the expiration of any
applicable cure period, shall constitute an "Event of Default" by Debtor under this Agreement.

8. Rights and Remedies.

8.1 Secured Party' Rights and Remedies.

(a) Upon the occurrence and during the continuance of an Event of Default, without notice of election and without
demand (but subject to the rights of the holders of Senior Liens),

                                                         6
Secured Party, upon the written consent and direction of Secured Party, may cause any one or more of the
following to occur, all of which are authorized by Debtor:

(i) Secured Party may make such payments and do such acts as it considers necessary or reasonable to protect
its security interests in the Collateral. Debtor agrees to assemble and make available the Collateral if Secured
Party so requires. Subject to the Senior Liens, Debtor authorizes Secured Party to enter the premises where the
Collateral is located, take and maintain possession of the Collateral, or any part thereof, and pay, purchase,
contest or compromise any encumbrance, claim, right or lien (other than the Senior Liens) which, in the opinion of
Secured Party or its assignee, appears to be prior or superior to Secured Party's security interests, and to pay all
expenses incurred in connection therewith;

(ii) Secured Party shall be automatically deemed to be granted a license or other right to use, without charge,
Debtor's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and
advertising matter, and any other property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale and selling any Collateral;

(iii) Secured Party may ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale
and sell (in the manner provided for herein) the Collateral;

(iv) Secured Party may sell the Collateral at either a public or private sale, or both, by way of one or more
contracts or transactions, for cash or on terms, in such manner and at such places (including Debtor's premises)
as is commercially reasonable (it not being necessary that the Collateral be present at any such sale);

(v) Secured Party shall be entitled to give notice of the disposition of the Collateral as follows: (A) Secured Party
shall give Debtor a notice in writing of the time and place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the Collateral, the time on or after which the private
sale or other disposition is to be made, (B) the notice shall be personally delivered or mailed, postage prepaid, to
Debtor at least ten (10) calendar days before the date fixed for the sale, or at least five (5) calendar days before
the date on or after which the private sale or other disposition is to be made, unless the Collateral is perishable or
threatens to decline speedily in value and (C) if the sale is to be a public sale, Secured Party shall also give notice
of the time and place by publishing a notice one time at least five (5) calendar days before the date of the sale in a
newspaper of general circulation, if one exists, in the county in which the sale is to be held; and

(vi) Secured Party may credit bid and purchase all or any portion of the Collateral at any public sale.

(b) Upon demand, Debtor shall pay all the Secured Party Expenses incurred in connection with the enforcement
and exercise of any of the rights and remedies of Secured Party provided for herein, irrespective of whether suit
is commenced. Any deficiency which exists after disposition of the Collateral as provided herein will be paid
immediately by Debtor, and any

                                                           7
excess that exists will be returned, without interest and subject to the rights of third parties, to Debtor by Secured
Party.

8.2 Rights and Remedies Cumulative. The rights and remedies of Secured Party under this Agreement and any
other agreements and documents delivered and/or executed in connection with the Obligations shall be
cumulative. Secured Party shall also have all other rights and remedies not inconsistent herewith as are provided
under applicable law, or in equity. No exercise by Secured Party of one right or remedy shall be deemed an
election, and no waiver by Secured Party of any default on Debtor's part shall be deemed a continuing waiver.
No delay by Secured Party shall constitute a waiver, election or acquiescence.

9. Additional Waivers. Secured Party shall not in any way or manner be liable or responsible for (i) the
safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from
any cause,
(iii) any diminution in the value thereof or (iv) any act or default of any carrier, warehouseman, bailee, forwarding
agency or other person whomsoever.

10. Notices. All notices or demands by any party relating to this Agreement shall be made in writing as provided
in Section 8(f) of the Securities Purchase Agreement.

11. Choice of Law. The validity of this Agreement, its construction, interpretation and enforcement, and the rights
of the parties hereunder and concerning the Collateral, shall be determined under, governed by, and construed in
accordance with the laws of the State of California.

12. Waiver of Jury Trial. Debtor and Secured Party each waive any right to trial by jury in any action or
proceeding relating to this Agreement.

13. General Provisions.

13.1 Effectiveness. This Agreement shall be binding and deemed effective when executed by Debtor and
Secured Party.

13.2 Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and
permitted assigns of Secured Party. Debtor shall not assign this Agreement or any rights hereunder, and any such
assignment shall be absolutely void.

13.3 Section Headings. Section headings are for convenience only.

13.4 Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved
against Secured Party or Debtor, whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions of the parties.

                                                          8
13.5 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of
this Agreement for the purpose of determining the legal enforceability of any specific provision.

13.6 Entire Agreement; Amendments. This Agreement and the documents referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and supercede all prior agreements,
negotiations and understandings, written or oral, with respect to such subject matter. No provision of this
Agreement shall be waived or amended other than by an instrument in writing signed by Debtor and Secured
Party.

13.7 Good Faith. The parties intend and agree that their respective rights, duties, powers, liabilities and
obligations shall be performed, carried out, discharged and exercised reasonably and in good faith.

13.8 Counterparts. This Agreement may be executed in any number of counterparts, each of which, when
executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute
but one and the same agreement.

13.9 Senior Liens. Notwithstanding anything in this Agreement to the contrary, the rights and remedies of
Secured Party hereunder with respect to the Collateral are subject to the prior rights and remedies of the holder
of the Senior Liens, and Debtor shall not be in violation of this Agreement for taking actions or failing to take
actions with respect to the Collateral if such actions are expressly required or prohibited, as applicable, by the
documents evidencing the Senior Liens.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized persons on the date first written above.

                                               RAPIDTRON, INC.

                                                         By:
                                                      President

                                                        By:
                                                     Secretary

                                         OCEANUS VALUE FUND, L.P.

                                  By:   Oceanus    Asset Management,       L.L.C.,
                                        General    Partner

                                  By:
                                        ----------------------------




John C. Tausche, Member

                                                          9
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE (COLLECTIVELY, THE
"LAWS"). THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE APPLICABLE LAWS OR (II) AN OPINION OF COUNSEL IN FORM,
SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER, TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED DUE TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE APPLICABLE LAWS.

                                             RAPIDTRON, INC.

                            WARRANT TO PURCHASE COMMON STOCK

Warrant No. 1 Number of Shares: 800,000

Date of Issuance: December 1, 2004

Rapidtron, Inc., a Nevada corporation (the "Company"), hereby certifies that, for value received, Oceanus Value
Fund, L.P., and permitted assigns, the registered holder hereof ("Holder"), is entitled, subject to the terms set
forth below, to purchase from the Company upon surrender of this Warrant to Purchase Common Stock (the
"Warrant"), at any time after the date hereof, but not after 5:00 P.M. California time on the Expiration Date (as
defined herein) 800,000 fully paid and nonassessable shares of Common Stock (as defined herein) of the
Company (each a "Warrant Share" and collectively the "Warrant Shares") at a purchase price (the "Warrant
Exercise Price") equal to $0.33 per share; provided, however, that one (1) time prior to the Expiration Date, the
Holder shall have the right, upon written notice to the Company (the "Notice"), to reset the Warrant Exercise
Price to an amount equal to the closing price of the Common Stock on the trading day immediately preceding the
date of the Notice (as specified in the Notice) as quoted on the OTC Bulletin Board or such national securities
exchange or other market on which the Common Stock is then listed or quoted. The Warrant Exercise Price shall
be paid in lawful money of the United States. Both the number of Warrant Shares purchasable hereunder and the
Warrant Exercise Price are subject to adjustment as provided in Section 9 below.

Section 1. Definitions.

(a) The following words and terms used in this Warrant shall have the following meanings:

"Common Stock" means (i) the Company's $0.001 par value common stock and
(ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from
a reclassification of such Common Stock.

                                                       1
"Expiration Date" means the date which is five (5) years from the date of this Warrant or, if such date falls on a
Saturday, Sunday or other day on which banks are required or authorized to be closed in the State of California
(a "Holiday"), the next preceding date that is not a Holiday.

"Market Price" means the average of the closing stock prices for the Common Stock for the ten (10) trading days
immediately prior to the date on which a Notice of Exercise is delivered to the Company, as quoted on the OTC
Bulletin Board or such national securities exchange or other market on which the Common Stock may then be
listed or quoted.

"Securities Act" means the Securities Act of 1933, as amended.

"Securities Purchase Agreement" shall mean the Securities Purchase Agreement between the Holder (or its
predecessor in interest) and the Company for the purchase of this Warrant and the other Securities (as defined in
the Securities Purchase Agreement).

(b) Other definitional provisions:

(i) Except as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the
Company's successors and (B) to any applicable law shall be deemed references to such applicable law as the
same may be amended or supplemented from time to time.

(ii) When used in this Warrant, unless otherwise specified in a particular instance, the words "herein," "hereof,"
and "hereunder," and words of similar import, shall refer to this Warrant as a whole and not to any provision of
this Warrant, and the words "Section" and "Exhibit" shall refer to Sections of, and Exhibits to, this Warrant unless
otherwise specified.

(iii) Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular
number includes the plural, and vice versa.

(iv) When used in this Warrant, "transfer" shall include any disposition of this Warrant or any Warrant Shares, or
of any interest in either thereof, which would constitute a sale thereof within the meaning of the Securities Act or
applicable state securities laws.

Section 2. Exercise of Warrant.

(a) Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder, as a whole or in
part (except that this Warrant shall not be exercisable as to a fractional share), at any time prior to 5:00 p.m.
California time on the Expiration Date. The rights represented by this Warrant shall be exercised by the Holder
by (i) delivery of a written notice in the form attached as Exhibit I hereto (a "Notice of Exercise") of the Holder's
election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased, (ii)
payment to the Company of an amount equal to the Warrant Exercise Price multiplied by the number of Warrant
Shares as to which the Warrant is being exercised, plus any applicable issuance or transfer taxes, in immediately
available funds (either by wire transfer or a certified or cashier's check drawn on a United States bank) and (iii)
the surrender of this Warrant, properly

                                                          2
endorsed, at the principal office of the Company (or at such other agency or office of the Company as the
Company may designate by notice to the Holder).

(b) In addition, and notwithstanding anything to the contrary contained in this Warrant, at such time as the Market
Price per share of the Common Stock exceeds the Warrant Exercise Price, this Warrant may be exercised by
presentation and surrender of this Warrant to the Company in a cashless exercise, including a written calculation
of the number of Warrant Shares to be issued upon such exercise in accordance with the terms hereof (a
"Cashless Exercise"). In the event of a Cashless Exercise, in lieu of paying the Warrant Exercise Price, the Holder
shall surrender this Warrant for, and the Company shall issue in respect thereof, the number of Warrant Shares
determined by multiplying the number of Warrant Shares to which the Holder would otherwise be entitled by a
fraction, the numerator of which shall be determined by subtracting the Warrant Exercise Price from the then
current Market Price per share of Common Stock, and the denominator of which shall be the then current
Market Price per share of Common Stock.

(c) Any Warrant Shares shall be deemed to be issued to the Holder or Holder's designee, as the record owner of
such Warrant Shares, as of the date on which this Warrant shall have been surrendered, the completed Notice of
Exercise shall have been delivered, and payment (or notice of an election to effect a Cashless Exercise) shall have
been made for such Warrant Shares as set forth above, irrespective of the date of delivery of such share
certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the
Company are properly closed, such person shall be deemed to have become the holder of such Warrant Shares
at the opening of business on the next succeeding date on which the stock transfer books are open. For each
exercise of the rights represented by this Warrant in compliance with this
Section 2, a certificate or certificates for the Warrant Shares so purchased, registered in the name of, or as
directed by, the Holder, shall be delivered to, or as directed by, the Holder within three (3) business days after
such rights shall have been so exercised.

(d) Unless this Warrant shall have expired or shall have been fully exercised, the Company shall issue a new
Warrant identical in all respects to the Warrant exercised except that it shall represent rights to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under the Warrant exercised, less the
number of Warrant Shares with respect to which such Warrant is exercised (or, in the case of a Cashless
Exercise, the number of shares to which the Holder would otherwise have been entitled).

(e) In the case of any dispute with respect to an exercise, the Company shall promptly issue such number of
Warrant Shares as are not disputed in accordance with this Section. If such dispute only involves the number of
Warrant Shares receivable by the Holder under a Cashless Exercise, the Company shall submit the disputed
calculations to an independent accounting firm of national standing via facsimile within two (2) business days of
receipt of the Notice of Exercise. The accountant shall review the calculations and notify the Company and the
Holder of the results no later than two (2) business days from the date it receives the disputed calculations. The
accountant's calculation shall be deemed conclusive absent manifest error. The Company shall then issue the
appropriate number of shares of Common Stock in accordance with this Section.

                                                         3
Section 3. Covenants as to Common Stock. The Company covenants and agrees that all Warrant Shares which
may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued,
fully paid and nonassessable. The Company further covenants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved
a sufficient number of shares of Common Stock to provide for the exercise of the rights then represented by this
Warrant and that the par value of said shares will at all times be less than or equal to the applicable Warrant
Exercise Price.

Section 4. Taxes. The Company shall not be required to pay any tax or taxes attributable to the initial issuance of
the Warrant Shares or any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the Holder or any permitted transferee of this Warrant.

Section 5. Warrant Holder Not Deemed a Stockholder. No Holder of this Warrant, as such, shall be entitled to
vote or receive dividends or be deemed the holder of shares of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, as such, any of the rights of a stockholder of
the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization,
issuance of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant Shares which the Holder is then entitled to receive upon the due exercise of this Warrant.
Notwithstanding the foregoing, the Company will provide the Holder with copies of the same notices and other
information given to the stockholders of the Company generally, contemporaneously with the delivery thereof to
the stockholders.

Section 6. No Limitation on Corporate Action. No provisions of this Warrant and no right or option granted or
conferred hereunder shall in any way limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Articles of Incorporation, reorganize, consolidate or merge with or into
another corporation, or to transfer all or any part of its property or assets, or the exercise of any other of its
corporate rights and powers.

Section 7. Representations of Holder. By the acceptance hereof, the Holder represents that the Holder is
acquiring this Warrant and the Warrant Shares for the Holder's own account for investment and not with a view
to, or for sale in connection with, any distribution hereof or of any of the shares of Common Stock or other
securities issuable upon the exercise hereof, and not with any present intention of distributing any of the same. The
Holder further represents, by acceptance hereof, that, as of this date, the Holder is an "accredited investor" as
such term is defined in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act. Upon exercise of this Warrant, the Holder shall, if requested by the Company, confirm
the foregoing representations in writing, in a form satisfactory to the Company. If the Holder cannot make such
representations because they would be factually incorrect, it shall be a condition to the Holder's exercise of the
Warrant that the Company receive such other representations as the Company considers reasonably necessary

                                                         4
to assure the Company that the issuance of its securities upon exercise of the Warrant shall not violate any federal
or state securities laws.

Section 8. Restrictions on Transfer. The Holder understands that (i) this Warrant and the Warrant Shares have
not been and are not being registered under the Securities Act or any state securities laws (other than as
described in the Securities Purchase Agreement and the Registration Rights Agreement entered into concurrently
therewith (the "Registration Rights Agreement")), and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder or (B) pursuant to an exemption from such registration, and (ii)
neither the Company nor any other person is under any obligation to register such securities (other than as
described in the Securities Purchase Agreement and the Registration Rights Agreement) under the Securities Act
or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

Section 9. Adjustments.

(a) Reclassification and Reorganization. In case of any reclassification, capital reorganization or other change of
outstanding shares

of the Common Stock, or in case of any consolidation or merger of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the continuing corporation and which
does not result in any reclassification, capital reorganization or other change of outstanding shares of Common
Stock), the Company shall cause effective provision to be made so that the Holder shall have the right thereafter,
by exercising this Warrant, to purchase the kind and number of shares of stock or other securities or property
(including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or
merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of
the Warrant immediately prior to such reclassification, capital reorganization or other change, consolidation or
merger. Any such provision shall include provision for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 9. The foregoing provisions shall similarly apply to
successive reclassifications, capital reorganizations and other changes of outstanding shares of Common Stock
and to successive consolidations or mergers. If the consideration received by the holders of Common Stock is
other than cash, the value shall be as determined by the Board of Directors of the Company acting in good faith.

(b) Dividends and Stock Splits. If and whenever the Company shall effect a stock dividend, a stock split, a stock
combination, or a reverse stock split of the Common Stock, the number of Warrant Shares purchasable
hereunder and the Warrant Exercise Price shall be proportionately adjusted in the manner determined by the
Company's Board of Directors acting in good faith. The number of shares, as so adjusted, shall be rounded down
to the nearest whole number and the Warrant Exercise Price shall be rounded to the nearest cent.

(c) Default Adjustment. Any other provision of this Warrant notwithstanding, in the event of a default under the
Note (as defined in the Securities Purchase Agreement), until the Expiration Date the Warrant Exercise Price
shall automatically be reduced to the par value of the Common Stock.

                                                          5
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen or destroyed, the
Company shall, on receipt of an indemnification undertaking reasonably satisfactory to the Company, issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen or destroyed. In the event the Holder
asserts such loss, theft or destruction of this Warrant, the Company may require the Holder to post a bond issued
by a surety reasonably satisfactory to the Company with respect to the issuance of such new Warrant.

Section 11. Notice. Any notices required or permitted to be given under the terms of this Warrant shall be sent
by mail or delivered personally or by courier or facsimile, and shall be effective five days after being placed in the
mail, if mailed, certified or registered, return receipt requested, or upon receipt, if delivered personally or by
courier or by facsimile, in each case properly addressed to the party to receive the same. The addresses for such
communications shall be as provided in Section 8(f) of the Securities Purchase Agreement (with Holder being
defined therein as the "Buyer"). Each party shall provide notice to the other party of any change in address.

Section 12. Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged, or
terminated only by an instrument in writing signed by the party or Holder against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant shall be governed by and interpreted under the
laws of the State of Kansas, without regard to the principles of conflict of laws. Headings are for convenience
only and shall not affect the meaning or construction of any of the provisions hereof. This Warrant shall be binding
upon the Company and its successors and assigns and shall inure to the benefit of the Holder and its permitted
successors and assigns. The Holder may not assign this Warrant except in accordance with applicable federal
and state securities laws.

