EXHIBIT 10.1
EXECUTION COPY
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of April 26, 2004, among UMT HOLDINGS,
L.P., a Delaware limited partnership (the "Company" and, together with the
Guarantors, the "Grantors" and each individually a "Grantor"), and WILMINGTON
TRUST COMPANY, in its capacity as collateral agent (and any successor collateral
agent, the "Agent") for the Holders (as defined below).
WITNESSETH:
WHEREAS, pursuant to that certain Indenture dated as of the date
hereof (as from time to time amended, restated, supplemented or otherwise
modified the "Indenture"), by and among the Company, the Guarantors named
therein and Wilmington Trust Company (the "Trustee"), the Company has authorized
issuance from time to time of its Class B Junior Subordinated Secured Debentures
(the "Debentures") which are guaranteed by the Guarantors;
WHEREAS, the Guarantors will receive substantial direct and indirect
benefits from the issuance of the Debentures by the Company;
WHEREAS, the Grantors have agreed to grant a continuing Lien on the
Collateral (as hereinafter defined) to secure the Obligations (as hereinafter
defined);
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS. The following terms shall have the following
respective meanings:
"Collateral" means Capital Stock of the Company's Restricted
Subsidiaries, and contract rights, Equipment and Instruments of the Company and
the Guarantors, and all substitutions for and replacements, products and
proceeds (as such term is defined in the UCC) of any of the foregoing; provided,
however, that notwithstanding the foregoing, the following shall not constitute,
and shall not be included in the Collateral:
(1) any Instruments with final payments due, or a final maturity
date that is, fifteen (15) years or more after the date such Instrument is
made or entered into;
(2) any contracts for deed, and any rights associated therewith;
(3) any proceeds of Instruments, contract rights or any capital
stock of the Issuer's Restricted Subsidiaries; and
(4) cash of any kind, including as proceeds of any Collateral
hereunder.
"Debt" shall have the meaning given to it in the Indenture.
"Equipment" means all of each Grantors' now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures, and other
tangible personal property (except Inventory), including office equipment;
together with all component and auxiliary parts and supplies used or to be used
in connection therewith; wherever any of the foregoing is located.
"Guarantee" means any guarantee entered into or given by a Guarantor
under the Indenture.
"Guarantor" shall have the meaning given to it in the Indenture.
"Instruments" means all instruments as such term is defined in the
UCC, now owned or hereafter acquired by each Grantor.
"Material Adverse Effect" means (a) a material adverse effect upon the
business, assets, liabilities (actual or contingent), condition (financial or
otherwise), or results of operations of (i) the Company or (ii) the Parent and
its Subsidiaries taken as a whole; (b) a material impairment of the ability of
the Company or any Guarantor to perform its obligations under the Indenture or
any Collateral Document to which it is a party; or (c) a material adverse effect
upon the legality validity, binding effect or enforceability against the Company
or any Guarantor of the Indenture or any Security Document to which it is a
party.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the Debentures, the Indenture or the Guarantees, in each case whether now or
hereafter existing, renewed or restructured, whether or not from time to time
decreased or extinguished and later increased, created or incurred, whether or
not arising on or after the commencement of a proceeding under Title 11, U.S.
Code or any similar federal or state law for the relief of debtors (including
post-petition interest) and whether or not allowed or allowable as a claim in
any such proceeding.
"Required Holders" means such Holder(s) as are entitled to take action
or direct the Trustee pursuant to the terms of the Indenture.
"Subsidiary" shall have the meaning given to it in the Indenture.
"UCC" means the Uniform Commercial Code, as in effect from time to
time, of the State of New York or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests.
"Uniform Commercial Code jurisdiction" means any jurisdiction that has
adopted "Revised Article 9" of the UCC on or after July 1, 2001.
