SECURITY AGREEMENT
UNICO, INCORPORATED, an Arizona corporation ("Debtor"), whose address is
P. O. Xxx 000, Xxxxxxx, XX 00000, hereby grants to Kaibab Industries, Inc., an
Arizona corporation ("Secured Party"), whose address is 0000 X. Xxxxxx Xxxx,
Xxxxxxx, XX 00000, a security interest in the following property of Debtor
(hereinafter called the "Collateral"):
All of the following property, now owned or hereafter acquired:
All of Debtor's equipment and rolling stock set forth on Exhibit "A"
attached hereto; all proceeds of insurance policies on the Collateral,
additions, accessions, replacements and substitutions for all such
Collateral; and books and records of Debtor with respect to such
Collateral,
to secure the payment and performance of the obligations of Debtor to Secured
Party (hereinafter called "Obligations") set forth in that certain Equipment
Purchase Agreement dated April 1, 2003 by and between Debtor and Secured Party
(the "Purchase Agreement"), including but not limited to the payment of a
Promissory Note dated April 1, 2003 in the initial principal amount of
$165,000.00, a copy of which is attached as Exhibit "B" hereto, and all
renewals, extensions and replacements of the Promissory Note.
Debtor represents and warrants that the Collateral will at all times be
located at one or more of the locations of Debtor listed on Exhibit "C"
attached hereto. Debtor shall not move the Collateral without ten (10) days
prior written notice to Secured Party.
Debtor shall pay and discharge all taxes, assessments and charges or
levies against the Collateral prior to delinquency thereof, shall keep the
Collateral free of all unpaid taxes, assessments and charges, and shall
maintain the Collateral in good order and repair.
Debtor shall have and maintain insurance at all times with respect to all
Collateral against such risks, with such carrier and in such amounts as
Secured Party may require. Such insurance shall be payable to Secured Party
and to Debtor as their interests may appear and shall not be subject to
cancellation or reduction in coverage without thirty (30) days prior written
notice to Secured Party. Debtor shall supply evidence of such insurance to
Secured Party upon request.
Debtor shall not sell, encumber or otherwise voluntarily or involuntarily
transfer or dispose of the Collateral or any portion thereof or create, permit
or suffer any encumbrance thereon without the prior written consent of the
Secured Party.
Secured Party shall have, during regular business hours, with or without
notice, the right to enter into and upon any premises where any of the
Collateral or records with respect thereto are located for the purpose of
inspecting the same, observing the use of any part of the Collateral,
protecting Secured Party's security interest in the Collateral, or otherwise
determining whether Debtor is in compliance with the terms of this Agreement.
Debtor shall execute any financing statements or other documents, give
any notices and take any other actions reasonably requested by Secured Party
to perfect, continue the perfection of or protect the priority of the security
interest granted under this Agreement. Debtor agrees that, at Secured Party's
option, this Agreement, or a photocopy hereof, may be filed by Secured Party
as a financing statement, and that Debtor's execution hereof shall constitute
the execution by Debtor of a financing statement.
Debtor shall be in default under this Agreement upon the happening of any
of the following events:
1. Debtor fails to pay or perform when due any of its Obligations
under this Agreement and fails to cure such nonpayment or non
performance within 30 days of the date of written notice or such
default from Secured Party.
2. All or any portion of the Collateral is seized or levied upon by
writ of attachment, garnishment, execution or otherwise, and such
seizure or levy is not released within five (5) days thereof;
3. Debtor executes a general assignment for the benefit of its
creditors, ceases to conduct its business in the ordinary course
as it is now conducted, convenes any meeting of its creditors,
becomes insolvent, admits in writing its insolvency or inability
to pay its debts, or is unable to pay or is generally not paying
its debts as they become due;
4. A receiver, trustee, custodian or agent is appointed to take
possession of all or any portion of the Collateral or all or any
substantial portion of Debtor's assets;
5. Any case or proceeding is voluntarily commenced by Debtor under
any provision of the Federal Bankruptcy Code or any other federal
or state law relating to debtor rehabilitation, insolvency,
bankruptcy, liquidation or reorganization, or any such case or
proceeding is involuntarily commenced against Debtor; or
6. An Event of Default occurs under the Purchase Agreement.
Upon such default, Secured Party may at its option declare all
Obligations to be immediately due and payable. Secured Party shall have the
remedies of a secured party under the applicable Uniform Commercial Code and
may require Debtor to assemble the Collateral and turn it over to Secured
Party at a place designated by Secured Party. Debtor shall reimburse Secured
Party for all costs and reasonable attorney's fees incurred by Secured Party
in pursuing any remedies, which costs and fees are also Obligations secured
hereunder.
No delay or omission by the Secured Party to exercise any right or remedy
relating to Debtor accruing upon any Event of Default shall (i) impair any
such right, or any other right or remedy, (ii) be construed to be a waiver of
any such default or any acquiescence therein, or (iii) affect any subsequent
default of the same or of a different nature. Secured Party has no obligation
to attempt to satisfy the Obligations by collecting them in any particular
order from Debtor or other persons liable for them and Secured Party may
release, modify or waive any collateral provided by any person (including
Debtor) to secure any of the Obligations, all without affecting Secured
Party's rights against Debtor. Compliance with any applicable state or
federal law requirements shall not adversely affect the commercial
reasonableness of any sale of the Collateral.
This Security Agreement binds and inures to the benefit of the respective
heirs, successors, administrators, executors and assigns of the parties. Any
holder of the Promissory Note shall be deemed to be a Secured Party for the
purposes hereof. Neither Debtor nor any of its successors shall have the
right to assign their obligations hereunder without the prior written consent
of Secured Party.
Dated this 1st day of April, 2003
UNICO, INCORPORATED
/s/ Xxx X. Xxxxx
By: _________________________
CEO
Its: _________________________