Section 13. Attorney's Fees. If Holder or the Company shall bring any action for relief against the other arising
out of or in connection with this Warrant, in addition to all other remedies to which the prevailing party may be
entitled, the losing party shall be required to pay to the prevailing party a reasonable sum for attorney's fees and
costs incurred in bringing such action and/or enforcing any judgment granted therein, all of which shall be deemed
to have accrued upon the commencement of such action and shall be paid whether or not such action is
prosecuted to judgment. Any judgment or order entered in such action shall contain a specific provision providing
for the recovery of attorney's fees and costs incurred in enforcing such judgment. For the purposes of this
Section, attorney's fees shall include, without limitation, fees incurred with respect to the following: (i) post-
judgment motions, (ii) contempt proceedings, (iii) garnishment, levy and debtor and third party debtor and third
party examinations, (iv) discovery and (v) bankruptcy litigation.

Section 14. Effect of Expiration. This Warrant, in all events, shall be wholly void and of no effect after the close
of business on the Expiration Date, except that notwithstanding any other provisions hereof, the provisions of
Sections 8 and 12 shall continue in full force and effect after such date as to any Warrant Shares or other
securities issued upon the exercise of this Warrant.

                                                          6
                                             RAPIDTRON, INC.

                                         By:_____________________
                                                 President
                                                    By:

                                                   Secretary

                                                  EXHIBIT I

                                      NOTICE OF EXERCISE FORM

                                             RAPIDTRON, INC.

The undersigned hereby exercises the right to purchase the number of Warrant Shares covered by the Warrant
attached hereto as specified below according to the conditions thereof and herewith makes payment of U.S.
$__________ (unless effected by a Cashless Exercise in accordance with the terms of the Warrant), which
constitutes the aggregate Warrant Exercise Price of such Warrant Shares pursuant to the terms and conditions of
the Warrant.

(i) The undersigned agrees not to offer, sell, transfer or otherwise dispose of any Common Stock obtained upon
exercise of the Warrant except under circumstances that will not result in a violation of the 1933 Act or
applicable state securities laws.

(ii) The undersigned requests that the stock certificates for the Warrant Shares be issued, and a Warrant
representing any unexercised portion hereof be issued, pursuant to the terms of the Warrant in the name of the
Holder (or such other person(s) indicated below) and delivered to the undersigned (or designee(s)) at the
address or addresses set forth below.

Dated: __________, _____.

                                                  HOLDER:
                                                    By:

Title:

                                                   Address:



Number of Warrant Shares being purchased:

                                                        7
          THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
          ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE (COLLECTIVELY, THE "LAWS"). THE
          SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
          ABSENCE OF EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
          UNDER THE APPLICABLE LAWS OR (II) AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND
          SCOPE REASONABLY ACCEPTABLE TO THE ISSUER, TO THE EFFECT THAT SUCH REGISTRATION
          IS NOT REQUIRED DUE TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
          OF THE APPLICABLE LAWS.

          THIS NOTE IS SUBJECT TO THE TERMS OF THE SUBORDINATION AGREEMENT DATED DECEMBER
          1, 2004 (THE "SUBORDINATION AGREEMENT") IN FAVOR OF SILICON VALLEY BANK (THE




"SENIOR LENDER"), AND THE RIGHTS AND REMEDIES HEREUNDER AND UNDER THE
SECURITY AGREEMENT, AS DEFINED BELOW, ARE SUBORDINATE TO THOSE OF THE
SENIOR LENDER.

                                         DATE: DECEMBER 1, 2004

$400,000.00

                                             RAPIDTRON, INC.

                        15% SECURED CONVERTIBLE PROMISSORY NOTE
                                    DUE MARCH 31, 2005

This 15% Secured Convertible Promissory Note (the "Note") is issued by Rapidtron, Inc., a corporation duly
organized and validly existing under the laws of the State of Nevada (the "Company"), pursuant to that certain
Securities Purchase Agreement (the "Agreement") entered into concurrently herewith by and between the
Company and Oceanus Value Fund, L.P.

1. Payment Obligation. For value received, the Company promises to pay to Oceanus Value Fund, L.P. or its
permitted successors and assigns (collectively, the "Holder"), (i) the principal amount of Four Hundred Thousand
Dollars ($400,000) (to which may be added any liquidated damages that accrue pursuant to the terms of the
Agreement or the Registration Rights Agreement referenced below) and (ii) interest on the principal amount
outstanding at the rate of fifteen percent (15%) per annum, compounded annually. The principal amount of this
Note, together with all accrued and unpaid interest, shall be due and payable in full on March 31, 2005 (the
"Maturity Date"). Interest on this Note in the amount of Fifteen Thousand Dollars ($15,000) shall be pre-paid by
the Company upon execution hereof (which pre-payment shall be non-refundable); thereafter, interest in the
amount of Five Thousand Dollars ($5,000) shall be paid at the end of each thirty (30) day period (the "Interest
Payment Date") that this Note remains outstanding after February 28, 2005 (prorated for a partial period and any
reductions in principal
amount). Accrual of interest on the outstanding principal amount shall commence on the date hereof and shall
continue until full payment of the outstanding principal amount has been made or duly provided for. Payments on
this Note are payable to the Holder in whose name this Note (or one or more successor Notes) is registered on
the records of the Company regarding registration and transfer of this Note (the "Note Register"); provided,
however, that the Company's obligation to a transferee of this Note arises only if such transfer, sale or other
disposition is made in accordance with the terms and conditions of the Agreement. The Company has the right at
any time, upon at least three (3) business days prior written notice to the Holder, to redeem or prepay all or any
portion of this Note for an amount equal to one hundred five percent (105%) of the principal amount being
redeemed or prepaid, plus all accrued and unpaid interest on the portion being redeemed or prepaid; the
Company shall have no right to redeem or prepay any portion of this Note except pursuant to the foregoing.

2. Provisions as to Payment. Payments on this Note are payable in immediately available funds in currency of the
United States of America at the address last appearing on the Note Register of the Company as designated in
writing by the Holder hereof from time to time. The Company shall pay the amount required by this Note on the
Maturity Date or applicable Interest Payment Date (as the case may be), less any amounts required by law to be
deducted or withheld, to the Holder of this Note appearing of record as of the fifth business day (as defined in the
Agreement) prior to the Maturity Date or applicable Interest Payment Date, as the case may be, in each case
addressed to such Holder at the last address appearing on the Note Register. The forwarding of such funds shall
constitute full payment of the amount then required to be paid under this Note and shall satisfy and discharge the
liability for such amount to the extent of the sum represented by such payment plus any amounts so deducted or
withheld. All payments under this Note shall be credited first to reimburse the Holder for any cost or expense
reimbursable hereunder, then to the payment of accrued interest, and third to the payment of principal.

3. Withholding. The Company shall be entitled to withhold from all payments of principal or interest pursuant to
this Note any amounts required to be withheld under applicable provisions of the United States income tax or
other applicable laws at the time of such payments.

4. Transfer of Note; Opinion of Counsel; Legend.

(a) This Note has been issued subject to investment representations of the original Holder and may be transferred
or exchanged only in compliance with the Securities Act of 1933, as amended (the "1933 Act") and applicable
state securities laws. Prior to presentment of this Note for transfer, the Company and any agent of the Company
may treat the person in whose name this Note is duly registered on the Note Register as the Holder hereof for the
purpose of receiving payments as herein provided and for all other purposes, whether or not this Note be
overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary.

(b) The Holder understands and acknowledges by its acceptance hereof that (i) this
Note has not been, and is not being, registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder or (B) the Holder
shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, substance and scope
to the Company, to the effect that this Note may be sold, assigned or transferred pursuant to an exemption from
such registration and (ii) neither the Company nor any other person is under any obligation to register this Note
under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption
thereunder.

5. Conversion Upon Default.

(a) If (and only if) this Note is not paid in full by the Maturity Date (a "Payment Default"), the Holder of this Note
shall be entitled, at its option at any time prior to such Payment Default being cured, to convert all or a portion of
the outstanding principal amount of this Note and any accrued and unpaid interest and/or liquidated damages
accrued under this Note, the Agreement and/or the Registration Rights Agreement as of the Conversion Date (as
defined below), into shares of the Company's $0.001 par value common stock (the "Common Stock") at a
conversion price (the "Conversion Price") for each share of Common Stock equal to the lesser of (i) $0.33 per
share or (ii) eighty percent (80%) of the lowest closing bid price for the Common Stock (as reported by
Bloomberg) in any of the five (5) trading days immediately preceding the Conversion Date.

(b) After a Payment Default, any conversion of this Note shall be achieved by submitting to the Company the fully
completed form of conversion notice attached hereto as Exhibit I (a "Notice of Conversion"), executed by the
Holder of this Note evidencing such Holder's intention to convert this Note or a specified portion hereof
(including any designated accrued and unpaid interest and/or liquidated damages). A Notice of Conversion may
be submitted via facsimile to the Company at the telecopy number for the Company provided in the Agreement
(or at such other number as specified in advance of such conversion in writing by the Company). A Notice of
Conversion may also be submitted by mail. The Company and the Holder shall each keep records with respect
to the portion of this Note then being converted and all portions previously converted. Upon receipt by the
Holder of the requisite Conversion Shares, the outstanding principal amount of this Note shall then (and only
then) be reduced by the amount specified in the Notice of Conversion resulting in such Conversion Shares. The
Company may, from time-to-time, but is not required to, (i) instruct the Holder to surrender this Note along with
the Notice of Conversion for the purposes of making a notation thereon as to the amount of principal being
converted or (ii) cancel this Note and issue a new Note in the same form with the principal amount of such Note
reduced by the amount converted. Such new or annotated Note shall be delivered to the Holder within three (3)
business days after such Holder's surrender to the Company. No fractional shares or scrip representing fractions
of shares will be issued on conversion, but the number of shares issuable shall be rounded up to the nearest whole
share. The date on which a Notice of Conversion is given (the "Conversion Date") shall be deemed to be either
the date on which the Company receives from the Holder an original

                                                          3
Notice of Conversion duly executed, or, if earlier, the date set forth in a Notice of Conversion that is sent via
facsimile.

(c) In all cases, the Company shall deliver the Conversion Shares to the Holder within three (3) business days
after the Conversion Date at the address specified in the Notice of Conversion. The Company acknowledges that
the Agreement requires that the Company pay liquidated damages for late or non-delivery of Conversion Shares.

6. Obligations of the Company Herein Are Unconditional. The Company's obligations to repay this Note at the
time, place, interest rate and in the currency hereinabove stated are absolute and unconditional. This Note and all
other Notes now or hereafter issued in replacement of this Note on the same or similar terms are direct
obligations of the Company. This Note ranks at least equally with all other Notes now or hereafter issued under
the terms set forth herein.

7. Waiver of Demand, Presentment, Etc. The Company hereby expressly waives demand and presentment for
payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to
accelerate, bringing of suit and diligence in taking any action to collect amounts called for hereunder and shall be
directly and primarily liable for the payment of all sums owing and to be owing hereunder, regardless of and
without any notice, diligence, act or omission as or with respect to the collection of any amount called for herein.
No delay or omission of any Holder hereof in exercising any right or remedy hereunder shall constitute a waiver
of any such right or remedy. A waiver on one occasion shall not operate as a bar to, or waiver of, any such right
or remedy on any future occasions.

8. Attorney's Fees; Reimbursable Expenses. The Company agrees to pay all costs and expenses, including,
without limitation, attorney's fees, which may be incurred by the Holder in collecting any amount due under this
Note or in enforcing any of the Holder's rights as described herein or under the Security Agreement (as defined
below).

9. Default. If one or more of the following described "Events of Default" shall occur:

(a) The Company shall fail to make timely payment of any amount then due and owing under this Note;

(b) Any of the representations or warranties made by the Company herein, in the Agreement, the Security
Agreement, or in any certificate or other written statement heretofore or hereafter furnished by or on behalf of the
Company in connection with the execution and delivery of this Note, the Agreement or the Security Agreement
shall be false or misleading in any material respect at the time made and the Holder shall have provided written
notice to the Company of the alleged misrepresentation or breach of warranty and the same shall continue
uncured for a period of

                                                          4
seven (7) days after such written notice from the Holder;

(c) If (i) the Company shall fail to perform or observe, in any material respect, any covenant, term, provision,
condition, agreement or obligation of the Company under this Note not covered by clause (a) or (b) above or (ii)
a default occurs under the Security Agreement or the Agreement, or any addenda thereto, and such failure or
default shall continue uncured for a period of seven (7) days after written notice from the Holder;

(d) The Company shall either: (i) become insolvent; (ii) admit in writing its inability to pay its debts generally or as
they become due, (iii) make an assignment for the benefit of creditors or commence proceedings for its
dissolution or (iv) apply for, or consent to the appointment of, a trustee, liquidator, or receiver for all or a
substantial part of its property or business;

(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or
business without the Company's consent and such appointment is not discharged within sixty (60) days after such
appointment;

(f) Any governmental agency, or any court of competent jurisdiction at the instance of any governmental agency,
shall assume custody or control of the whole or any substantial portion of the properties or assets of the
Company and such custody or control shall not be released within sixty (60) days thereafter;

(g) Any money judgment, writ or note of attachment, or similar process in excess of $25,000 in the aggregate
shall be entered or filed against the Company or any of its properties or assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days, or in any event later than five (5) days prior to
the date of any proposed sale thereunder;

(h) Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company and, if instituted
against the Company, shall not be dismissed within sixty (60) days after such institution, or the Company shall by
any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in, any such proceeding;

(i) The Company shall have received a notice of default on the payment of any debt(s) aggregating in excess of
$25,000 beyond any applicable grace period;

(j) The Holder shall reasonably believe that there has been a change in control of the Company;

(k) The Company shall be in default as to any obligation to Silicon Valley Bank beyond any applicable grace
period;

                                                           5
(l) The Company's common stock shall have been voluntarily or involuntarily removed from future quotation on
the OTC Bulletin Board;

(m) John Creel and/or Peter Dermutz shall be in default as to any obligation under their Guaranty, Pledge and
Security Agreements dated December 1, 2004, beyond any applicable grace period; or

(n) The Holder shall reasonably believe that there has been a material adverse change in the operations,
properties, management or financial condition of the Company;

then, or at any time thereafter, and in any and every such case, unless such Event of Default shall have been
waived in writing by the Holder (which waiver in one instance shall not be deemed to be a waiver in another
instance or for any other prior or subsequent Event of Default), at the option of the Holder and in the Holder's
sole discretion, the Holder may immediately accelerate the maturity hereof, whereupon all principal and accrued
interest and liquidated damages (if any) hereunder shall be immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived by the Company, anything herein
or in any other instrument to the contrary notwithstanding, and the Holder may immediately, and upon the
expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any
other rights or remedies afforded by law or equity.

10. Security. Pursuant to a Security Agreement attached to the Agreement as Exhibit "C" (the "Security
Agreement"), this Note is secured by a security interest in substantially all of the Company's tangible and
intangible assets (including intellectual property) (collectively, the "Collateral"). A default under the terms of this
Note shall also constitute a default under the Security Agreement.

11. Due on Sale Clause. If the Company shall sell, convey, transfer, assign or further encumber the Collateral or
any part thereof or any interest therein, whether legal or equitable, in any manner (whether voluntarily or
involuntarily) not permitted under the Security Agreement, without the prior written consent of the Holder, which
consent the Holder shall have no obligation to give, the Holder shall have the right, at its option, to declare this
Note immediately due and payable irrespective of the Maturity Date specified herein. Any consent by the Holder
to such a transfer may be predicated upon such terms, conditions and covenants as may be deemed advisable or
necessary in the sole discretion of the Holder, including, but not limited to, the right to (i) require the transferee's
assumption of personal liability on the debt hereunder,
(ii) approve the form and substance of all transfer and assumption documents,
(iii) change the interest rate, date of maturity and amount and/or schedule of payments hereunder and (iv) charge
a fee based on a percentage of the original principal amount of this Note. The granting of permission for a
transferee of the Collateral to assume this Note shall not in any manner be deemed a consent to any subsequent
transfer, and the Holder shall retain the right to consent to

                                                            6
such subsequent transfer or transfers on the terms and conditions stated above. Consent to one such transfer shall
not be deemed to be a waiver of the right of such consent to further or successive transfers. No assumption or
consent to any subsequent transfer shall be deemed to constitute a release of the Company's obligations
hereunder.

12. Enforceability; Maximum Interest Rate.

(a) In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or
otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this
Note shall not in any way be affected or impaired thereby.

(b) Notwithstanding anything to the contrary contained in this Note, the Company shall not be obligated to pay,
and the Holder shall not be entitled to charge, collect, receive, reserve or take interest ("interest" being defined,
for purposes of this paragraph, as the aggregate of all charges which constitute interest under applicable law that
are contracted for, charged, reserved, received or paid under this Note) in excess of the maximum rate allowed
by applicable law. During any period of time in which the interest rate specified herein exceeds such maximum
rate, interest shall accrue and be payable at such maximum rate. For purposes of this Note, the term "applicable
law" shall mean that law in effect from time-to-time and applicable to the transaction between the Company and
the Holder which lawfully permits the charging and collection of the highest permissible rate of interest on such
transaction and this Note, including the laws of the State of Kansas and, to the extent controlling, laws of the
United States of America.

13. Entire Agreement. This Note, together with the Agreement and the Security Agreement and any exhibits or
schedules attached thereto, and any addenda to any of the foregoing, constitute the full and entire understanding
between the Company and the Holder with respect to the subject matter hereof and thereof and supersede all
prior negotiations, agreements and understandings, written or oral, with respect to such subject matter. No
provision of this Note shall be amended, waived, discharged or terminated other than by a written instrument
signed by the Company and the Holder.

14. Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of
Kansas without giving effect to applicable principles of conflict of law. The Company hereby agrees that the
exclusive venue for resolution of any case or controversy arising out of or in connection with this Note shall be the
State of Kansas.

15. Headings. The headings in this Note are for convenience only, and shall not be used in the construction of this
Note.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by its duly authorized
officers on the date first written above.

                                                          7
                                               RADIPTRON, INC.

                                                         By:
                                                      President

                                                         By:
                                                      Secretary

                                                    EXHIBIT I

                                          NOTICE OF CONVERSION

                    (To Be Executed by the Registered Holder in Order to Convert the Note)

The undersigned hereby irrevocably elects to convert $___________ in principal amount of the 15% Secured
Convertible Promissory Note Due March 31, 2005, into shares of Common Stock of Rapidtron, Inc. ( the
"Company"), according to the terms and conditions set forth in the Note, as of the date specified below. In
addition, the undersigned hereby irrevocably elects to convert $___________ in accrued interest and
$___________ in accrued liquidated damages into an additional ___________ shares of Common Stock of the
Company according to the terms and conditions set forth in the Note. If securities are to be issued to a person
other than the undersigned, the undersigned agrees to pay all applicable transfer taxes with respect thereto.