All other capitalized terms used but not otherwise defined herein have
the meanings given to them in the Indenture. All other undefined terms contained
in this Security Agreement, unless the context indicates otherwise, have the
meanings provided for by the UCC to the extent the same are used or defined
therein.
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2. GRANT OF LIEN.
(a) As security for all Obligations, each Grantor hereby grants to the
Agent, for the benefit of the Agent, the Trustee and the Holders, a continuing
security interest in, lien on, assignment of and right of set-off against the
Collateral.
(b) All of the Obligations shall be secured by all of the Collateral.
3. PERFECTION AND PROTECTION OF SECURITY INTEREST.
(a) Each of the Grantors shall, at their own expense, perform all
steps requested by the Agent at any time to perfect, maintain, protect, and
enforce the Agent's Liens, including: (i) executing and filing financing or
continuation statements, and amendments thereof, in form and substance
reasonably satisfactory to the Agent; (ii) placing notations on such Grantor's
books of account to disclose the Agent's security interest; and (iii) taking
such other steps as are deemed necessary or desirable by the Agent to maintain
and protect the Agent's Liens, provided that no Guarantor shall be required to
deliver to the Agent possession of any Instrument comprising an item of
Collateral; provided further that within 30 days after April 30 in each year
beginning with April 30, 2005, the Company shall furnish the Agent an Opinion of
Counsel pursuant to Section 10.02(b)(ii) of the Indenture, whether or not such
Opinion of Counsel is required by the TIA. Each Grantor agrees that a carbon,
photographic, photostatic, or other reproduction of this Security Agreement or
of a financing statement is sufficient as a financing statement.
(b) Each Grantor hereby irrevocably authorizes the Agent 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) accurately describe the Collateral and (b) contain any other information
required by part 5 of Article 9 of the UCC for the sufficiency or filing office
acceptance of any financing statement or amendment, including whether such
Grantor is an organization, the type of organization and any organization
identification number issued to such Grantor. Each Grantor agrees to furnish any
such information to the Agent promptly upon request. Each Grantor also ratifies
its authorization for the Agent to have filed in any Uniform Commercial Code
jurisdiction any like initial financing statements or amendments thereto if
filed prior to the date hereof.
(c) From time to time, each Grantor shall, upon the Agent's request,
execute and deliver confirmatory written instruments pledging to the Agent, for
the ratable benefit of the Agent and the Lenders, the Collateral, but any
Grantor's failure to do so shall not affect or limit any security interest or
any other rights of the Agent or any Lender in and to the Collateral with
respect to any Grantor. So long as the Indenture is in effect and until all
Obligations have been fully satisfied, the Agent's Liens shall continue in full
force and effect in all Collateral except for such Collateral as is disposed of
in accordance with the Indenture.
(d) Terminations Amendments Not Authorized. Each Grantor acknowledges
that it is not authorized to file any financing statement or amendment or
termination statement with respect to any financing statement without the prior
written consent of Agent and agrees
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that it will not do so without the prior written consent of Agent, subject to
such Grantor's rights under Section 9.509(d)(2) of the UCC.
4. LOCATION OF COLLATERAL. Each of the Grantors represents and
warrants to the Agent, the Trustee and the Holders that, as of the date of the
issuance of the Debentures, Schedule A is a correct and complete list of the
location of its chief executive office, the location of its books and records,
the locations of the Collateral, and the locations of all of its other places of
business. Each Grantor covenants and agrees that it will not (i) maintain any
Collateral at any location other than those locations listed for such Grantor on
Schedule A, (ii) otherwise change or add to any of such locations, or (iii)
change the location of its chief executive office from the location identified
in Schedule A, unless it concurrently gives the Agent written notice thereof and
within four months of such change executes any and all financing statements and
other documents that the Agent reasonably requests in connection therewith.
5. JURISDICTION OF ORGANIZATION. Schedule II hereto identifies each
Grantor's name as of the Closing Date as it appears in official filings in the
state of its incorporation or other organization, the type of entity of such
Grantor (including corporation, partnership, limited partnership or limited
liability company), organizational identification number issued by such
Grantor's state of incorporation or organization or a statement that no such
number has been issued and the jurisdiction in which the such Grantor is
incorporated or organized. Each Grantor has only one state of incorporation or
organization.
6. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Grantor
represents and warrants to the Agent, the Trustee and the Holders and agrees
with the Agent, the Trustee and the Holders that: (a) such Grantor has rights in
and the power to transfer rights in all of the Collateral free and clear of all
Liens whatsoever, except for Permitted Liens; and (b) such Grantor will use,
store, and maintain the Collateral with all reasonable care and will use such
Collateral for lawful purposes only.
7. ACCESS AND EXAMINATION. The Grantors shall permit representatives
and independent contractors of Agent access to their properties and records from
time to time upon the reasonable prior written request of Agent.
8. EQUIPMENT.
(a) Each Grantor represents and warrants to the Agent, the Trustee and
the Holders and agrees with the Agent, the Trustee and the Holders that all of
the Equipment owned by such Grantor is and will be used or held for use in such
Grantor's business, and is and will be fit for such purposes. Each Grantor shall
keep and maintain its Equipment in good operating condition and repair (ordinary
wear and tear excepted) and shall make all necessary replacements thereof.
(b) No Grantor will, without the Agent's prior written consent, alter
or remove any identifying symbol or number on any of such Grantor's Equipment
constituting Collateral.
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(c) Except as permitted under the Indenture, no Grantor shall, without
the Agent's prior written consent, sell, license, lease as a lessor, or
otherwise dispose of any of such Grantor's Equipment.
9. RIGHT TO CURE. The Agent may, in its discretion, and shall, at the
direction of the Trustee (acting at the direction of the Required Holders), pay
any amount or do any act required of any Grantor hereunder or under the
Indenture or any other Security Document in order to preserve, protect, maintain
or enforce the Obligations, the Collateral or the Agent's Liens therein, and
which any Grantor fails to pay or do, including payment of any judgment against
such Grantor, any insurance premium, any warehouse charge, any finishing or
processing charge, any landlord's or bailee's claim, and any other Lien upon or
with respect to the Collateral; provided, however, that the Agent shall be under
no obligation to take any action which in its sole discretion would subject the
Agent to personal or financial liability. Any payment made or other action taken
by the Agent under this Section 9 shall be without prejudice to any right to
assert an Event of Default hereunder and to proceed thereafter as herein
provided.
10. THE AGENT'S AND HOLDERS' RIGHTS, DUTIES AND LIABILITIES.
(a) Each Holder hereby appoints Wilmington Trust Company to act as the
Agent for such Person under this Security Agreement and the other Collateral
Documents. Each Holder hereby irrevocably authorizes the Agent to take such
action on its behalf under the provisions of this Security Agreement and the
other Collateral Documents and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto and the Agent shall hold all Collateral, charges
and collections received pursuant to this Security Agreement, for the ratable
benefit of the Holders. The Agent may perform any of its duties hereunder by or
through its agents or employees. As to any matters not expressly provided for by
this Security Agreement (including without limitation, collection of the
Debentures) the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Trustee or the Required Holders, and such instructions shall be binding;
provided, however, that the Agent shall not be required to take any action which
in the Agent's reasonable discretion exposes it to liability or which is
contrary to this Security Agreement or the other Collateral Documents or
applicable law unless the Agent is furnished with an indemnification reasonably
acceptable to the Agent in its sole discretion with respect thereto and the
Agent shall not be responsible for any misconduct or negligence on the part of
any agents appointed with due care by the Agent. The Agent may utilize the
services of such Persons as the Agent, in its sole discretion, may determine and
all reasonable fees and expenses shall be borne by the Grantors. The Agent shall
have no duties or responsibilities except those expressly set forth in this
Security Agreement and the other Collateral Documents. The Agent shall not be
under any obligation to any Holder to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Security Agreement or any of the other Collateral Documents. The Agent
shall not have by reason of this Security Agreement a fiduciary relationship in
respect of any Holder; and nothing in this Security Agreement, expressed or
implied, is intended to or shall be so construed as to impose
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upon the Agent any obligations in respect of this Security Agreement except as
expressly set forth herein.