The undersigned represents that he, she or it, as of this date, is an "accredited investor" as such term is defined in
Rule 501(a) of Regulation D under the 1933 Act.

The undersigned also represents that the Conversion Shares are being acquired for the undersigned's own
account and not as a nominee for any other person. The undersigned represents and warrants that all offers and
sales by the undersigned of the Conversion Shares shall be made pursuant to registration of the same under the
1933 Act, or pursuant to an exemption from registration under the 1933 Act. The undersigned acknowledges
that the Conversion Shares shall, if (and only if) required by law, contain the legend contained on page 1 of the
Note.

Conversion Date:

Applicable Conversion Price:

Total Conversion Shares:

Holder:

                                            (Print Legal Name and Title)


                             (Signature of Duly Authorized Representative of Holder)

Address of Holder:

                                                          8
SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (the "Agreement") is made and entered into on December 1, 2004, by and
between Rapidtron, Inc., a corporation organized under the laws of the State of Nevada, with its principal place
of business located at 3151 Airway Avenue, Building Q, Costa Mesa, California (the "Company"), and Oceanus
Value Fund, L.P. (the "Buyer").

                                                   RECITALS

A. The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemptions
from securities registration afforded by (i) the provisions of Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act"), and (ii) Section 4(2) under the 1933 Act.

B. The Buyer desires to purchase from the Company, and the Company desires to sell to the Buyer, for the
amount and upon the terms and conditions stated in this Agreement, in a closing (the "Closing") as herein
described, the following securities of the Company:

(i) The Company's 15% Secured Convertible Promissory Note, the form of which is attached as Exhibit A (the
"Note"), which may be converted into the Company's $0.001 par value common stock (the "Common Stock")
on the terms and conditions set forth in the Note. The principal amount of the Note shall be Four Hundred
Thousand Dollars ($400,000).

(ii) As additional consideration for the Buyer's purchase of the Note, the Company shall also issue to the Buyer a
warrant (the "Warrant") to purchase 800,000 shares of Common Stock with an exercise price as specified in the
Warrant, which Warrant must be exercised (if at all) within five (5) years after the date of issuance. The Warrant
shall be in the form attached as Exhibit B.

Any Common Stock issuable pursuant to conversion of the Note shall be referred to herein as the "Conversion
Shares." The Common Stock receivable upon exercise of the Warrant shall be referred to herein as the "Warrant
Shares." The Note, the Conversion Shares, the Warrant and the Warrant Shares may be collectively referred to
herein as the "Securities."

C. Contemporaneously with the execution and delivery of this Agreement, the Company is executing and
delivering a Security Agreement (the "Security Agreement") in the form of the attached Exhibit C, pursuant to
which the Company has agreed to secure its obligations under the Note with a security interest in substantially all
tangible and intangible assets (including intellectual property) owned by the Company (the "Collateral"). Pursuant
to a Subordination Agreement between the Buyer and Silicon Valley Bank ("SVB") in the form
attached as Exhibit D (the "SVB Subordination Agreement"), the Buyer's security interest in the Collateral will be
subordinated to the interest of SVB.

D. As additional security for the Company's obligations under the Note, contemporaneously with the execution
and delivery of this Agreement, John Creel (the Company's President and Chief Executive Officer) and Peter
Dermutz (the Company's Executive Vice President, acting Secretary, Treasurer and Principal Financial Officer)
(collectively, the "Pledgors"), are each executing and delivering a Guaranty, Pledge and Security Agreement (the
"Pledge Agreements") in the form attached as Exhibit E pursuant to which, effective January 1, 2005, each
Pledgor agrees to guaranty payment of the Note and to secure that guaranty with a first-priority security interest
in all shares of the Company which he owns.

E. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are also executing
and delivering a Registration Rights Agreement (the "Registration Rights Agreement") in the form of the attached
Exhibit F, pursuant to which the Company has, among other things, agreed to provide certain registration rights
for the Warrant Shares under the 1933 Act and applicable state securities laws.

                                                AGREEMENTS

NOW, THEREFORE, in consideration of their respective promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyer hereby agree as follows:

1. PURCHASE AND SALE OF THE SECURITIES.

(a) Purchase. At the Closing, the Buyer agrees to purchase the Note from the Company and the Company
agrees to sell the Note to the Buyer. The purchase price for the Note shall be $400,000 (the "Purchase Price"),
out of which shall be paid (i) $15,000 in pre-paid interest (as provided in the Note),
(ii) an origination fee of $12,000 to the Buyer, (iii) a finder's fee of $20,000 to Bridgewater Capital Corporation
and (iv) such other amounts as may be included in the Disbursement Instructions attached as Exhibit G (the
"Disbursement Instructions"). The disbursements specified in the Disbursement Instructions (including
disbursement to the Company of the remainder of the Purchase Price) shall be made on the Closing Date (as
defined below).

(b) The Closing. The date of the Closing (the "Closing Date") shall be December 1, 2004, or such other date as
the parties may agree in writing. On or before the Closing Date, (i) the Purchase Price shall be delivered to the
Escrow Agent (as defined in the Escrow Agreement in the form of the attached Exhibit H (the "Escrow
Agreement")) and (ii) the Company shall deliver to the Escrow Agent on behalf of the Company the originals of
this Agreement, the Note, the Warrant, the Security Agreement, the SVB Subordination Agreement, the Pledge
Agreements, the Registration Rights Agreement, the Disbursement Instructions and the Escrow Agreement, each
duly authorized and executed by the Company and/or any other parties thereto (other than the Buyer), together
with such other items as may be required by this Agreement (collectively, the "Closing Documents").
(c) Payment. The Buyer shall pay the Purchase Price by wire transfer of immediately available funds in United
States Dollars, to be deposited into the Escrow Account (as defined in the Escrow Agreement), against delivery
to the Escrow Agent of the Closing Documents by the Company. At the Closing, the Escrow Agent shall be
responsible for disbursement of the Purchase Price according to the Disbursement Instructions and delivery of the
Closing Documents to the Buyer (with copies to the Company duly executed by the Buyer, where required), in
each case in accordance with the terms of the Escrow Agreement.

2. THE BUYER'S REPRESENTATIONS AND WARRANTIES. With respect to its purchase hereunder, the
Buyer represents and warrants to the Company, and agrees, as follows:

(a) Investment Purposes; Compliance With 1933 Act. The Buyer is purchasing the Securities for its own account
for investment only and not with a view towards, or in connection with, the public sale or distribution thereof,
except pursuant to sales registered, or exempt from registration, under the 1933 Act and applicable state
securities laws. The Buyer is not purchasing the Securities for the purpose of covering short sale positions in the
Common Stock established on or prior to the Closing Date. The Buyer agrees to offer, sell or otherwise transfer
the Securities only (i) in accordance with the terms of this Agreement, the Note and the Warrant, as applicable,
and (ii) pursuant to registration under the 1933 Act or an exemption from registration under the 1933 Act and
any other applicable securities laws. The Buyer does not by its representations in this Section 2(a) agree to hold
the Securities for any minimum or other specific term, and reserves the right to dispose of the Securities at any
time pursuant to a registration statement or in accordance with an exemption from registration under the 1933
Act, in all cases in accordance with applicable state and federal securities laws. The Buyer understands that it
shall be a condition to the issuance of the Conversion Shares and the Warrant Shares that such shares be and are
subject to the representations set forth in this Section 2(a).

(b) Accredited Investor Status. The Buyer is an "accredited investor," as that term is defined in Rule 501(a) of
Regulation D. The Buyer has such knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment made pursuant to this Agreement. The Buyer is aware that it may
be required to bear the economic risk of the investment made pursuant to this Agreement for an indefinite period
of time, and is able to bear such risk.

(c) Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance
on specific exemptions from the registration requirements of applicable federal and state securities laws, and that
the Company is relying upon the truth and accuracy of, and the Buyer's compliance with, the representations,
warranties, agreements and covenants of the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Securities.

(d) Information. The Buyer and its advisors, if any, have been furnished with all materials relating to the business,
finances and operations of the Company and materials relating to the offer and sale of the Securities that have
been requested by the Buyer. The Buyer and its advisors, if any, have been afforded the opportunity to ask all
questions of the Company as they
have in their discretion deemed advisable. The Buyer understands that its investment in the Securities involves a
high degree of risk. The Buyer has sought such accounting, legal and tax advice as it has considered necessary to
an informed investment decision with respect to the investment made pursuant to this Agreement.

(e) No Government Review. The Buyer understands that no United States federal or state agency or any other
government or governmental agency has approved or made any recommendation or endorsement of the
Securities or the fairness or suitability of the investment in the Securities, nor have such authorities passed upon or
endorsed the merits of the offering of the Securities.

(f) Transfer or Resale. The Buyer understands that: (i) except as provided in the Registration Rights Agreement,
the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and
may not be offered for sale, sold or otherwise transferred unless either (A) subsequently registered thereunder or
(B) the Buyer shall have delivered to the Company an opinion by counsel reasonably satisfactory to the
Company, in form, scope and substance reasonably satisfactory to the Company, to the effect that the securities
to be sold or transferred may be sold or transferred pursuant to an exemption from such registration and (ii)
neither the Company nor any other person is under any obligation to register the Securities under the 1933 Act or
any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case,
except as required by this Agreement or the Registration Rights Agreement).

(g) Legend. Subject to Section 5(b) below, the Buyer understands that the Note, the Warrant and the stock
certificates representing the Conversion Shares and the Warrant Shares (until such time as the Conversion Shares
and the Warrant Shares have been registered under the 1933 Act pursuant to the Registration Rights Agreement
or otherwise may be sold by the Buyer pursuant to Rule 144 (or any applicable rule which operates to replace
said Rule) promulgated under the 1933 Act ("Rule 144")), will bear a restrictive legend (the "Legend") in
substantially the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE (COLLECTIVELY, THE
"LAWS"). THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF EITHER (I) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE APPLICABLE LAWS OR (II) AN OPINION OF COUNSEL IN FORM,
SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER, TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED DUE TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE APPLICABLE LAWS.

(h) Authorization; Enforcement. This Agreement, the Registration Rights Agreement, the Disbursement
Instructions, the Security Agreement and the Escrow Agreement (collectively, the "Agreements") have been duly
and validly authorized, executed and delivered
by the Buyer and are each valid and binding agreements of the Buyer enforceable in accordance with their terms,
subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.

3. THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to the Buyer, and agrees, as follows:

(a) Organization and Qualification. The Company is a corporation duly organized and existing in good standing
under the laws of the State of Nevada, and has the requisite corporate power to own its properties and to carry
on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of the business conducted by it makes such
qualification necessary and where the failure so to qualify would have a Material Adverse Effect. As used herein,
"Material Adverse Effect" means any material adverse effect on the operations, properties or financial condition
of the Company taken as a whole. The Common Stock is quoted on the OTC Bulletin Board. The Company has
received no notice, either written or oral, with respect to the continued eligibility of the Common Stock for such
quotation, the Company has maintained all requirements for the continuation of such quotation, and the Company
does not reasonably anticipate that the Common Stock will be removed from the OTC Bulletin Board in the
foreseeable future. The Company has complied, and will timely comply, with all requirements of the SEC, the
National Association of Securities Dealers and the OTC Bulletin Board with respect to the issuance of the
Securities.

(b) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and
perform the Agreements, to issue and sell the Securities in accordance with the terms thereof, and to perform its
obligations under the Note and the Warrant in accordance with their terms. The Company's execution, delivery
and performance of the Agreements, the Note and the Warrant, and its consummation of the transactions
contemplated thereby, have been duly authorized by the Company's Board of Directors and no further consent or
authorization of the Company, its Board of Directors, its stockholders, or any other person or entity is required.
The Agreements and, on the Closing Date, the Note and the Warrant, have been duly and validly authorized,
executed and delivered by the Company, and the Note (when issued), the Warrant (when issued), and the
Agreements constitute the valid and binding obligations of the Company enforceable in accordance with their
terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and
other similar laws affecting the enforcement of creditors' rights generally.

(c) Capitalization. As of September 30, 2004, the authorized capital stock of the Company consisted of
100,000,000 shares of Common Stock, of which 20,463,058 shares were issued and outstanding. All of such
outstanding shares have been validly issued and are fully paid and non-assessable. No shares of Common Stock
are subject to preemptive rights or any other similar rights or any liens or encumbrances. As of the Closing Date,
except as set forth in the attached Schedule 3(c) or in the SEC Documents (as defined in paragraph (h) below)
filed
prior to or for the quarter ended September 30, 2004, (i) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever issued or agreed to by the Company relating
to, or securities or rights convertible into, any shares of capital stock of the Company or any of its subsidiaries, or
arrangements by which the Company or any of its subsidiaries is or may become bound to issue additional shares
of capital stock of the Company or any of its subsidiaries, (ii) there are no outstanding debt securities of the
Company or any of its subsidiaries except those issued to the Buyer and (iii) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of its or
their securities under the 1933 Act (except as provided herein and in the Registration Rights Agreement). If
requested by the Buyer, the Company has furnished to the Buyer true and correct copies of the Company's
Articles of Incorporation as in effect on the date hereof (the "Articles of Incorporation"), and the Company's
Bylaws as in effect on the date hereof.

(d) Issuance of Warrant and Conversion Shares. The Warrant Shares are all duly authorized and reserved for
issuance, and in all cases upon issuance shall be validly issued, fully paid and non-assessable, free from all taxes,
liens and charges with respect to the issuance thereof, and will not be subject to preemptive rights or other similar
rights of stockholders of the Company. Upon issuance, the Conversion Shares shall be validly issued, fully paid
and non-assessable, free from all taxes, liens and charges with respect to the issuance thereof, and will not be
subject to preemptive rights or other similar rights of stockholders of the Company.

(e) Acknowledgment Regarding Buyer's Purchase of the Securities. (i) The Buyer is not acting as a financial
advisor to or fiduciary of the Company (or in any similar capacity) with respect to this Agreement or the
transactions contemplated hereby, (ii) this Agreement and the transactions contemplated hereby, and the
relationship between the Buyer and the Company, are and will be considered "arms-length" notwithstanding any
other or prior agreements or nexus between the Buyer and the Company, whether or not disclosed, and (iii) any
statements made by the Buyer, or any of its representatives or agents, in connection with this Agreement and the
transactions contemplated hereby are not to be construed as advice or a recommendation, are merely incidental
to the Buyer's purchase of the Securities and have not been relied upon in any way by the Company, its officers
or directors. The Company's decision to enter into this Agreement and the transactions contemplated hereby
have been based solely upon an independent evaluation by the Company, its officers and directors.

(f) No Integrated Offering. Neither the Company nor any of its affiliates, nor any person acting on its or their
behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security
under circumstances which would prevent the parties hereto from consummating the transactions contemplated
hereby pursuant to an exemption from registration under the 1933 Act and, specifically, in accordance with the
provisions of Regulation D. The transactions contemplated hereby are exempt from the registration requirements
of the 1933 Act, assuming the accuracy of the representations and warranties of the Buyer contained herein.
(g) No Conflicts. Except as set forth in the attached Schedule 3(g), neither the Company nor any of its
subsidiaries is in violation of its Articles of Incorporation or other organizational documents, and neither the
Company nor any of its subsidiaries is in default (and no event has occurred which, with notice or lapse of time or
both, would put the Company or any of its subsidiaries in default) under, nor has there occurred any event giving
others (with notice or lapse of time or both) any rights of termination, amendment, acceleration or cancellation, of
any agreement, indenture or other instrument to which the Company or any of its subsidiaries is a party, except
for possible defaults or rights as would not, in the aggregate or individually, have a Material Adverse Effect. The
business of the Company and its subsidiaries is not being conducted and, so long as the Buyer owns any of the
Securities, shall not be conducted, in violation of any law, ordinance or regulation of any governmental entity,
except for possible violations which neither singly or in the aggregate would have a Material Adverse Effect.
Except as specifically contemplated by this Agreement or as required under the 1933 Act and any applicable
state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court, governmental agency, individual or entity in order for it to execute, deliver
and perform any of its obligations under the Agreements, the Note or the Warrant in accordance with the terms
thereof.

(h) SEC Documents; Financial Statements. Except as disclosed on Schedule 3(h) hereof, since at least
September 30, 2004, the Company has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "1934 Act"), with all of the foregoing that were filed prior to the date hereof and all
exhibits included therein and all financial statements and schedules thereto and all documents (other than exhibits)
incorporated by reference therein being hereinafter referred to as the "SEC Documents." The Company has
delivered to the Buyer (to the extent requested by the Buyer) true and complete copies of the SEC Documents.
As of their respective dates, the SEC Documents complied in all material respects with the requirements of the
1934 Act and the applicable rules and regulations of the SEC promulgated thereunder, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective dates, the financial statements
of the Company included in the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial
statements (i) have been prepared in accordance with generally accepted accounting principles, consistently
applied, during the periods involved except (A) as may be otherwise indicated in such financial statements or the
notes thereto or (B) in the case of unaudited interim statements, to the extent they may exclude footnotes or may
be condensed or summary statements and (ii) fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit adjustments). No information provided by
or on behalf of the Company to the Buyer contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein in order to make the statements therein, in the light of
the circumstances under which they are or were made, not misleading. Except as set forth in the financial
statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or
otherwise, other than
(i) liabilities incurred in the ordinary course of business subsequent to the date of such financial statements and (ii)
obligations under contracts and commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such financial statements, in each case of clauses (i)
and (ii) above, which, individually or in the aggregate, are not material to the financial condition, business,
operations, properties, operating results or prospects of the Company. The SEC Documents contain a complete
and accurate description of all written and oral contracts, agreements, leases or other instruments to which the
Company or any subsidiary is a party or by which the Company or any subsidiary is bound which are required by
the rules and regulations promulgated by the SEC to be disclosed (each a "Contract"). None of the Company, its
subsidiaries or, to the best of the Company's knowledge, any of the other parties thereto, is in breach or violation
of any Contract, which breach or violation would, or with the lapse of time, the giving of notice, or both, have a
Material Adverse Effect.

(i) Absence of Certain Changes; Bankruptcy. Except as disclosed in the SEC Documents, since at least
November 23, 2004, there has been no material adverse change or development in the business, properties,
operation, financial condition, results of operations or prospects of the Company. The Company has not taken
any steps, and does not currently have any reasonable expectation of taking any steps, to seek protection
pursuant to any bankruptcy law, nor does the Company have any knowledge that its creditors intend to initiate
involuntary bankruptcy proceedings.