(b) The Grantors assume jointly and severally all responsibility and
liability arising from or relating to the use, sale, license or other
disposition of the Collateral. The Obligations shall not be affected by any
failure of the Agent, the Trustee or any Holder to take any steps to perfect the
Agent's Liens or to collect or realize upon the Collateral, nor shall loss of or
damage to the Collateral release any Grantor from any of the Obligations.
Following the occurrence and during the continuation of an Event of Default, the
Agent may (but shall not be required to), and at the direction of the Required
Holders shall, without notice to or consent from any Grantor, xxx upon or
otherwise collect, extend the time for payment of, modify or amend the terms of,
compromise or settle for cash, credit, or otherwise upon any terms, grant other
indulgences, extensions, renewals, compositions, or releases, and take or omit
to take any other action with respect to the Collateral, any security therefor,
any agreement relating thereto, any insurance applicable thereto, or any Person
liable directly or indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of any Grantor for the
Obligations or under the Indenture or any other agreement now or hereafter
existing between the Agent and/or the Trustee or any Holder and any Grantor.
(c) It is expressly agreed by each Grantor that, anything herein to
the contrary notwithstanding, each Grantor shall remain liable under each of its
contracts and each of its licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder. None of the Agent,
the Trustee nor any Holder shall have any obligation or liability under any
contract or license by reason of or arising out of this Security Agreement or
the granting herein of a Lien thereon or the receipt by Agent, the Trustee or
any Holder of any payment relating to any contract or license pursuant hereto.
None of the Agent, the Trustee nor any Holder shall be required or obligated in
any manner to perform or fulfill any of the obligations of any Grantor under or
pursuant to any contract or license, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any contract or license, or to
present or file any claims, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
(d) Neither the Agent nor any of the Agent's officers, directors,
employees, agents, attorneys-in-fact or Affiliates shall be (1) liable for any
action taken or omitted to be taken by it or such Person under or in connection
with this Security Agreement or the Collateral Documents or any Collateral
(except for its or such Person's own negligence or willful misconduct), or (2)
responsible in any manner to any of the Holders for any recitals, statements,
representations or warranties made by the Grantors, any officer thereof or any
other Person contained in, or made or deemed made in connection with, any
Collateral Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with this Security Agreement or the Collateral Documents, or for the due
execution, legality, value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Security Agreement or the Collateral Documents or any
other document or instrument furnished pursuant thereto or of any of the
Collateral or for any failure of any Grantor to perform its obligations under
such documents.
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(e) The Agent shall be entitled to conclusively rely, and shall be
fully protected and shall incur no liability in acting and relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, statement, order or other document reasonably believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice of its legal counsel (which shall not also be
counsel to any Grantor), written advice of legal counsel to any Grantor that is
required pursuant to the Indenture, or upon advice of independent accountants
and other experts selected by the Agent.
11. COST AND EXPENSES; INDEMNIFICATION.
(a) The Grantors agree to indemnify the Agent in its capacity as such,
against, and hold the Agent harmless from, any and all liabilities, obligations,
losses, claims, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any kind or nature whatsoever, which may be imposed on,
incurred by, or asserted against the Agent, in any way relating to or arising
out of this Security Agreement or the Collateral Documents or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent in
connection with any of the foregoing; provided that no Grantor shall be liable
to the Agent for any portion of such liabilities, obligations, losses, claims,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent they are found by a final decision of a court of competent
jurisdiction to have resulted from the Agent's negligence or willful misconduct.