(j) Absence of Litigation. Except as set forth in the attached Schedule 3(j) or in the SEC Documents filed prior to
or for the quarter ended September 30, 2004, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or governmental body pending or, to the knowledge of the Company, threatened
against or affecting the Company, wherein an unfavorable decision, ruling or finding would have a Material
Adverse Effect or which would adversely affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement or any of the documents contemplated herein.

(k) Foreign Corrupt Practices. Neither the Company nor any of its subsidiaries, nor any officer, director or other
person acting on behalf of the Company or any subsidiary has, in the course of his, her or its actions for or on
behalf of the Company, (i) used any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds, (iii) violated or is in violation of any provision of
the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic government official or employee.
(l) Brokers; No General Solicitation. The Company has taken no action that would give rise to any claim by any
person for brokerage commissions, finder's fees or similar payments relating to this Agreement and the
transactions contemplated hereby, other than as set forth in the attached Schedule 3(l) or the Disbursement
Instructions. The Company acknowledges that no broker or finder was involved with respect to the transactions
contemplated hereby, other than as set forth in the attached Schedule 3(l) or the Disbursement Instructions.
Neither the Company nor any other person or entity participating on the Company's behalf in the transactions
contemplated hereby, nor any person or entity acting for the Company or any such other person or entity, has
conducted any "general solicitation," as described in Rule 502(c) under Regulation D, with respect to the
Securities.

(m) Status of Assets. Except as described on Schedule 3(m) or in the SEC Documents filed prior to or for the
quarter ended September 30, 2004, the Company has good and marketable title to each of the assets that is
material to its business, free and clear of all liens, claims, restrictions and other encumbrances.

(n) Eligibility to File Registration Statement. The Company is currently eligible to file registration statements with
the SEC on Form SB-2 under the 1933 Act.

(o) No Encumbrances on Shares. To the Company's best knowledge after inquiry of both John Creel and Peter
Dermutz, except as described on Schedule
3(o), neither Mr. Creel nor Mr. Dermutz has pledged, hypothecated or otherwise encumbered any shares in the
Company that he may own.

(p) Validity of Pledge Agreements. To the Company's best knowledge, the Pledge Agreements constitute valid
and binding obligations of John Creel and Peter Dermutz, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors' rights generally.

4. COVENANTS OF THE PARTIES.

(a) Best Efforts. Each party shall use its best efforts to timely satisfy each of the conditions to be satisfied by it as
provided in Sections 6 and 7 of this Agreement.

(b) Securities Laws. The Company shall timely file a Form D (and any other equivalent form or notice required
by applicable state law) with respect to the Securities if and as required under Regulation D and applicable state
securities laws and provide copies thereof to the Buyer upon the Buyer's request. The Company shall, on or
before the Closing Date, take all action necessary in order to sell the Securities to the Buyer in compliance with
federal and applicable state securities laws, and shall provide written evidence of such action to the Buyer upon
the Buyer's request.

(c) Reporting Status. So long as the Buyer beneficially owns any of the Securities, the Company shall (i) file all
reports required to be filed with the SEC pursuant to the 1934 Act
and (ii) maintain its status as an issuer required to file reports under the 1934 Act, even if the 1934 Act or the
rules and regulations thereunder would permit termination of such status.

(d) Reservation of Shares.

(i) The Company shall at all times have authorized and reserved for the purpose of issuance that number of shares
of Common Stock which is sufficient to provide for the issuance of all of the Conversion Shares and the Warrant
Shares. Prior to full payment of the Note and complete exercise of the Warrant, the Company shall not reduce
the number of shares of Common Stock reserved for issuance hereunder without the written consent of the
Buyer, except for a reduction proportionate to a reverse stock split which affects all shares of Common Stock
equally.

(ii) If at any date the Company shall not have authorized and reserved for the purpose of issuance that number of
shares of Common Stock which is sufficient to provide for the issuance of all of the Conversion Shares and the
Warrant Shares which could then be issued, within thirty (30) days of such date the Company shall call and hold
a special meeting of its shareholders for the sole purpose of increasing the Company's authorized and unissued
shares to an amount sufficient to correct such deficiency. In connection with such meeting, (i) the Company's
officers and directors shall (A) recommend to shareholders that they vote in favor of such increase in the number
of authorized and unissued shares and (B) vote all of their shares in favor of such increase and (ii) the Company
shall cause its officers and directors to act in a manner consistent with the forgoing clause (i).

(e) Listing or Quotation. The Company shall promptly secure the listing of the Warrant Shares and the
Conversion Shares upon each national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed (subject to official notice of issuance), and shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of the Warrant Shares and the Conversion Shares
as may exist from time to time under the terms of this Agreement and/or the Registration Rights Agreement. The
Company shall at all times comply in all respects with the Company's reporting, filing and other obligations under
the by-laws or rules of the National Association of Securities Dealers and the OTC Bulletin Board or such
national securities exchange or other market on which the Common Stock may then be quoted or listed, as
applicable.

(f) Prospectus Delivery Requirement. The Buyer understands that the 1933 Act requires delivery of a prospectus
relating to the Conversion Shares and the Warrant Shares in connection with any sale thereof pursuant to a
registration statement under the 1933 Act, and the Buyer shall comply with any applicable prospectus delivery
requirements of the 1933 Act in connection with any such sale. The Company shall have the right to rely upon the
Buyer's agreement contained in this Section 4(g); therefore, with respect to any resale of the Conversion Shares
and the Warrant Shares by the Buyer pursuant to a registration statement, any certificate
evidencing such Conversion Shares and Warrant Shares shall not contain a restrictive legend of any kind.

(g) Intentional Acts or Omissions. Neither party shall intentionally perform or fail to perform any act that, if
performed or omitted to be performed, would prevent or excuse the performance of this Agreement or any of the
transactions contemplated hereby.

(h) Expenses. At the Closing, the Company agrees to pay to, or at the direction of, the Buyer an amount equal to
the attorney's fees and other expenses incurred by Buyer in connection with the Buyer's due diligence
investigation, document preparation and escrow for the transactions contemplated by this Agreement.

(i) Corporate Status; Taxes. The Company shall, at least until the Buyer no longer holds any of the Securities,
maintain its corporate existence in good standing and shall pay all taxes when due except for taxes it reasonably
disputes.

5. LEGEND; TRANSFER INSTRUCTIONS; RELATED MATTERS.

(a) Transfer Agent Instructions. Promptly after receiving notice of conversion of the Note or exercise of the
Warrant (as applicable), and in any event no more than three (3) business days after the Company's receipt of
such notice of conversion or exercise, the Company shall instruct its transfer agent to issue certificates, registered
in the name of the Buyer or its permitted nominee, for the Conversion Shares and/or Warrant Shares in such
amounts as are specified in such notice. All such certificates shall bear the restrictive legend specified in Section 2
(g) of this Agreement only to the extent required by applicable law and as specified in this Agreement or any
documents referenced herein. The Company represents and warrants that (i) no instructions will be given by it to
its transfer agent other than (A) the instructions referred to in this Section 5 and (B) any stop transfer instructions
required to give effect to
Section 2(f) hereof in the case of the Conversion Shares and Warrant Shares prior to their registration under the
1933 Act and (ii) the Conversion Shares and Warrant Shares shall otherwise be freely transferable on the books
and records of the Company as and to the extent permitted by applicable law and provided by this Agreement,
the Warrant and the Registration Rights Agreement. Nothing in this Section shall affect in any way the Buyer's
obligations and agreement to comply with all applicable securities laws upon resale of the Conversion Shares and
Warrant Shares. If the Buyer (i) provides the Company with an opinion of counsel reasonably satisfactory to
Company that registration by the Buyer of the Note, the Warrant, the Warrant Shares and/or the Conversion
Shares is not required under the 1933 Act or (ii) transfers any of the Securities to an affiliate which is an
accredited investor (in accordance with the provisions of this Agreement) or in compliance with Rule 144, then, in
either instance, the Company shall permit such transfer and, if applicable, promptly (and in all events within three
(3) trading days) instruct its transfer agent to issue one or more certificates in such name and in such
denominations as specified by the Buyer.

(b) Removal of Legend. The Legend shall be removed from any certificate for a Security, and a certificate for a
Security shall be originally issued without the Legend, if, unless otherwise required by state securities laws, (i) the
sale of such Security is registered under the 1933 Act, (ii) the holder of such Security provides the Company with
an opinion by counsel
reasonably satisfactory to the Company, that is in form, substance and scope reasonably satisfactory to the
Company, to the effect that a public sale or transfer of such Security may be made without registration under the
1933 Act or
(iii) such holder provides the Company with assurances reasonably satisfactory to the Company and its counsel
that such Security can be sold pursuant to Rule
144. The Buyer agrees that its sale of all Securities, including those represented by a certificate from which the
Legend has been removed, or which were originally issued without the Legend, shall be made only pursuant to an
effective registration statement (with delivery of a prospectus in connection with such sale) or in compliance with
an exemption from the registration requirements of the 1933 Act. In the event the Legend is removed from the
certificate for any Security or any certificate for a Security is issued without the Legend and thereafter the
effectiveness of a registration statement covering the sale of such Security is suspended or the Company
determines that a supplement or amendment thereto is required by applicable securities laws, then upon
reasonable advance notice to the holder of such Security, the Company shall be entitled to require that the
Legend be placed upon such Security, which Legend shall be removed when such Security may again be sold
pursuant to an effective registration statement or Rule 144 or such holder provides the opinion with respect
thereto described in clause (ii) above.

(c) Conversion of Note. Subject to the terms of the Note, the Buyer shall have the right to convert the Note by
delivering via facsimile an executed and completed Notice of Conversion (as defined in the Note) to the
Company and delivering within three (3) business days thereafter the original Notice of Conversion and, if
required by the Company, the original Note being converted by overnight courier to the Company. Each date on
which a Notice of Conversion is faxed to the Company in accordance with the provisions hereof shall be deemed
a "Conversion Date." The Company will then deliver the certificates representing the shares of Common Stock
issuable upon conversion of the Note (along with a replacement Note representing the principal amount of the
original Note not so converted, if applicable) to the Buyer or its designee via overnight courier within three (3)
business days after the relevant Conversion Date (with respect to each conversion, the "Deadline"). Time is of the
essence with respect to the requirements of the immediately preceding sentence.

(d) Exercise of Warrant. The Buyer shall have the right to exercise the Warrant by delivering via facsimile an
executed and completed Notice of Exercise
(as attached to the Warrant) to the Company and delivering within three (3)
business days thereafter the original Notice of Exercise and the original Warrant being exercised (if required by
the Company) by overnight courier to the Company. Each date on which a Notice of Exercise is faxed to the
Company in accordance with the provisions hereof shall be deemed an "Exercise Date." The Company will
transmit the certificates representing the shares of Common Stock issuable upon exercise of the Warrant (along
with a replacement Warrant representing the amount of said Warrant not so exercised, if applicable) to the Buyer
or its designee via overnight courier within three (3) business days after the relevant Exercise Date (with respect
to each exercise, the "Deadline"). Time is of the essence with respect to the requirements of the immediately
preceding sentence.
(e) Injunctive Relief for Breach. The Company acknowledges that a breach of its obligations under Sections 5(a),
5(b), 5(c) and/or 5(d) above will cause irreparable harm to the Buyer by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Company agrees that the remedy at law for a breach of its
obligations under such Sections would be inadequate and agrees that, in the event of a breach or threatened
breach by the Company, the Buyer shall be entitled, in addition to all other remedies at law or in equity, to an
injunction restraining any breach and requiring immediate issuance and/or transfer, without the necessity of
showing economic loss and without any bond or other security being required.

(f) Liquidated Damages for Non-Delivery of Certificates. In addition to the provisions of Section 5(e) above, the
Company understands and agrees that any delay in the issuance of the certificates beyond the Deadline will result
in substantial economic loss and other damages to the Buyer. As partial compensation to the Buyer for such loss,
the Company agrees to pay liquidated damages (which the Company acknowledges is not a penalty) to the
Buyer for issuance and delivery of the certificates after the Deadline, in accordance with the following schedule
(where "No. of Business Days Late" is defined as the number of business days beyond five (5) business days
from the date of delivery by the Buyer to the Company of a facsimile Notice of Conversion or Notice of Exercise
or, if later, from the date on which all other necessary documentation duly executed and in proper form required
for conversion of the Note or exercise of the Warrant has been delivered to the Company, but only if such
necessary documentation has not been delivered to the Company within the three (3) business day period after
the facsimile delivery to the Company of the Notice of Conversion or Notice of Exercise required in this
Agreement):

                       No. of Business Days Late            Liquidated Damages (in US$)
                       -------------------------            ---------------------------

                                    1                                 $300
                                    2                                 $400
                                    3                                 $500
                                    4                                 $600
                                    5                                 $700
                                    6                                 $800
                                    7                                 $900
                                    8                                 $1,000
                                    9                                 $1,250
                                    10                                $1,500
                                    11+                               $1,750 + $1,000 for
                                                                      each Business Day Late
                                                                      beyond 11 days




Subject to the Buyer's right, in its sole discretion, to add accrued liquidated damages on to the principal amount
of the Note (as provided in the Note), the Company shall pay the Buyer any liquidated damages incurred under
this Section 5(f) by certified or cashier's check upon the earlier of (i) the issuance to the Buyer of the certificates
with respect to which the damages
accrued or (ii) each monthly anniversary of the receipt by the Company of the Buyer's Notice of Conversion or
Notice of Exercise, as the case may be. Nothing herein shall limit the Buyer's right to pursue actual damages for
the Company's failure to issue and deliver certificates to the Buyer in accordance with the terms of this
Agreement or for breach by the Company of this Agreement.

6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the Company
hereunder to sell the Note and the Warrant at the Closing is subject to the satisfaction, on or before the Closing
Date, of each of the following conditions; provided, however, that these conditions are for the Company's sole
benefit and may be waived by the Company at any time in its sole discretion:

(a) The Buyer shall have (i) executed the Agreements (to the extent required thereby) and (ii) delivered such
documents or signature pages thereof (via facsimile or as otherwise provided in the Escrow Agreement), together
with such other items as may be required by this Agreement, to the Escrow Agent.

(b) The Buyer shall have delivered to the Escrow Agent on behalf of the Company the Purchase Price by wire
transfer of immediately available funds pursuant to the wiring instructions provided by the Escrow Agent.

(c) The representations and warranties of the Buyer in this Agreement shall be true and correct in all material
respects as of the date made and as of the Closing Date as though made at that time (except for representations
and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Buyer at or prior to the Closing Date.

(d) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered or
issued by any court or governmental authority of competent jurisdiction or any self- regulatory organization having
authority over the matters contemplated hereby which restricts or prohibits the consummation of any of the
transactions contemplated herein.

7. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. The obligation of the Buyer to
purchase the Note and Warrant is subject to the satisfaction, on or before the Closing Date, of each of the
following conditions; provided, however, that these conditions are for the sole benefit of the Buyer and may be
waived by the Buyer at any time in its sole discretion:

(a) The Company shall have (i) executed the Agreements and (ii) delivered such documents and the executed
Pledge Agreements and the SVB Subordination Agreement, or signature pages thereof (via overnight delivery or
as otherwise provided in the Escrow Agreement), together with such other items as may be required by this
Agreement, to the Escrow Agent.
(b) The Company shall have issued and have duly executed by the authorized officers of the Company, and
delivered to the Escrow Agent on behalf of the Buyer, the original Note and Warrant (via overnight delivery or as
otherwise provided by the Escrow Agreement).

(c) The representations and warranties of the Company in this Agreement shall be true and correct in all material
respects as of the date made and as of Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and the Company shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing Date. The Buyer may require a certificate,
executed by the Chief Executive Officer of the Company and dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by the Buyer.

(d) The Common Stock shall be authorized for quotation on the OTC Bulletin Board (or listing on a national
securities exchange or other market) and trading in the Common Stock on such market shall not have been
suspended by the SEC or other relevant regulatory agency.

(e) No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered or
issued by any court or governmental authority of competent jurisdiction or any self- regulatory organization having
authority over the matters contemplated hereby which restricts or prohibits the consummation of any of the
transactions contemplated herein.

8. GOVERNING LAW; MISCELLANEOUS.

(a) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the
State of Kansas without regard to the principles of conflict of laws. Service of process in any civil action relating
to or arising out of this Agreement (including all Exhibits or Schedules or any addenda hereto) or the transactions
contemplated herein may be accomplished in any manner provided by law. The parties hereto agree that a final,
non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.

(b) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be
considered one and the same agreement and shall become effective when counterparts have been signed by each
party and signature pages from such counterparts have been delivered to the Escrow Agent.

(c) Headings; Interpretation. The headings of this Agreement are for convenience of reference and shall not form
a part of, or affect the interpretation of this Agreement. As used herein, the masculine shall refer to the feminine
and neuter, and vice versa, as the context may require. As used herein, unless the context clearly requires
otherwise, the words "herein,"
"hereunder" and "hereby," shall refer to this entire Agreement and not only to the Section or paragraph in which
such word appears. If any date specified herein falls on a Saturday, Sunday or public or legal holiday, the date
shall be construed to mean the next business day following such Saturday, Sunday or public or legal holiday. For
purposes of this Agreement, a "business day" is any day other than a Saturday, Sunday or public or legal holiday.
Each party intends that this Agreement be deemed and construed to have been jointly prepared by the parties.
As a result, the parties agree that any uncertainty or ambiguity existing herein shall not be interpreted against either
of them.

(d) Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

(e) Entire Agreement; Amendments. This Agreement and the documents referenced herein (which are
incorporated herein by reference) contain the entire understanding of the parties with respect to the matters
covered herein and supercede all prior agreements, negotiations and understandings, written or oral, with respect
to such subject matter. Except as specifically set forth herein, neither the Company nor the Buyer makes any
representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement
shall be waived or amended other than by an instrument in writing signed by the party to be charged with
enforcement. No delay or omission of either party hereto in exercising any right or remedy hereunder shall
constitute a waiver of such right or remedy, and no waiver as to any obligation shall operate as a continuing
waiver or as a waiver of any subsequent breach.

(f) Notices. Any notices required or permitted to be given under the terms of this Agreement shall be in writing
and sent by U. S. Mail or delivered personally or by overnight courier or via facsimile (if via facsimile, to be
followed within one (1) business day by an original of the notice document via overnight courier) and shall be
effective (i) five (5) days after being placed in the mail, if mailed, certified or registered, return receipt requested,
(ii) upon receipt, if delivered personally or (iii) one (1) day after facsimile transmission or delivery to a courier
service for overnight delivery, in each case properly addressed to the party to receive the same. The addresses
for such communications shall be as follows:

                         If to the Company:          Rapidtron, Inc.
                                                     3151 Airway Avenue, Building Q
                                                     Costa Mesa, California 92626
                                                     Telephone: (949) 798-0652
                                                     Facsimile: (949) 474-4550
                                                     Attention: John Creel

                         If to the Buyer:            Oceanus Value Fund, L.P.
                                                     225 North Market Street, Suite 220
                                                     Wichita, Kansas 67202
                                                     Telephone: (316) 262-8874
                                                     Facsimile: (316) 267-0204
                                                     Attention: John C. Tausche
Each party shall provide written notice to the other party of any change in address.

(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns. Neither the Company nor the Buyer shall assign this Agreement or
any rights or obligations hereunder without the prior written consent of the other (which consent shall not be
unreasonably withheld) and, in any event, any assignee of the Buyer shall be an accredited investor (as defined in
Regulation
D), in the written opinion of counsel who is reasonably satisfactory to the Company and in form, substance and
scope reasonably satisfactory to the Company. Notwithstanding the foregoing, if applicable, the Buyer may
assign its rights hereunder to any of its "affiliates," as that term is defined in Rule 405 of the 1933 Act, without the
consent of the Company; provided, however, that (i) any such assignment shall not release the Buyer from its
obligations hereunder unless such obligations are assumed by such affiliate and (ii) no such assignment shall be
made unless it is made in accordance with any applicable securities laws. Any request for consent to an
assignment made hereunder by the Buyer shall be accompanied by a legal opinion in form, substance and scope
reasonably satisfactory to the Company that such assignment is proper under applicable law. Notwithstanding
anything herein to the contrary, the Buyer may pledge all or any part of the Securities as collateral for a bona fide
loan pursuant to a security agreement with a third party lender, and such pledge shall not be considered an
assignment in violation of this Agreement so long as it is made in compliance with all applicable laws.

(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.

(i) Survival. Unless this Agreement is terminated under Section 8(l) below, the representations and warranties of
the Company and the Buyer contained herein, and the agreements and covenants set forth herein, shall survive the
Closing.

(j) Publicity. The Company and the Buyer shall have the right to review, before issuance by the other, any press
releases or other public statements with respect to the transactions contemplated hereby; provided, however, that
(i) the Company shall be entitled, without prior consultation with or approval of the Buyer, to make any press
release or other public disclosure with respect to such transactions that is required by applicable law or
regulations and (ii) the Buyer and it affiliates shall be entitled, without prior consultation with or approval of the
Company, to publish a "tombstone" describing the financing provided pursuant to this Agreement.

(k) Further Assurance. Each party shall do and perform, or cause to be done and performed, at its expense, all
such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.

(l) Termination. In the event that the Closing shall not have occurred on or before December 15, 2004, this
Agreement may be terminated at any time thereafter by written notice from one party to the other. Such
termination shall not be the sole remedy for a breach of this Agreement by the non-breaching party, and each
party shall retain all of its rights hereunder at law or in equity. Notwithstanding anything herein to the contrary, a
party whose breach of a covenant or representation and warranty or failure to satisfy a condition prevented the
Closing shall not be entitled to terminate this Agreement.

(m) Remedies. No provision of this Agreement providing for any specific remedy to a party shall be construed to
limit such party to the specific remedy described, and that any other remedy that would otherwise be available to
such party at law or in equity shall also be available. The parties also intend that the rights and remedies
hereunder be cumulative, so that exercise of any one or more of such rights or remedies shall not preclude the
later or concurrent exercise of any other rights or remedies.

(n) Attorney's Fees. If any party to this Agreement shall bring any action for relief against the other arising out of
or in connection with this Agreement, in addition to all other remedies to which the prevailing party may be
entitled, the losing party shall be required to pay to the prevailing party a reasonable sum for attorney's fees and
costs incurred in bringing such action and/or enforcing any judgment granted therein, all of which shall be deemed
to have accrued upon the commencement of such action and shall be paid whether or not such action is
prosecuted to judgment. Any judgment or order entered in such action shall contain a specific provision providing
for the recovery of attorney's fees and costs incurred in enforcing such judgment. For the purposes of this
Section, attorney's fees shall include, without limitation, fees incurred with respect to the following: (i) post-
judgment motions, (ii) contempt proceedings, (iii) garnishment, levy and debtor and third party examinations, (iv)
discovery and (v) bankruptcy litigation.

IN WITNESS WHEREOF, the Buyer and the Company have caused this Agreement to be duly executed by
their respective authorized persons on the date first written above.
RAPIDTRON, INC.

By:
President By:

                                                       Secretary

                                        OCEANUS VALUE FUND, L.P.
                                     By: Oceanus Asset Management, L. L. C.,
                                                 General Partner

                                                      By:
                                            John C. Tausche, Member
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned hereby agree to be bound by the terms of Section 4(d)(ii) above as it relates to them personally.


John Creel, individually Peter Dermutz, individually

                                  LIST OF EXHIBITS AND SCHEDULES

                    Exhibit   A       15% Secured Convertible Promissory Note
                    Exhibit   B       Warrant to Purchase Common Stock
                    Exhibit   C       Security Agreement
                    Exhibit   D       Subordination Agreement with Silicon Valley Bank
                    Exhibit   E       Form of Guaranty, Pledge and Security Agreement
                    Exhibit   F       Registration Rights Agreement
                    Exhibit   G       Disbursement Instructions
                    Exhibit   H       Escrow Agreement

                    Schedule   3(c)
                    Schedule   3(g)
                    Schedule   3(h)
                    Schedule   3(j)
                    Schedule   3(l)
                    Schedule   3(m)
                    Schedule   3(o)
                                            SCHEDULE 3(C)
                                           CAPITALIZATION

None other than what has been reflected in the SEC Documents.

                                            SCHEDULE 3(G)
                                            NO CONFLICTS

None

                                     SCHEDULE 3(H)
                          SEC DOCUMENTS; FINANCIAL STATEMENTS

None

                                          SCHEDULE 3(J)
                                      ABSENCE OF LITIGATION

None

                                       SCHEDULE 3(L)
                             BROKERS; NO GENERAL SOLICITATION

Scott Liolios - Bathgate Capital - 2% commission based on agreement signed on
October 22, 2003.

                                            SCHEDULE 3(M)
                                           STATUS OF ASSETS

None other than those disclosed in the SEC Documents filed prior to or for the quarter ended September 30,
2004. The LDM Enterprises agreement will be terminated at the Closing.

                                         SCHEDULE 3(O)
                                  NO ENCUMBRANCES ON SHARES

None other than those disclosed in the SEC Documents.
CONVERTIBLE SECURED PROMISSORY NOTE

$350,000
OCTOBER 8, 2004
COSTA MESA, CALIFORNIA

FOR VALUE RECEIVED, RAPIDTRON, INC., a Nevada corporation ("MAKER"), hereby promise to pay
to the order of LDM Enterprises, LLC, a California limited liability company ("HOLDER"), at Holder's address
for notice as set forth in
Section 12 hereof or at such other address as Holder may designate by written notice delivered to Maker at any
time and from time to time, the principal sum credited or disbursed to Maker from time to time, not to exceed
Three Hundred Fifty Thousand and 00/100 Dollars ($350,000.00), plus interest on the principal amount
disbursed and other fees and costs due hereunder, as set forth below.

1. Interest Rate. Interest upon the principal amount disbursed under this Note plus any other fees and costs due
hereunder shall accrue at the rate of ten percent (10%) per annum. NOTICE: Under no circumstances will the
interest rate of this Note be more than the maximum rate allowed by applicable law.

2. Payments/Maturity. The entire indebtedness evidenced by this Note, including the entire principal balance
outstanding hereunder, any and all unpaid interest accrued thereon, and any and all other amounts due and owing
hereunder, shall be due and payable in full on November 8, 2004 (the "MATURITY DATE"). Maker may
prepay the principal and interest due hereunder at any time without additional fee or penalty.

3. No Setoff. All payments made hereunder shall be made in lawful money of the United States of America
without setoff, deduction or counterclaim of any kind whatsoever.

4. Default and Acceleration. For purposes of this Note, Maker shall be in "DEFAULT" under this Note if any
one of the following events occurs: (a) Maker fails to make any payment of interest, principal or other amount
hereunder on or before the Maturity Date; (b) Maker admits in writing Maker's inability to pay Maker's debts as
such debts become due, makes a general assignment for the benefit of creditors, or files any petition or action for
relief under any bankruptcy, reorganization, insolvency or moratorium law or under any other law for the relief of,
or relating to, debtors; (c) Maker commits any breach of or default under this Note or any instrument securing or
otherwise assuring payment of or performance under this Note; (d) any involuntary petition is filed against Maker
under any bankruptcy, reorganization, insolvency or moratorium law or under any other law for the relief of, or
relating to, debtors; (e) a levy or writ of attachment or garnishment or other like judicial process is filed or issued
against or upon the Maker or any of the "Collateral" (defined in Section 13 below); or (f) Holder deems itself
insecure, believing that the prospect of payment under this Note is impaired or fears the Collateral is at risk of
being compromised. Notwithstanding any other provision of this Note to the contrary, upon the occurrence of a
Default, Holder may, at Holder's option but with written notice to Maker, the entire indebtedness evidenced by
this Note, including the entire principal balance outstanding hereunder, any and all unpaid interest accrued thereon
and any and all other amounts due and owing under this Note, shall immediately be due and payable.

5. Late Charge. If Maker fails to pay any amount due hereunder (including, without limitation, any monthly
installment or the final installment of principal and interest due on the Maturity Date) on or before the due date,
Maker shall pay a late charge of five percent (5%) of the amount past due (the "LATE FEE"). Maker
acknowledges and agrees that it would be extremely difficult or impracticable to fix the actual damages resulting
from Maker's failure to pay amounts when due, and therefore, Maker shall pay such late charges not as a
penalty, but for the purpose of defraying the administrative expenses incident to handling amounts past due. Such
late charges represent the reasonable estimate of such expenses. The late charges shall be payable by Maker
without prejudice to the rights of Holder to collect any other amounts to be paid under this Note or any Security
Document (including, without limitation, interest at the Default Rate pursuant to Section 6, below and other
collection fees) or to accelerate all sums due hereunder pursuant to Section 4, above.

                                                          1
6. Default Rate. Notwithstanding anything in this Note to the contrary, upon and after a Default, interest shall
accrue on the unpaid principal at the interest rate of the greater of (a) fourteen percent (14%) per annum, or (b)
the Prime Rate as published by U.S. Bank for its U.S. customers, plus eight points (the "DEFAULT RATE"').
The unpaid principal shall accrue interest at the Default Rate only until the Default is cured. Maker acknowledges
and agrees that it would be extremely difficult or impractical to fix the actual damages resulting from Maker's
failure to pay the principal, accrued interest and other sums due on the Maturity Date, and therefore Maker shall
pay interest at the Default Rate not as a penalty, but for purposes of defraying the expenses and losses incident to
the loss of the past due principal, accrued interest and other sums due under this Note. Interest at the Default
Rate represents the reasonable estimate of such expenses and losses. Interest at the Default Rate shall be payable
by Maker without prejudice to the rights of Holder to collect any other amounts to be paid under this Note or
any Security Document (including, without limitation, the Late Fee pursuant to Section 5, above), or to accelerate
all sums due hereunder pursuant to Section 4, above.

7. Conversion. If Maker is in Default of this Note, then Holder may, at any time prior to the cure of such Default
in its sole and absolute discretion, convert the entire outstanding principal balance of this Note into that number of
shares of common stock of the Corporation as determined by dividing (i) the outstanding principal amount under
this Note, by (ii) the "Conversion Price" (as defined below). In connection with such conversion, no fraction of a
share of common stock shall be issued. Such right to conversion shall terminate immediately following the
Maturity Date. The term "COMMON STOCK" means the common stock of Rapidtron, Inc., a Nevada
corporation (the "CORPORATION") issued upon conversion of this Note. The term "CONVERSION PRICE"
means the lesser of
(a) $0.33 per share, or (b) the average lowest closing bid price during the five
(5) trading days immediately prior to the "Conversion Date" (defined below), each as reported by Bloomberg, or
if no report is provided by Bloomberg, as reported by Nasdaq's OTC Bulletin Board or other U.S. national
trading market upon which the Corporation's common stock is traded. Holder shall have no obligation to convert
the Note pursuant to this Section 7, and any such conversion shall not be deemed a waiver of any of Holder's
remedies for any Default, including the collection of the Late Fee or Default Interest.

7.1 Effect of Conversion. Immediately following tender of the original Note and other items required by Section 7
and its related subsections, this Note shall be deemed no longer outstanding and all rights with respect to this
Note shall immediately cease and terminate, except only the right of the Holder to receive shares of Common
Stock in exchange therefor. Upon conversion but subject to the terms and conditions of the Corporation's
Shareholders Agreement, Certificate of Incorporation and related documents, the Holder shall be admitted as a
constituent shareholder of the Corporation holding the Common Stock.

7.2 Securities Representations. Upon conversion of this Note, the registered Holder shall execute and deliver to
the Corporation an instrument, in form and substance satisfactory to the Corporation, representing that either (a)
Holder is an "Accredited Investor" within the meaning of the rules and regulations promulgated under the
Securities Act of 1933, as amended (the "SECURITIES ACT"); and that the shares of Common Stock issued to
Holder are being acquired for such Holder's own account, for investment and not with a view to sale, transfer,
assignment or distribution within the meaning of the Securities Act, or (b) Holder is not a "U.S. Person" within the
meaning of Regulation S promulgated under the Securities Act, the sale of the Common Stock to Holder qualifies
for an exemption from registration in accordance with Regulation S, and such other representations and
warranties as may then be appropriate under Regulation S.

7.3 Delivery of Documents. To convert this Note, the Holder must surrender the original of this Note to the
Corporation at its offices, accompanied by a Conversion Notice in the form attached hereto as Exhibit A and
such other documents as may be reasonably required by the Corporation in connection with the issuance of
shares of Common Stock to Holder, including, without limitation, an investor questionnaire related to Holder's
qualification as an Accredited Investor. "CONVERSION DATE" shall mean the date Holder delivers all of the
foregoing documents.

7.4 Failure to Issue Common Stock. Failure to issue unrestricted, freely tradable Common Stock to the
purchasers following Conversion and pursuant to the effective Registration filed pursuant to this Note

                                                          2
shall be considered a Default, which if not cured within 10 days, shall entitle the Holder to accelerate full
repayment of the Note then outstanding. The Corporation acknowledges that the failure to honor a Conversion
Notice shall cause definable financial hardship on Holder.

7.5 Reservation of Common Stock. At all times until the total outstanding balance of this Note is paid in full, the
Corporation shall keep available Common Stock duly authorized for issuance against this Note. If at any time, the
Corporation does not have available an amount of authorized and non-issued Common Stock necessary to
satisfy full Conversion of the then outstanding amount of the Convertible, the Corporation shall call and hold a
special meeting within 30 days of such occurrence, or as soon thereafter as permitted by the Securities and
Exchange Act of 1934, for the sole purpose of increasing the number of shares of Common Stock authorized.
The Board of Directors of the Corporation shall recommend to shareholders to vote in favor of increasing the
number of Common Stock authorized. The Management shall also vote all of its shares in favor of increasing the
number of Common Stock authorized.

8. Registration and Securities Act Compliance.

8.1 No Registration on Closing Date. Holder acknowledges that the sale of this Note and the Common Stock
have not been registered under the Securities Act or any applicable state laws.

8.2 Securities Act Compliance. This Note, any share of Common Stock, and any equity securities in any
successor entity for which such Common Stock may be exchanged in a merger, shall not be sold or transferred
unless either (i) such sale or transfer shall first have been registered under the Securities Act and any applicable
state law, or (ii) such sale or transfer is exempt from such registration and Holder furnishes to the Corporation an
opinion of legal counsel, reasonably satisfactory to the Corporation, to the effect that such sale or transfer is
exempt from the registration requirements of the Securities Act.

8.3 Registration Following Default. If Holder exercises the right to convert this Note pursuant to Section 7 above,
then the Corporation shall, at its sole cost and expense, file a registration statement (the "REGISTRATION")
with the Securities and Exchange Commission (the "SEC") within six (6) months after the Conversion Date for the
public resale of the Common Stock by Holder and all other holders of the Notes, as follows:

(a) The Corporation shall file the Registration on such forms as may be available to the Corporation, in the
Corporation's sole discretion, for the resale of its common stock, including a Form S-3, Form SB-2, or similar
forms.

(b) The Holder will cooperate with the Corporation in all respects in connection with the Registration, at Holder's
sole cost and expense, including timely supplying all information reasonably requested by the Corporation (which
shall include all information regarding the Holder and proposed manner of sale of the Common Stock required to
be disclosed in any registration statement) and executing and returning all documents reasonably requested in
connection with the registration and sale of the Common Stock and entering into and performing their obligations
under any underwriting agreement, if the offering is an underwritten offering, in usual and customary form, with the
managing underwriter or underwriters of such underwritten offering. Nothing in this Note shall obligate any
Holder to consent to be named as an underwriter in any registration statement. Any delay or delays caused by the
Holder by failure to cooperate as required hereunder shall extend the deadline for filing the Registration.

(c) The Corporation shall keep such Registration effective until the Common Stock is no longer "restricted" under
Rule 144 and may be freely tradable without registration.

(d) If at any time or from time to time after the effective date of the Registration, the Corporation notifies the
Holder in writing of the existence of a "Potential Material Event" (as defined below), the Holder shall not offer or
sell any Common Stock or engage in any other transaction involving or relating to Common Stock, from the time
of the giving of notice with respect to a Potential Material Event until the Holder receives written notice from the
Corporation that such Potential Material Event either has been disclosed to the public or no longer

                                                         3
constitutes a Potential Material Event; provided, however, that the Corporation may not so suspend the right to
Holder for more than twenty (20) days in the aggregate during the period the Registration is required to be in
effect. If a Potential Material Event shall occur prior to the date the Registration is required to be filed, then the
Corporation's obligation to file such Registration shall be delayed without penalty for not more than twenty (20)
days. The Corporation must, if lawful, give the Holder notice in writing at least two (2) trading days prior to the
first day of the blackout period.

(e) If, at the time the Holder wishes to resell the Common Stock, the Corporation's legal counsel determines that
the Common Stock may be resold by Holder without registration, then notwithstanding anything to the contrary in
this Section 8, the Corporation shall not be required to register such resale; provided the Corporation permits
such resale in accordance with any such exemption.