The agreements in this Section 11 shall survive the payment of the Obligations.
(b) The Grantors agree to pay to the Agent, for its benefit, on
demand, all reasonable costs and expenses that Agent pays or incurs in
connection with the negotiation, preparation, administration, enforcement, and
termination of this Security Agreement or any of the other Collateral Documents,
including: (1) all reasonable fees, expenses and disbursements of any law firm
or other counsel engaged by the Agent; (2) costs and expenses (including
reasonable attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with the
Collateral Documents and the transactions contemplated thereby; (3) costs and
expenses of lien searches; (4) taxes, fees and other charges for filing
financing statements and continuations, and other actions to perfect, protect,
and continue the Agent's Liens (including costs and expenses paid or incurred by
the Agent in connection with the consummation of this Security Agreement); (5)
sums paid or incurred to pay any amount or take any action required of the
Grantors under the Collateral Documents that the Grantors fail to pay or take;
and (6) costs and expenses of preserving and protecting the Collateral. The
foregoing shall not be construed to limit any other directly contrary provisions
of the Collateral Documents regarding costs and expenses to be paid by any
Grantor.
(c) In any suit, proceeding or action brought by Agent, the Trustee or
any Holder to enforce its rights with respect to any Collateral for any sum
owing with respect thereto or to enforce any rights or claims with respect
thereto, each Grantor will jointly and severally save, indemnify and keep Agent,
the Trustee and Holders harmless from and against all expense (including
reasonable attorneys' fees and expenses), loss or damage suffered by reason of
any defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the Account Debtor or other Person obligated on the Collateral,
arising out of a breach by any Grantor of any
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obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to, or in favor of, such obligor or its successors
from such Grantor, except in the case of Agent, the Trustee or any Holder, to
the extent such expense, loss, or damage is determined by a court of competent
jurisdiction in a final nonappealable judgment to have resulted primarily from
the gross negligence or willful misconduct of Agent, the Trustee or such Holder
as finally determined by a court of competent jurisdiction. All such obligations
of the Grantors shall be and remain enforceable against and only against each
Grantor and shall not be enforceable against Agent, the Trustee or any Holder.
12. LIMITATION ON LIENS ON COLLATERAL. Each Grantor will not create,
permit or suffer to exist, and will defend the Collateral against, and take such
other action as is necessary to remove, any Lien on the Collateral except
Permitted Liens, and will defend the right, title and interest of Agent and the
Holders in and to any of either of the Grantor's rights under the Collateral
against the claims and demands of all Persons whomsoever.
13. NOTICE REGARDING COLLATERAL. Each Grantor will advise Agent
promptly, in reasonable detail, (i) of any Lien (other than Permitted Liens) or
claim made or asserted against any of the Collateral, and (ii) of the occurrence
of any other event which could reasonably be expected to have a Material Adverse
Effect.
14. REMEDIES; RIGHTS UPON DEFAULT.
(a) In addition to all other rights and remedies granted to it under
this Security Agreement, the Indenture, the other Collateral Documents and under
any other instrument or agreement securing, evidencing or relating to any of the
Obligations, if any Event of Default shall have occurred and be continuing,
Agent may exercise all rights and remedies of a secured party under the UCC.
Without limiting the generality of the foregoing, each Grantor expressly agrees
that in any such event Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon such Grantor or any other Person
(all and each of which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the UCC and other applicable law), may
forthwith enter upon the premises of such Grantor where any Collateral is
located through self-help, without judicial process, without first obtaining a
final judgment or giving such Grantor or any other Person notice and opportunity
for a hearing on Agent's claim or action and may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, license, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange at such prices as it may deem acceptable,
for cash or on credit or for future delivery without assumption of any credit
risk. Agent, the Trustee or any Holder shall have the right upon any such public
sale or sales and, to the extent permitted by law, upon any such private sale or
sales, to purchase for the benefit of Agent, the Trustee and Holders, the whole
or any part of said Collateral so sold, free of any right or equity of
redemption, which equity of redemption each Grantor hereby releases. Such sales
may be adjourned and continued from time to time with or without notice. Agent
shall have the right to conduct such sales on the Grantors' premises or
elsewhere and shall have the right to use the Grantors' premises without charge
for such time or times as Agent deems necessary or advisable.