9. No Assignment. Maker shall not assign any right, title, interest, power or privilege (or any part thereof) in, to
or under this Note or to delegate any debt, duty, liability or obligation (or any part thereof) under this Note
without the prior written consent of Holder.

10. Severability. The provisions of this Note are intended by Maker to be severable and divisible and the
invalidity or unenforceability of a provision or term herein shall not invalidate or render unenforceable the
remainder of this Note or any part thereof.

11. No Waiver. The acceptance by Holder of any amount in payment less than the full amount due and payable
shall not constitute a waiver of Holder's right to accelerate the indebtedness at that time or any subsequent time or
nullify any prior acceleration unless Holder has expressly waived such right by written notice to Maker or such
waiver is implied or otherwise effected by operation of law.

12. Notices. All notices required or permitted by this Guaranty shall be in writing or by telex or facsimile
transmission and shall be deemed to have been duly given (i) on the date of service if delivered in person or by
telex or facsimile transmission (with the telex or facsimile confirmation of transmission receipt acting as
confirmation of service when sent and provided telexed or telecopied notices are also mailed by first class,
certified or registered mail, postage prepaid); or (ii) seventy-two (72) hours after mailing by first class, registered
or certified mail, postage prepaid, and properly addressed to the addresses specified below or at such other
address as the party affected may designate in a written notice to such other party in compliance with this
Section 12.

13. Security. As a condition to and in consideration of the amounts loaned to Maker pursuant to this Note, the
payment, performance and satisfaction of Maker's debts, duties, liabilities and obligations under this Note are and
shall be fully secured by a security interest in all of the assets of Maker (the "COLLATERAL") in accordance
with a separate Assignment and Security Agreement, of even date herewith (the "SECURITY AGREEMENT"),
duly executed and delivered by Maker, and a personal guaranty of payment and performance executed and
delivered by John Creel, an individual.

14. Waivers By Maker. Maker (a) waives diligence, presentment, protest and demand, and (b) consents to the
acceptance of security, or the release of security, for this Note, all without in any way affecting the liability of
Maker. The right to plead any and all statutes of limitations as a defense to any duty, obligation, or liability under
this Note, or any instrument securing or otherwise assuring payment of this Note, is expressly waived by Maker
to the fullest extent permitted by law.

15. Governing Law. This Note shall be governed by and construed and interpreted in accordance with the
internal laws of the State of California, as applied to contracts between California residents entered into and to be
performed wholly within the State of California.

16. Compliance with Laws. Notwithstanding any provision of this Note to the contrary, the total liability for
payments in the nature of interest shall not exceed the limits imposed by the applicable usury laws of the

                                                           4
State of California. If, from any circumstances whatsoever, fulfillment of any provision hereof or of any other
agreement evidencing, securing or otherwise assuring payment of the debt, at the time performance of such
provision shall be due, shall involve the payment of interest in excess of that authorized by law, and if from any
circumstances, Holder shall ever receive as interest an amount which would exceed the highest lawful rate
applicable to Maker, such amount which would be excessive interest shall be applied to the reduction of the
principal balance outstanding under this Note and not to the payment of interest.

17. Attorneys Fees. If Holder institutes any collection effort, of any nature whatsoever (expressly including any
collection efforts in any bankruptcy case), for any amount due and payable hereunder following a Default, then
Maker shall pay to Holder forthwith any and all reasonable costs and expenses of collection actually incurred by
Holder, including, without limitation, reasonable attorneys fees, accounting fees, expert witness fees and related
costs, including time for personnel of Holder, plus interest for such costs or expenses as incurred, at the Default
Rate, whether or not suit or other action or proceeding is instituted. The payment of any and all such costs and
expenses shall be fully secured by any and all instruments securing this Note and fully assured by any and all
instruments assuring payment of this Note, including without limitation, the Security Documents. If either party to
this Note commences any mediation, arbitration, administrative proceeding or judicial proceeding (each, a
"PROCEEDING") to enforce or interpret any term, condition or other provision of this Note, the prevailing party
in such Proceeding shall be entitled to recover reasonable attorneys fees, accounting fees, expert witness fees and
related costs incurred by such prevailing party in such Proceeding from the non-prevailing party, in addition to
any other relief to which such prevailing party may be entitled.

"MAKER"

RAPIDTRON, INC.,
a Nevada corporation

By:________________________________________________________ John Creel, President & Chief
Executive Officer

Maker's Address for Notice:

Rapidtron, Inc.
3151 Airway Avenue, Suite Q
Costa Mesa, CA 92626-4627
Facsimile: (949) 474-4550

Holder's Address for Notice:

LDM Enterprises, LLC
Attention: Raymond Lee
2515 Sierra Vista
Newport Beach, California 92660
Facsimile: (949) 722-7526

                                                          5
Exhibit "A" to Convertible Secured Promissory Note
EXHIBIT A

                                           CONVERSION NOTICE

                                           To: RAPIDTRON, INC.

The undersigned holder of the within Notice hereby irrevocably exercises the option to convert all of the principal
amount outstanding of the within Debenture into that number of shares of Common Stock determined by dividing
the outstanding principal amount by the Conversion Price (as defined in the Debenture) in accordance with the
terms of the within Debenture, and directs that the shares issuable and deliverable upon the conversion be issued
in the name of and delivered to the undersigned payee.

Date: ____________________

[for individual]


                                                    (signature)

Printed Name and Capacity:________________________

[for entity]



By:__________________________________________________


                                                    (signature)

Name:________________________________________________

Title:_______________________________________________
LOAN AGREEMENT

This LOAN AGREEMENT (this "Agreement") is entered into effective as of October 9, 2004 (the
"EFFECTIVE DATE") by and between LDM ENTERPRISES, LLC, a California limited liability company
("LENDER"); Rapidtron, Inc., a Nevada corporation ("BORROWER"); and John Creel, an individual
("GUARANTOR"), with reference to the following recitals:

A. Borrower is currently a party to a Memorandum of Understanding ("MOU") with Smart Card Integrators,
Inc. ("SCI"), pursuant to which Borrower is obligated to provide $350,000 of financing to SCI in accordance
with the terms of the MOU (the "SCI LOAN").

B. The following parties have made financing available to Borrower (each such loan, a "BRIDGE LOAN"): (i)
Bathgate Capital Partners LLC in the amount of $600,000 pursuant to a Sale Of Secured Convertible Bridge
Notes Summary of Terms, dated September 28, 2004; (ii) Oceanus Value Fund, LP in the amount of $400,000
pursuant to a Draft Term Sheet dated September 22, 2004; and (iii) affiliates of John Steinacker in the amount of
$1,000,000. Borrower intends to accept one or more of the Bridge Loans as soon as possible and use the
proceeds thereof to finance the SCI Loan, but pursuant to the MOU, Borrower must finance the SCI Loan prior
to the expected closing of any one of the Bridge Loans.

C. Borrower has requested, and Lender has agreed to provide, a short-term loan to Borrower to fund a portion
of the SCI Loan intended to be repaid from the proceeds of the first Bridge Loan.

D. As of the Effective Date hereof, Borrower is a client of Greenberg Traurig LLP ("GT") and Raymond A. Lee
("RAL"), a shareholder of GT and former partner of Lee & Rasor LLP ("LR"). RAL is an affiliate of Lender.

E. Lender has agreed to loan to Borrower up to $350,000, to be used solely for the purpose of funding of
$250,000 of the SCI Loan, provided SCI agrees to amend the MOU to permit Borrower to fund a portion of
the SCI Loan pending the closing of the Bathgate Bridge Loan, and payment of $100,000 towards outstanding
invoices owed to GT and LR.

F. Borrower shall secure the loan by granting Lender an assignment of the SCI Loan and a security interest in all
of the assets of Borrower.

G. Guarantor is an owner, officer and director of Borrower. Guarantor shall guaranty Borrower's repayment of
the loan and shall secure such guaranty by granting a deed of trust upon his personal residence (the
"RESIDENCE") for the benefit of Lender.

H. Borrower and Guarantor understand that because RAL is an affiliate of Lender and GT, GT is unable to
represent Borrower or Guarantor with respect to this Agreement and the related transactions, and Borrower and
Guarantor have agreed to obtain separate legal counsel to represent them with respect to this Agreement and the
related transactions. Further, GT shall represent Lender in connection with the Loan and related transactions, and
each of

                                                        1
Borrower and Lender has agreed to waive any actual or potential conflict of interest that may exists with respect
to GT's representation of Lender in this matter and GT's ongoing and future representation of Borrower with
respect to other matters.

NOW, THEREFORE, for and in consideration of the foregoing recitals and the mutual covenants, promises and
agreements set forth herein, the parties hereto agree as follows:

1. The Loan. Borrower agrees to accept and Lender agrees to make, upon the terms and conditions contained in
this Agreement, a loan in the principal sum of up to Three Hundred Fifty Thousand Dollars ($350,000.00) (the
"LOAN"), at an interest rate of the lesser of ten percent (10%) per annum or the highest rate permitted by law,
and due and payable on or before the earlier of (a) October 29, 2004, or (b) closing of the first Bridge Loan. If
the total outstanding balance of the Loan is not repaid on or before November 14, 2004, then Lender shall have
the option, but not the obligation, to covert the total balance of the Loan or any portion thereof into common
stock of Borrower at any time until such balance is paid in full, at a conversion rate of the lesser of $0.33 per
share or the average closing bid price during the five trading days prior to and including November 14, 2004.
Lender's election to so convert the outstanding balance of the Note shall not be deemed a waiver of any right or
remedy Lender may have for breach of this Agreement or any Loan Document.

2. Security for the Loan. As collateral for repayment of the Loan and Borrower's performance of the other "Loan
Documents" (defined below), Borrower shall execute and deliver to Lender a Security Agreement in the form
attached hereto as Exhibit "A" (the "SECURITY AGREEMENT"), assigning to Lender all right, title and interest
in and to the SCI Loan and the Bathgate Bridge Loan, and granting a security interest in all other existing or
hereinafter acquired assets of Borrower, to be perfected by the filing of a UCC-1 financing statement.

3. Personal Guaranty. As a condition to the Loan, Guarantor shall execute and deliver the Guaranty in the form
attached hereto as Exhibit "B" (the "GUARANTY") and the Deed of Trust attached hereto as Exhibit "C" (the
"DEED OF TRUST"). If Borrower fails to repay the Loan on or before October 29, 2004, then Guarantor shall
obtain a new loan secured by the Residence and use the proceeds thereof to satisfy the Loan and Guaranty. If
Borrower has failed to repay the entire balance of the Loan on or before October 22, 2004, then Guarantor shall
promptly make a good faith application for such new loan with an available bank or other mortgage lender on or
before October 25, 2004. Failure by Guarantor to satisfy the obligation to apply for such new loan shall be
deemed a material default of this Agreement and the Guaranty, and Lender shall have all rights and remedies for
default under the Guaranty.

4. Loan Documents. In order to consummate the Loan, Borrower shall execute and/or deliver to Lender the
following documents (collectively, together with this Agreement, the "LOAN DOCUMENTS"):

(a) Convertible Secured Promissory Note (the "NOTE") in the principal amount of up to $350,000.00, with a
maturity date of November 8, 2004, and in the form attached hereto as Exhibit "D";

                                                        2
(b) the Security Agreement;

(c) the Guaranty, duly executed and delivered by Guarantor; and

(d) the Deed of Trust.

5. Closing. Closing of the Loan shall occur within one business day following Borrower's delivery of the original
Loan Documents to Lender. At closing, Lender shall disburse the proceeds of the Loan on behalf of Borrower as
provided in Section 6 below.

6. Use of Loan Proceeds. Borrower hereby covenants to Lender that Borrower shall use the proceeds of the
Loan only in accordance with Schedule 1, attached hereto. Borrower hereby authorizes and directs Lender to
disburse the proceeds of the Loan directly to the third-party payees identified on Schedule 1, in the amounts
shown thereon, for and on behalf of Borrower.

7. Covenant to Accept Bridge Loans. Rapidtron shall in good faith proceed to apply for the Bridge Loans as
soon as possible and diligently pursue the closing of such Bridge Loans, and Rapidtron shall apply any such funds
to the repayment of the Loan.

8. Lender's Costs and Expenses. At closing, Borrower shall reimburse Lender for its legal fees and other out-of-
pocket expenses in connection with the preparation of the Loan Documents and other matters related to the
transactions contemplated herein, not to exceed $3,500, from funds separate and apart from the proceeds of the
Loan.

9. Default. The occurrence of any of the following events shall constitute an "EVENT OF DEFAULT" under this
Agreement:

9.1 Nonpayment. Borrower fails to pay, within five (5) calendar days after demand or after the date when due,
any payment obligation in accordance with the terms of the Note.

9.2 Other Provisions of Loan Documents. Except for payment obligations under the Note or Guaranty, either
Borrower or Guarantor fails to comply with or perform any agreement, covenant, condition or provision of this
Agreement or any other Loan Document and such failure shall remain uncured for a period of thirty (30) days
following delivery of written notice of default by Lender to Borrower or Guarantor, as the case may be.

10. Further Assurances. Each party hereto also agrees to provide further assurances; to take further actions; and
to make, execute, acknowledge, certify, verify, enter into, deliver, record and/ or file any and all documents as
are necessary and appropriate to the Loan or to the closing, consummation, confirmation and perfection of any
and all transactions contemplated by this Agreement.

                                                        3
11. General Provisions.

11.1 No Modifications. No supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by all parties.

11.2 Binding Agreement. Neither party shall assign any right, power, privilege or authority or delegate any duty,
liability or obligation under this Agreement to any person or entity without the prior written consent of the other
party, such consent not to be unreasonably withheld or delayed. No such assignment or delegation shall release
the assigning party from any duty, liability or obligation under this Agreement unless expressly provided to the
contrary in a written instrument signed by all parties. Subject to the foregoing restrictions and limitations, this
Agreement shall be binding on, and shall inure to the benefit of, the parties and their respective heirs,
representatives, successors and assigns.

11.3 Attorneys Fees. If either party commences any mediation, arbitration, administrative proceeding or judicial
proceeding (each, a "PROCEEDING") to enforce or interpret any term, condition or other provision of this
Agreement, then the prevailing party in such Proceeding shall be entitled to recover reasonable attorneys fees,
expert witness fees, accounting fees and related costs incurred by such prevailing party in such Proceeding from
the non-prevailing party, in addition to any other relief to which such prevailing party may be entitled.

11.4 Enforceability. In the event that the application of any of the provisions of this Agreement is held to be
unenforceable or invalid by a court of competent jurisdiction, the validity and enforceability of other applications
of that provision and of the remaining provisions shall not be affected.

11.5 Counterparts and Execution. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same document. Each
signatory may affix its respective signatures to this Agreement in any manner so long as such signatory
acknowledges such signature as its own. Executed signature pages from separate counterpart originals may be
attached to a single counterpart copy. The parties hereby agree that facsimile signatures may be used in order to
close the transactions contemplated hereby (other than with respect to the Purchase Note); provided, however,
that original signatures shall promptly follow (by Federal Express, other overnight messenger or courier service)
the delivery of such facsimile signatures.

11.6 Construction. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural
number shall each be deemed to include the others where and when the context so dictates.

11.7 Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the
internal laws of the State of California, as applied to contracts between California residents entered into and to be
performed wholly within the State of California.

                                                          4
11.8 Legal Representation and Acknowledgement and Waiver of Conflict. Lender and Borrower hereby
acknowledge that RAL is the principal of Lender, is an attorney licensed to practice law in the State of California
and a shareholder with GT and former partner of LR, which has been dissolved. Lender and Borrower further
acknowledge that Dennis J. Rasor ("DJR") is an associate attorney with GT and a former partner of LR. LR has
in the past represented Borrower, and GT has in the past and continues to represent Borrower in connection with
general business and securities matters. Borrower acknowledges that neither RAL, DJR nor GT is representing
Borrower, its representatives or advisors with respect to this Agreement or any transaction related thereto.
Borrower acknowledges that RAL has disclosed to Borrower a conflict of interest between RAL, DJR and GT
on the one hand, and Borrower on the other, with respect to the terms of this Agreement. Borrower further
acknowledges that RAL, DJR and GT have advised Borrower to obtain independent legal counsel to represent
Borrower in connection with this Agreement and to advise Borrower with respect to any conflict this Agreement
may present with respect to RAL's, DJR's and GT's current and future representation of Borrower. Further,
Borrower and Lender acknowledge that DJR and GT are representing Lender with respect to this transaction
and that each of Lender and Borrower has reviewed and executed a separate waiver of conflict of interest with
respect to such representation.

IN WITNESS WHEREOF, Borrower and Lender have executed, delivered and entered into this Agreement as
of the Effective Date hereof.

"BORROWER"

RAPIDTRON, INC., a Nevada corporation

By:______________________________________ John Creel
President & Chief Executive Officer

"LENDER"

LDM ENTERPRISES, LLC,
a California limited liability company

By:_______________________________________ Raymond A. Lee, Manager

By:_______________________________________ Barbara Lee, Manager

                                                        5
                                           Schedule 1

                                         Use of Proceeds

                                   SCI            $250,000.00
                                   GT             $ 80,000.00
                                   LR             $ 20,000.00




(1) Discounted from $32,528.56.

                                  Schedule 1 to Loan Agreement
Exhibit "A" to Loan Agreement

                                Form of Security Agreement

                                     SEE ATTACHED

                                Exhibit "A" to Loan Agreement
Exhibit "B" to Loan Agreement

                                     Form of Guaranty

                                     SEE ATTACHED

                                Exhibit "B" to Loan Agreement
Exhibit "C" to Loan Agreement

                                  Form of Deed of Trust

                                     SEE ATTACHED

                                Exhibit "C" to Loan Agreement
Exhibit "D" to Loan Agreement

                            Form of Convertible Secured Promissory Note

                                         SEE ATTACHED

                                    Exhibit "D" to Loan Agreement
SECURITY AGREEMENT

This SECURITY AGREEMENT, is made effective as of October 8, 2004 (the "EFFECTIVE DATE"), by and
between RAPIDTRON, INC., a Nevada corporation (the "DEBTOR"), and LDM Enterprises, LLC, a
California limited liability company (the "SECURED PARTY"), with reference to the following recitals:

WHEREAS, the Debtor and Secured Party are parties to that certain Loan Agreement, dated as of the Effective
Date (the "LOAN AGREEMENT"), pursuant to which Debtor has delivered that certain Secured Promissory
Note made by Debtor payable to Secured Party in the amount of up to Three Hundred Fifty Thousand Dollars
($350,000) (the "NOTE"); and

WHEREAS, it is a condition precedent to the Secured Party's making any loans (or otherwise extending credit)
to the Debtor under the Loan Agreement that the Debtor execute and deliver to the Secured Party this
Agreement; and

WHEREAS, the Debtor wishes to grant a security interest in favor of the Secured Party as herein provided.