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(b) Each Grantor further agrees, at Agent's request, to assemble the
Collateral and make it available to Agent at a place or places designated by
Agent which are reasonably convenient to Agent and Grantor, whether at such
Grantor's premises or elsewhere. Until Agent is able to effect a sale, lease, or
other disposition of Collateral, Agent shall have the right to hold or use
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by Agent. Agent shall have no obligation to any Grantor to maintain
or preserve the rights of such Grantor as against third parties with respect to
Collateral while Collateral is in the possession of Agent. Agent may, if it so
elects, seek the appointment of a receiver or keeper to take possession of
Collateral and to enforce any of Agent's remedies (for the benefit of Agent, the
Trustee and Holders), with respect to such appointment without prior notice or
hearing as to such appointment. Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale to the
Obligations as provided herein and in the Indenture, and only after so paying
over such net proceeds, and after the payment by Agent of any other amount
required by any provision of law, need Agent account for the surplus, if any, to
the applicable Grantor. To the maximum extent permitted by applicable law, each
Grantor waives all claims, damages, and demands against Agent, the Trustee or
any Holder arising out of the repossession, retention or sale of the Collateral
except such as determined by a court of competent jurisdiction in a final
nonappealable judgment to have resulted primarily from the gross negligence or
willful misconduct of Agent, the Trustee or such Holder as finally determined by
a court of competent jurisdiction. Each Grantor agrees that ten (10) days prior
written notice by Agent of the time and place of any public sale or of the time
after which a private sale may take place is reasonable notification of such
matters. Each Grantor shall remain liable for any deficiency if the proceeds of
any sale or disposition of the Collateral are insufficient to pay all
Obligations, including any reasonable attorneys' fees or other out-of-pocket
expenses actually incurred by Agent, the Trustee or any Holder to collect such
deficiency.
(c) Except as otherwise specifically provided herein, each Grantor
hereby waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.
(d) To the extent that applicable law imposes duties on the Agent to
exercise remedies in a commercially reasonable manner, each Grantor acknowledges
and agrees that it is not commercially unreasonable for the Agent (a) to fail to
incur expenses reasonably deemed significant by the Agent to prepare Collateral
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 Persons obligated on Collateral or to
remove Liens on or any adverse claims against Collateral, (d) to exercise
collection remedies against 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 such Grantor, for
expressions of interest in acquiring all or any portion of such 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
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reasonable capacity 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, such as title, possession or quiet enjoyment, (k) to
purchase insurance or credit enhancements to insure the Agent against risks of
loss, collection or disposition of Collateral or to provide to the Agent a
guaranteed return from the collection or disposition of Collateral, or (l) to
the extent deemed appropriate by the Agent, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist the
Agent in the collection or disposition of any of the Collateral. Each Grantor
acknowledges that the purpose of this Section 14(d) is to provide non-exhaustive
indications of what actions or omissions by the Agent would not be commercially
unreasonable in the Agent's exercise of remedies against the Collateral and that
other actions or omissions by the Agent shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section 14(d).
Without limitation upon the foregoing, nothing contained in this Section 14(d)
shall be construed to grant any rights to any Grantor or to impose any duties on
Agent that would not have been granted or imposed by this Security Agreement or
by applicable law in the absence of this Section 14(d).
15. LIMITATION ON AGENT'S AND HOLDERS' DUTY IN RESPECT OF COLLATERAL.
Agent, the Trustee and each Holder shall use reasonable care with respect to the
Collateral in its possession or under its control. None of Agent, the Trustee or
any Holder shall have any other duty as to any Collateral in its possession or
control or in the possession or control of any agent or nominee of Agent, the
Trustee or such Holder, or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto.