NOW, THEREFORE, in consideration of the promises contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions. All capitalized terms used herein without definitions shall have the respective meanings provided
therefor in the Loan Agreement. The term "STATE," as used herein, means the State of California. All terms
defined in the Uniform Commercial Code of the State and not otherwise defined herein shall have the same
definitions herein as specified therein. The term "OBLIGATIONS," as used herein, means all of the indebtedness,
obligations and liabilities of the Debtor to the Secured Party, individually or collectively, whether direct or
indirect, joint or several, absolute or contingent, due or to become due, now existing or hereafter arising under or
in respect of the Loan Agreement, the Note or this Agreement, and the term "EVENT OF DEFAULT," as used
herein, means the failure of the Debtor to pay or perform any of the Obligations as and when due to be paid or
performed under the terms of the Loan Agreement or the Note.

2. Grant of Security Interest. The Debtor hereby grants to the Secured Party, to secure the payment and
performance in full of all of the Obligations, a security interest in and so pledges and assigns to the Secured Party
all the properties, assets and rights of the Debtor, tangible and intangible, wherever located, whether now owned
or hereafter acquired or arising, and all proceeds and products thereof (all of the same being hereinafter called the
"COLLATERAL"), including, without limitation, the following: all contract, all personal and fixture property of
every kind and nature including without limitation all goods (including inventory, equipment and any accessions
thereto), instruments (including promissory notes), contracts, documents, accounts (including health-care-
insurance or life insurance receivables), chattel paper (whether tangible or electronic), deposit accounts, letter-of-
credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims, securities and
all other investment property, supporting obligations, any other contract rights or rights to the payment of money,
insurance claims and proceeds, and all general intangibles (including all payment intangibles).

3. Authorization to File Financing Statements. The Debtor hereby irrevocably authorizes the Secured Party at any
time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial
financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of the Debtor or
words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the
scope of Article 9 of the Uniform Commercial Code of the State, or (ii) as being of an equal or lesser scope or
with greater detail, and (b) provide any other information required by part 5 of Article 9 of the Uniform
Commercial Code of the State, or such other jurisdiction, for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether the Debtor is an organization, the type of organization
and any organizational identification number issued to the Debtor and, (ii) in the case of a financing statement filed
as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of
real property to which the Collateral relates. The Debtor agrees to furnish any such information to the Secured
Party promptly upon the Secured Party's request. The Debtor also ratifies its authorization for the Secured Party
to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments
thereto if filed prior to the date hereof.
4. Other Actions. To further the attachment, perfection and priority of, and the ability of the Secured Party to
enforce, the Secured Party's security interest in the Collateral, and without limitation on the Debtor's other
obligations in this Agreement, the Debtor agrees, in each case at the Debtor's expense, to take the following
actions with respect to the following Collateral:

4.1 Promissory Notes and Tangible Chattel Paper. If the Debtor shall at any time hold or acquire any promissory
notes or tangible chattel paper, the Debtor shall forthwith endorse, assign and deliver the same to the Secured
Party, accompanied by such instruments of transfer or assignment duly executed in blank as the Secured Party
may from time to time specify.

4.2 Deposit Accounts. For each deposit account that the Debtor at any time opens or maintains, the Debtor shall,
at the Secured Party's request and option, pursuant to an agreement in form and substance satisfactory to the
Secured Party, either (a) cause the depositary bank to comply at any time with instructions from the Secured
Party to such depositary bank directing the disposition of funds from time to time credited to such deposit
account, without further consent of the Debtor, or (b) arrange for the Secured Party to become the customer of
the depositary bank with respect to the deposit account, with the Debtor being permitted, only with the consent
of the Secured Party, to exercise rights to withdraw funds from such deposit account. The provisions of this
paragraph shall not apply to (i) any deposit account for which the Debtor, the depositary bank and the Secured
Party have entered into a cash collateral agreement specially negotiated among the Debtor, the depositary bank
and the Secured Party for the specific purpose set forth therein, (ii) a deposit account for which the Secured
Party is the depositary bank and is in automatic control, and (iii) deposit accounts specially and exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Debtor's
salaried employees.

4.3 Investment Property. If the Debtor shall at any time hold or acquire any certificated securities, the Debtor
shall forthwith endorse, assign and deliver the same to the Secured Party, accompanied by such instruments of
transfer or assignment duly executed in blank as the Secured Party may from time to time specify. If any securities
now or hereafter acquired by the Debtor are uncertificated and are issued to the Debtor or its nominee directly
by the issuer thereof, the Debtor shall immediately notify the Secured Party thereof and, at the Secured Party's
request and option, pursuant to an agreement in form and substance satisfactory to the Secured Party, either (a)
cause the issuer to agree to comply with instructions from the Secured Party as to such securities, without further
consent of the Debtor or such nominee, or (b) arrange for the Secured Party to become the registered owner of
the securities. If any securities, whether certificated or uncertificated, or other investment property now or
hereafter acquired by the Debtor are held by the Debtor or its nominee through a securities intermediary or
commodity intermediary, the Debtor shall immediately notify the Secured Party thereof and, at the Secured
Party's request and option, pursuant to an agreement in form and substance satisfactory to the Secured Party,
either (i) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply
with entitlement orders or other instructions from the Secured Party to such securities intermediary as to such
securities or other investment property, or (as the case may be) to apply any value distributed on account of any
commodity contract as directed by the Secured Party to such commodity intermediary, in each case without
further consent of the Debtor or such nominee, or (ii) in the case of financial assets or other investment property
held through a securities intermediary, arrange for the Secured Party to become the entitlement holder with
respect to such investment property, with the Debtor being permitted, only with the consent of the Secured Party,
to exercise rights to withdraw or otherwise deal with such investment property. The provisions of this paragraph
shall not apply to any financial assets credited to a securities account for which the Secured Party is the securities
intermediary.

4.4 Collateral in the Possession of a Bailee. If any Collateral is at any time in the possession of a bailee, the
Debtor shall promptly notify the Secured Party thereof and, at the Secured Party's request and option, shall
promptly obtain an acknowledgement from the bailee, in form and substance satisfactory to the Secured Party,
that the bailee holds such Collateral for the benefit of the Secured Party, and that such bailee agrees to comply,
without further consent of the Debtor, with instructions from the Secured Party as to such Collateral.

4.5 Electronic Chattel Paper and Transferable Records. If the Debtor at any time holds or acquires an interest in
any electronic chattel paper or any "transferable record," as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction, the Debtor shall promptly notify the Secured Party
thereof and, at the request and option of the Secured Party, shall take such action as the Secured Party may
reasonably request
to vest in the Secured Party control, under Section 9-105 of the Uniform Commercial Code, of such electronic
chattel paper or control under Section 201 of the federal Electronic Signatures in Global and National Commerce
Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record.

4.6 Letter-of-Credit Rights. If the Debtor is at any time a beneficiary under a letter of credit, the Debtor shall
promptly notify the Secured Party thereof and, at the request and option of the Secured Party, the Debtor shall,
pursuant to an agreement in form and substance satisfactory to the Secured Party, either (i) arrange for the issuer
and any confirmer or other nominated person of such letter of credit to consent to an assignment to the Secured
Party of the proceeds of the letter of credit, or (ii) arrange for the Secured Party to become the transferee
beneficiary of the letter of credit, with the Secured Party agreeing, in each case, that the proceeds of the letter to
credit are to be applied as provided in the Note.

4.7 Commercial Tort Claims. If the Debtor shall at any time hold or acquire a commercial tort claim, the Debtor
shall immediately notify the Secured Party in a writing signed by the Debtor of the particulars thereof and grant to
the Secured Party in such writing a security interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory to the Secured Party.

4.8 Other Actions as to Any and All Collateral. The Debtor further agrees, at the request and option of the
Secured Party, to take any and all other actions the Secured Party may determine to be necessary or useful for
the attachment, perfection and first priority of, and the ability of the Secured Party to enforce, the Secured Party's
security interest in any and all of the Collateral, including, without limitation, (a) executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto under the Uniform Commercial Code, to
the extent, if any, that the Debtor's signature thereon is required therefor, (b) causing the Secured Party's name to
be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment,
perfection or priority of, or ability of the Secured Party to enforce, the Secured Party's security interest in such
Collateral, (c) complying with any provision of any statute, regulation or treaty of the United States as to any
Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of the
Secured Party to enforce, the Secured Party's security interest in such Collateral, (d) obtaining governmental and
other third party waivers, consents and approvals in form and substance satisfactory to Secured Party, including,
without limitation, any consent of any licensor, lessor or other person obligated on Collateral, (e) obtaining
waivers from mortgagees and landlords in form and substance satisfactory to the Secured Party and (f) taking all
actions under any earlier versions of the Uniform Commercial Code or under any other law, as reasonably
determined by the Secured Party to be applicable in any relevant Uniform Commercial Code or other
jurisdiction, including any foreign jurisdiction.

5. Insurance Policies. In furtherance of the continuing security interests granted herein, the Debtor hereby grants
to Secured Party the right to:

(a) collect from Transamerica Life Companies ("TRANSAMERICA") the net proceeds of any of the Insurance
Policies;

(b) surrender any of the Insurance Policies and receive the surrender value thereof at any time provided by the
terms of such Insurance Policy and at such other times as Transamerica may allow;

(c) obtain one or more loans or advances on any of the Insurance Policies at any time, either from Transamerica
or from other persons, and to pledge or assign any of the Insurance Policies as security for such loans or
advances;

(d) collect and receive all distributions or shares of surplus, dividend deposits or additions to any of the Insurance
Policies now or hereinafter made or apportioned thereto, and exercise any and all options contained in any of the
Insurance Policies with respect hereto; provided that, unless and until the Secured Party shall notify Transamerica
in writing to the contrary, the distributions or shares of surplus, divided deposits and additions shall continue on
the plan in force as of the date hereof;
(e) exercise all nonforfeiture rights permitted by the terms of any of the Insurance Policies or allowed by
Transamerica and receive all benefits and advantages derived therefrom;

(f) amend any of the Insurance Policies; and

(g) exercise any and all voting rights or privileges to the extent created or endowed by and of the Insurance
Policies.

6. Relation to Other Security Documents. The provisions of this Agreement supplement the provisions of any real
estate mortgage or deed of trust now or hereinafter granted by the Debtor or any guarantor to the Secured Party
which secures the payment or performance of any of the Obligations. Nothing contained in any such real estate
mortgage or deed of trust shall derogate from any of the rights or remedies of the Secured Party hereunder.

7. Covenants Concerning Debtor's Legal Status. The Debtor covenants with the Secured Party as follows: (a)
without providing at least 30 days prior written notice to the Secured Party, the Debtor will not change its name,
its place of business or, if more than one, chief executive office, or its mailing address or organizational
identification number if it has one, (b) if the Debtor does not have an organizational identification number and later
obtains one, the Debtor shall forthwith notify the Secured Party of such organizational identification number, and
(c) the Debtor will not change its type of organization, jurisdiction of organization or other legal structure.

8. Representations and Warranties Concerning Collateral, etc. The Debtor further represents and warrants to the
Secured Party as follows: (a) the Debtor is the owner of or has other rights in or power to transfer the Collateral,
free from any right or claim or any person or any adverse lien, security interest or other encumbrance, except for
the security interest created by this Agreement or as otherwise disclosed to Secured Party, (b) none of the
Collateral constitutes, or is the proceeds of, "farm products" as defined in Section 9-102(a)(34) of the Uniform
Commercial Code of the State, (c) none of the account debtors or other persons obligated on any of the
Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or
local statute or rule in respect of such Collateral, and (d) the Debtor has at all times operated its business in
compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all
applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment,
storage or disposal of hazardous materials or substances.

9. Covenants Concerning Collateral, etc. The Debtor further covenants with the Secured Party as follows: (a) the
Collateral, to the extent not delivered to the Secured Party pursuant to Section 4, will be kept at the Debtor's
principal place of business and the Debtor will not remove the Collateral from such locations, without providing at
least thirty days prior written notice to the Secured Party, (b) except for the security interest herein granted and
liens permitted by the Note, the Debtor shall be the owner of or have other rights in the Collateral free from any
right or claim of any other person, lien, security interest or other encumbrance, and the Debtor shall defend the
same against all claims and demands of all persons at any time claiming the same or any interests therein adverse
to the Secured Party, (c) the Debtor shall not pledge, mortgage or create, or suffer to exist any right of any
person in or claim by any person to the Collateral, or any security interest, lien or encumbrance in the Collateral in
favor of any person, other than the Secured Party, (d) the Debtor will keep the Collateral in good order and
repair and will not use the same in violation of law or any policy of insurance thereon, (e) the Debtor will permit
the Secured Party, or its designee, to inspect the Collateral at any reasonable time, wherever located, (f) the
Debtor will pay promptly when due all taxes, assessments, governmental charges and levies upon the Collateral
or incurred in connection with the use or operation of such Collateral or incurred in connection with this
Agreement, (g) the Debtor will continue to operate, its business in compliance with all applicable provisions of the
federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local
statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or
substances, and (h) the Debtor will not sell or otherwise dispose, or offer to sell or otherwise dispose, of the
Collateral or any interest therein, without the prior written consent of the Secured Party.

10. Insurance.

10.1 Maintenance of Insurance. The Debtor will maintain with financially sound and reputable insurers insurance
with respect to its properties and business against such casualties and contingencies as shall be in accordance
with general practices of businesses engaged in similar activities in similar geographic areas. Such insurance shall
be in such minimum amounts that the Debtor will not be deemed a co-insurer under applicable
insurance laws, regulations and policies and otherwise shall be in such amounts, contain such terms, be in such
forms and be for such periods as may be reasonably satisfactory to the Secured Party. In addition, all such
insurance shall be payable to the Secured Party as loss payee under a "standard" loss payee clause. Without
limiting the foregoing, the Debtor will (i) keep all of its physical property insured with casualty or physical hazard
insurance on an "all risks" basis, with broad form flood and earthquake coverages and electronic data processing
coverage, with a full replacement cost endorsement and an "agreed amount" clause in an amount equal to 100%
of the full replacement cost of such property, (ii) maintain all such workers' compensation or similar insurance as
may be required by law, and (iii) maintain, in amounts and with deductibles equal to those generally maintained by
businesses engaged in similar activities in similar geographic areas, general public liability insurance against claims
of bodily injury, death or property damage occurring, on, in or about the properties of the Debtor; business
interruption insurance; and product liability insurance.

10.2 Insurance Proceeds. The proceeds of any casualty insurance in respect of any casualty loss of any of the
Collateral shall, subject to the rights, if any, of other parties with an interest having priority in the property covered
thereby, (i) so long as no Default or Event of Default has occurred and is continuing and to the extent that the
amount of such proceeds is less than $10,000, be disbursed to the Debtor for direct application by the Debtor
solely to the repair or replacement of the Debtor's property so damaged or destroyed, and (ii) in all other
circumstances, be held by the Secured Party as cash collateral for the Obligations. The Secured Party may, at its
sole option, disburse from time to time all or any part of such proceeds so held as cash collateral, upon such
terms and conditions as the Secured Party may reasonably prescribe, for direct application by the Debtor solely
to the repair or replacement of the Debtor's property so damaged or destroyed, or the Secured Party may apply
all or any part of such proceeds to the Obligations.

10.3 Continuation of Insurance. All policies of insurance shall provide for at least 10 days prior written
cancellation notice to the Secured Party. In the event of failure by the Debtor to provide and maintain insurance
as herein provided, the Secured Party may, at its option, provide such insurance and charge the amount thereof
to the Debtor. The Debtor shall furnish the Secured Party with certificates of insurance and policies evidencing
compliance with the foregoing insurance provision.

11. Collateral Protection Expenses; Preservation of Collateral.

11.1 Expenses Incurred by Secured Party. In the Secured Party's discretion, if the Debtor fails to do so, the
Secured Party may discharge taxes and other encumbrances at any time levied or placed on any of the Collateral,
maintain any of the Collateral, make repairs thereto and pay any necessary filing fees or insurance premiums. The
Debtor agrees to reimburse the Secured Party on demand for all expenditures so made. The Secured Party shall
have no obligation to the Debtor to make any such expenditures, nor shall the making thereof be construed as the
waiver or cure of any Default or Event of Default.

11.2 Secured Party's Obligations and Duties. Anything herein to the contrary notwithstanding, the Debtor shall
remain obligated and liable under each contract or agreement comprised in the Collateral to be observed or
performed by the Debtor thereunder. The Secured Party shall not have any obligation or liability under any such
contract or agreement by reason of or arising out of this Agreement or the receipt by the Secured Party of any
payment relating to any of the Collateral, nor shall the Secured Party be obligated in any manner to perform any
of the obligations of the Debtor under or pursuant to any such contract or agreement, to make inquiry as to the
nature or sufficiency of any payment received by the Secured Party in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any amounts which may have been
assigned to the Secured Party or to which the Secured Party may be entitled at any time or times. The Secured
Party's sole duty with respect to the custody, safe keeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Uniform Commercial Code of the State or otherwise, shall be to deal
with such Collateral in the same manner as the Secured Party deals with similar property for its own account.

11.3 Securities and Deposits. The Secured Party may at any time, at its option, transfer to itself or any nominee
any securities constituting Collateral, receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Whether or not any Obligations are due, the Secured Party may demand, sue for,
collect, or make any settlement or compromise which it deems desirable with respect to the Collateral.
Regardless
of the adequacy of Collateral or any other security for the Obligations, any deposits or other sums at any time
credited by or due from the Secured Party to the Debtor may at any time be applied to or set off against any of
the Obligations.

12. Notification to Account Debtors and Other Persons Obligated on Collateral.
The Debtor shall, at the request and option of the Secured Party, notify account debtors and other persons
obligated on any of the Collateral of the security interest of the Secured Party in any account, chattel paper,
general intangible, instrument or other Collateral and that payment thereof is to be made directly to the Secured
Party or to any financial institution designated by the Secured Party as the Secured Party's agent therefor, and the
Secured Party may itself, without notice to or demand upon the Debtor, so notify account debtors and other
persons obligated on Collateral. After the making of such a request or the giving of any such notification, the
Debtor shall hold any proceeds of collection of accounts, chattel paper, general intangibles, instruments and other
Collateral received by the Debtor as trustee for the Secured Party without commingling the same with other funds
of the Debtor and shall turn the same over to the Secured Party in the identical form received, together with any
necessary endorsements or assignments. The Secured Party shall apply the proceeds of collection of accounts,
chattel paper, general intangibles, instruments and other Collateral received by the Secured Party to the
Obligations, such proceeds to be immediately credited after final payment in cash or other immediately available
funds of the items giving rise to them.

13. Power of Attorney.

13.1 Appointment and Powers of Secured Party. The Debtor hereby irrevocably constitutes and appoints the
Secured Party and any officer or agent thereof, with full power of substitution, as its true and lawful attorneys-in-
fact with full irrevocable power and authority in the place and stead of the Debtor or in the Secured Party's own
name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments that may be necessary or useful to accomplish the purposes of this
Agreement and, without limiting the generality of the foregoing, hereby gives said attorneys the power and right,
on behalf of the Debtor, without notice to or assent by the Debtor, to do the following:

(a) upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge,
make any agreement with respect to or otherwise dispose of or deal with any of the Collateral in such manner as
is consistent with the Uniform Commercial Code of the State and as fully and completely as though the Secured
Party were the absolute owner thereof for all purposes, and to do, at the Debtor's expense, at any time, or from
time to time, all acts and things which the Secured Party deems necessary or useful to protect, preserve or realize
upon the Collateral and the Secured Party's security interest therein, in order to effect the intent of this
Agreement, all at least as fully and effectively as the Debtor might do, including, without limitation, (i) the filing and
prosecuting of registration and transfer applications with the appropriate federal, state, local or other agencies or
authorities with respect to trademarks, copyrights and patentable inventions and processes, (ii) upon written
notice to the Debtor, the exercise of voting rights with respect to voting securities, which rights may be exercised,
if the Secured Party so elects, with a view to causing the liquidation of assets of the issuer of any such securities,
and (iii) the execution, delivery and recording, in connection with any sale or other disposition of any Collateral,
of the endorsements, assignments or other instruments of conveyance or transfer with respect to such Collateral;
and

(b) to the extent that the Debtor's authorization given in Section 3 is not sufficient, to file such financing statements
with respect hereto, with or without the Debtor's signature, or a photocopy of this Agreement in substitution for a
financing statement, as the Secured Party may deem appropriate and to execute in the Debtor's name such
financing statements and amendments thereto and continuation statements which may require the Debtor's
signature.

13.2 Ratification by Debtor. To the extent permitted by law, the Debtor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and
is irrevocable.

13.3 No Duty on Secured Party. The powers conferred on the Secured Party hereunder are solely to protect its
interests in the Collateral and shall not impose any duty upon it to exercise any such powers. The Secured Party
shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and
neither it nor any of its officers, directors, employees or agents shall be responsible to the Debtor for any act or
failure to act, except for the Secured Party's own gross negligence or willful misconduct.
14. Rights and Remedies. If an Event of Default shall have occurred and be continuing, the Secured Party,
without any other notice to or demand upon the Debtor have in any jurisdiction in which enforcement hereof is
sought, in addition to all other rights and remedies, the rights and remedies of a secured party under the Uniform
Commercial Code of the State and any additional rights and remedies which may be provided to a secured party
in any jurisdiction in which Collateral is located, including, without limitation, the right to take possession of the
Collateral, and for that purpose the Secured Party may, so far as the Debtor can give authority therefor, enter
upon any premises on which the Collateral may be situated and remove the same therefrom. The Secured Party
may in its discretion require the Debtor to assemble all or any part of the Collateral at such location or locations
within the jurisdiction(s) of the Debtor's principal office(s) or at such other locations as the Secured Party may
reasonably designate. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Secured Party shall give to the Debtor at least five Business Days
prior written notice of the time and place of any public sale of Collateral or of the time after which any private sale
or any other intended disposition is to be made. The Debtor hereby acknowledges that five Business Days prior
written notice of such sale or sales shall be reasonable notice. In addition, the Debtor waives any and all rights
that it may have to a judicial hearing in advance of the enforcement of any of the Secured Party's rights and
remedies hereunder, including, without limitation, its right following an Event of Default to take immediate
possession of the Collateral and to exercise its rights and remedies with respect thereto.

15. Standards for Exercising Rights and Remedies. To the extent that applicable law imposes duties on the
Secured Party to exercise remedies in a commercially reasonable manner, the Debtor acknowledges and agrees
that it is not commercially unreasonable for the Secured Party (a) to fail to incur expenses reasonably deemed
significant by the Secured Party to prepare Collateral for disposition or otherwise to fail to complete raw material
or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of,
(c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to
fail to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection
remedies against account debtors and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications
or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other
persons, whether or not in the same business as the Debtor, for expressions of interest in acquiring all or any
portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (h) to dispose of Collateral by utilizing Internet sites that
provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties,
(k) to purchase insurance or credit enhancements to insure the Secured Party against risks of loss, collection or
disposition of Collateral or to provide to the Secured Party a guaranteed return from the collection or disposition
of Collateral, or (l) to the extent deemed appropriate by the Secured Party, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist the Secured Party in the collection or
disposition of any of the Collateral. The Debtor acknowledges that the purpose of this Section 15 is to provide
non-exhaustive indications of what actions or omissions by the Secured Party would fulfill the Secured Party's
duties under the Uniform Commercial Code or other law of the State or any other relevant jurisdiction in the
Secured Party's exercise of remedies against the Collateral and that other actions or omissions by the Secured
Party shall not be deemed to fail to fulfill such duties solely on account of not being indicated in this Section 15.
Without limitation upon the foregoing, nothing contained in this Section 15 shall be construed to grant any rights to
the Debtor or to impose any duties on the Secured Party that would not have been granted or imposed by this
Agreement or by applicable law in the absence of this Section 15.

16. Notices. All notices required or permitted by this Agreement shall be in writing or by telex or facsimile
transmission and shall be deemed to have been duly given (i) on the date of service if delivered in person or by
telex or facsimile transmission (with the telex or facsimile confirmation of transmission receipt acting as
confirmation of service when sent and provided telexed or telecopied notices are also mailed by first class,
certified or registered mail, postage prepaid); or (ii) seventy-two (72) hours after mailing by first class, registered
or certified mail, postage prepaid, and properly addressed to the addresses specified below or at such other
address as the party affected may designate in a written notice to such other party in compliance with this
Section 16.
                           Debtor:                   Rapidtron, Inc.
                                                     3151 Airway Avenue, Suite Q
                                                     Costa Mesa, CA 92626-4627
                                                     Facsimile: (949) 474-4550

                           Secured Party:            LDM Enterprises, LLC
                                                     Attention: Raymond Lee
                                                     2515 Sierra Vista
                                                     Newport Beach, California 92660
                                                     Facsimile: (949) 722-7526




17. No Waiver by Secured Party, etc. The Secured Party shall not be deemed to have waived any of its rights or
remedies in respect of the Obligations or the Collateral unless such waiver shall be in writing and signed by the
Secured Party. No delay or omission on the part of the Secured Party in exercising any right or remedy shall
operate as a waiver of such right or remedy or any other right or remedy. A waiver on any one occasion shall not
be construed as a bar to or waiver of any right or remedy on any future occasion. All rights and remedies of the
Secured Party with respect to the Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the Secured Party deems expedient.

18. Suretyship Waivers by Debtor. The Debtor waives demand, notice, protest, notice of acceptance of this
Agreement, notice of loans made, credit extended, Collateral received or delivered or other action taken in
reliance hereon and all other demands and notices of any description. With respect to both the Obligations and
the Collateral, the Debtor assents to any extension or postponement of the time of payment or any other
indulgence, to any substitution, exchange or release of or failure to perfect any security interest in any Collateral,
to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial
payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time
or times as the Secured Party may deem advisable. The Secured Party shall have no duty as to the collection or
protection of the Collateral or any income therefrom, the preservation of rights against prior parties, or the
preservation of any rights pertaining thereto beyond the safe custody thereof as set forth in Section 11.2. The
Debtor further waives any and all other suretyship defenses.

19. Marshalling. The Secured Party shall not be required to marshal any present or future collateral security
(including but not limited to the Collateral) for, or other assurances of payment of, the Obligations or any of them
or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights
and remedies hereunder and in respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it
lawfully may, the Debtor hereby agrees that it will not invoke any law relating to the marshalling of collateral
which might cause delay in or impede the enforcement of the Secured Party's rights and remedies under this
Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured,
and, to the extent that it lawfully may, the Debtor hereby irrevocably waives the benefits of all such laws.

20. Proceeds of Dispositions; Expenses. The Debtor shall pay to the Secured Party on demand any and all
expenses, including reasonable attorneys' fees and disbursements, incurred or paid by the Secured Party in
protecting, preserving or enforcing the Secured Party's rights and remedies under or in respect of any of the
Obligations or any of the Collateral. After deducting all of said expenses, the residue of any proceeds of
collection or sale or other disposition of the Collateral shall, to the extent actually received in cash, be applied to
the payment of the Obligations in such order or preference as the Secured Party may determine, proper
allowance and provision being made for any Obligations not then due. Upon the final payment and satisfaction in
full of all of the Obligations and after making any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3)
of the Uniform Commercial Code of the State, any excess shall be returned to the Debtor. In the absence of final
payment and satisfaction in full of all of the Obligations, the Debtor shall remain liable for any deficiency.

21. Overdue Amounts. Until paid, all amounts due and payable by the Debtor hereunder shall be a debt secured
by the Collateral and shall bear, whether before or after judgment, interest at the rate of interest.
22. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS INTENDED TO TAKE EFFECT AS A
SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA. The Debtor agrees that any action or claim arising
out of, or any dispute in connection with, this Agreement, any rights, remedies, obligations, or duties hereunder,
or the performance or enforcement hereof or thereof, may be brought in the courts of the State or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such court and to service of process in any
such suit being made upon the Debtor by mail at the address specified in the Note. The Debtor hereby waives
any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is
brought in an inconvenient court.

23. Waiver of Jury Trial. THE DEBTOR WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, ANY RIGHTS, REMEDIES, OBLIGATIONS, OR DUTIES HEREUNDER, OR THE
PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF. Except as prohibited by law, the Debtor
waives any right which it may have to claim or recover in any litigation referred to in the preceding sentence any
special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual
damages. The Debtor (i) certifies that neither the Secured Party nor any representative, agent or attorney of the
Secured Party has represented, expressly or otherwise, that the Secured Party would not, in the event of
litigation, seek to enforce the foregoing waivers or other waivers contained in this Agreement, and (ii)
acknowledges that, in loan the funds pursuant to the Note, the Secured Party is relying upon, among other things,
the waivers and certifications contained in this Section 23.

24. Miscellaneous. The headings of each section of this Agreement are for convenience only and shall not define
or limit the provisions thereof. This Agreement and all rights and obligations hereunder shall be binding upon the
Debtor and its respective successors and assigns, and shall inure to the benefit of the Secured Party and its
successors and assigns. If any term of this Agreement shall be held to be invalid, illegal or unenforceable, the
validity of all other terms hereof shall in no way be affected thereby, and this Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been included herein. The Debtor
acknowledges receipt of a copy of this Agreement.

IN WITNESS WHEREOF, intending to be legally bound, the Debtor has caused this Agreement to be duly
executed as of the date first above written.

RAPIDTRON, INC.,
a Nevada corporation

By:_____________________________________________________ John Creel, President & Chief
Executive Officer
AMENDMENT NO. 1 TO LOAN AGREEMENT

This Amendment No. 1 to Loan Agreement (this "AMENDMENT"), is made effective as of November 22,
2004, by and between Rapidtron, Inc., a Nevada corporation (the "COMPANY"), and LDM Enterprises, LLC,
a California limited liability company ("Lender"), in connection with that certain Loan Agreement, dated effective
as of October 8, 2004 (the "MASTER AGREEMENT"):

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

1. Amount of Loan. The amount of the Loan is hereby increased to $375,000.

2. Maturity Date. The Maturity Date is extended to December 15, 2004.

3. Schedule 1. Schedule 1 is hereby amended and restated as follows:

                                                Use of Proceeds

                                         ----------------------------
                                         SCI              $250,000.00
                                         ------------- -------------
                                         GT               $ 80,000.00
                                         ------------- -------------
                                         LR               $ 20,000.00
                                         ------------- -------------
                                         Squar Milner     $ 25,000.00
                                         ----------------------------




4. Acknowledgment and Consent of Guarantors. By signing below, the undersigned Guarantors of the Master
Agreement hereby acknowledge and consent to this Amendment and agree that the "Obligations" as defined in
the Guaranty, dated October 8, 2004, shall include for all purposes this Amendment. Guarantors acknowledge
that Lender is relying upon this acknowledgment and consent in order to advance additional principal to
Borrower and to enter into this Amendment, and hereby consents to the recording of the original Deed of Trust
previously executed and delivered as security for the Guaranty.

5. Non-Impairment. Except as expressly modified herein, the Master Agreement shall continue in full force and
effect, and the parties hereby ratify and reaffirm the Master Agreement as modified herein.

6. Defined Terms. All capitalized terms used in this Amendment and not otherwise defined herein shall have the
meaning given to such terms in the Master Agreement.

7. Inconsistencies. In the event of any inconsistency, ambiguity or conflict between the terms and provisions of
this Amendment and the terms and provisions of the Master Agreement, the terms and provisions of this
Amendment shall control.

8. Counterparts. This Amendment may be executed in any number of counterparts, each of which when executed
will be deemed an original and all of which, taken together, will be deemed to be one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.

               RAPIDTRON, INC.,                       LDM ENTERPRISES, LLC,
               a Nevada corporation                   a California limited liability company


               By:_________________________           By:_______________________
                  John Creel, President                  Raymond A. Lee, Manager
ALLONGE TO PROMISSORY NOTE

For valuable consideration, the receipt of which is hereby acknowledged, this Allonge to Promissory Note is
made and executed effective as of November 22, 2004, with reference to that certain Convertible Secured
Promissory Note, dated October 8, 2004 (the "Note"), in the original principal amount of Three Hundred Fifty
Thousand Dollars (US$350,000.00), made by RAPIDTRON, INC., a Delaware corporation ("Maker"),
payable to the order of LDM ENTERPRISES, LLC, a California limited liability company ("Holder"). This
Allonge to Promissory Note shall be affixed to the original of the Note and is hereby incorporated into and made
a part of the Note, for all purposes.

The principal amount of the Note is increased from $350,000 to $375,000.

The term of the Note is hereby extended from November 8, 2004, until December 15, 2004.

IN WITNESS WHEREOF, the maker and the Holder have executed this Allonge effective as of the date set
forth above.

"MAKER"

RAPIDTRON, INC,

a Delaware corporation

By:_________________________________________________ John Creel, Chief Executive Officer and
President

"HOLDER"

LDM ENTERPRISES, LLC,
a California limited liability company

By:_______________________
Raymond A. Lee, Manager

ACKNOWLEDGEMENT AND CONSENT OF GUARANTOR

The undersigned Guarantors of the foregoing Note hereby acknowledge and consent to this Allonge to
Promissory Note and agree that the "Obligations" as defined in the Guaranty, dated October 8, 2004, shall
include for all purposes the increased principal amount added to the Note pursuant to this Allonge to Promissory
Note. Guarantors acknowledge that Holder is relying upon this acknowledgment and consent in order to advance
additional principal to Maker and to enter into this Allonge, and hereby consents to the recording of the original
Deed of Trust previously executed and delivered as security for the Guaranty.


JOHN A. CREEL, an individual


JUDITH CREEL, an individual
Exhibit 31.1

                                            CERTIFICATION OF
                                         CHIEF EXECUTIVE OFFICER
                                           PURSUANT TO 13a-14(a)

I, John Creel, certify that:

1. I have reviewed this annual report on Form 10-KSB of Rapidtron, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this annual report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant is
made known to us by others within those entities, particularly during the period in which this annual report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days
prior to the filing date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation on such evaluation Date;

d) disclosed in this report any changes in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter that has materially affected, or is reasonable likely to affect, the
registrant's internal control over financial reporting;

5. I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting which are reasonable likely to adversely affect the registrant's ability to record, process, summarize and
report information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant's internal controls over financial reporting.

            Date: April 15, 2005                                           By: /s/ John Creel
                                                                               ----------------
                                                                               John Creel
                                                                               Chief Financial Officer
Exhibit 31.2

                                             CERTIFICATION OF
                                          CHIEF FINANCIAL OFFICER
                                           PURSUANT TO 13a-14(a)

I, Peter Dermutz, certify that:

1. I have reviewed this annual report on Form 10-KSB of Rapidtron, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this annual report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. designed such disclosure controls and procedures to ensure that material information relating to the registrant is
made known to us by others within those entities, particularly during the period in which this annual report is being
prepared;

b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days
prior to the filing date of this annual report (the "Evaluation Date"); and

c. presented in this annual report our conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation on such evaluation Date;

d. Disclosed in this report any changes in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter that has materially affected, or is reasonable likely to affect, the
registrant's internal control over financial reporting;

5. I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting which are reasonable likely to adversely affect the registrant's ability to record, process, summarize and
report information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant's internal controls over financial reporting.

           Date: April 15, 2005                                            By: /s/ Peter Dermutz
                                                                               -------------------
                                                                               Peter Dermutz
                                                                               Chief Financial Officer
Exhibit 32.1

              CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
    AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, John Creel, certify, PURSUANT TO 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that the annual report of Rapidtron, Inc. on form 10-KSB for the year ended
December 31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 and that information contained in such annual report on Form 10-KSB fairly presents in all material
respects the financial condition and results of operations of Rapidtron, Inc.

         April 15, 2005                                          By:   /s/ John Creel
                                                                       ----------------------------
                                                                       John Creel
                                                                       Chief Executive Officer




A signed original of this written statement required by Section 906, or other document authenticating,
acknowledging, or otherwise adopting the signature that appears typed from within the electronic version of this
written statement required by Section 906, has been provided to Rapidtron, Inc. and will be retained by
Rapidtron, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2

              CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
    AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter Dermutz, certify, PURSUANT TO 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that the annual report of Rapidtron, Inc. on form 10-KSB for the year ended
December 31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 and that information contained in such annual report on Form 10-KSB fairly presents in all material
respects the financial condition and results of operations of Rapidtron, Inc.

         Date: April 15, 2005                               By:   /s/ Peter Dermutz
                                                                  --------------------------------
                                                                  Peter Dermutz
                                                                  Chief Financial Officer




A signed original of this written statement required by Section 906, or other document authenticating,
acknowledging, or otherwise adopting the signature that appears typed from within the electronic version of this
written statement required by Section 906, has been provided to Rapidtron, Inc. and will be retained by
Rapidtron, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.