16. MISCELLANEOUS.
(a) REINSTATEMENT. This Security Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should any Grantor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a "voidable preference," "fraudulent conveyance," or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
(b) NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other party, or whenever any of the parties desires to give and
serve upon any other party any communication with respect to this Security
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be given in the manner, and
deemed received, as provided for in the Indenture; provided, however that notice
to the Agent shall be delivered to the following address or such other address
as notified by the Agent from time to time:
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Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx Xx.
Fax: 000-000-0000
(c) SEVERABILITY. Whenever possible, each provision of this Security
Agreement shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement is to be read, construed and applied together
with the Indenture and the other Collateral Documents which, taken together, set
forth the complete understanding and agreement of Agent, the Trustee, the
Holders and the Grantors with respect to the matters referred to herein and
therein.
(d) NO WAIVER; CUMULATIVE REMEDIES. Neither Agent, the Trustee nor any
Holder shall by any act, delay, omission or otherwise be deemed to have waived
any of its rights or remedies hereunder, and no waiver shall be valid unless in
writing, signed by Agent and then only to the extent therein set forth. A waiver
by Agent of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Agent would otherwise have had
on any future occasion. No failure to exercise nor any delay in exercising on
the part of Agent, the Trustee or any Holder, any right, power or privilege
hereunder, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or future
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies hereunder provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights and remedies
provided by law. None of the terms or provisions of this Security Agreement may
be waived, altered, modified or amended except by an instrument in writing, duly
executed by Agent and the Grantors.
(e) LIMITATION BY LAW. All rights, remedies and powers provided in
this Security Agreement may be exercised only to the extent that the exercise
thereof does not violate any applicable provision of law, and all the provisions
of this Security Agreement are intended to be subject to all applicable
mandatory provisions of law that may be controlling and to be limited to the
extent necessary so that they shall not render this Security Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered
or filed under the provisions of any applicable law.
(f) TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section 16(a)
hereof, this Security Agreement shall terminate upon the payment in full of all
other Obligations (other than indemnification Obligations as to which no claim
has been asserted).
(g) SUCCESSORS AND ASSIGNS. This Security Agreement and all
obligations of the Grantors hereunder shall be binding upon the successors and
assigns of the Grantors (including any debtor-in-possession on behalf of any
Grantor) and shall, together with the rights
11
and remedies of Agent, for the benefit of Agent, the Trustee and Holders,
hereunder, inure to the benefit of Agent, the Trustee and Holders, all future
holders of any instrument evidencing any of the Obligations and their respective
successors and assigns. No sales of participations, other sales, assignments,
transfers or other dispositions of any agreement governing or instrument
evidencing the Obligations or any portion thereof or interest therein shall in
any manner affect the Lien granted to Agent, for the benefit of Agent, the
Trustee and Holders, hereunder. No Grantor may assign, sell, hypothecate or
otherwise transfer any interest in or obligation under this Security Agreement.
(h) COUNTERPARTS. This Security Agreement may be authenticated in any
number of separate counterparts, each of which shall collectively and separately
constitute one and the same agreement. This Security Agreement may be
authenticated by manual signature, facsimile or, if approved in writing by
Agent, electronic means, all of which shall be equally valid.
(i) GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE OBLIGATIONS ARISING
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA. EACH GRANTOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN DALLAS COUNTY, CITY OF DALLAS, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY GRANTOR,
AGENT, THE TRUSTEE AND HOLDERS PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF
THE OTHER SECURITY DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
SECURITY AGREEMENT OR ANY OF THE OTHER SECURITY DOCUMENTS; PROVIDED, THAT AGENT,
THE TRUSTEE, HOLDERS AND THE GRANTORS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF DALLAS COUNTY, CITY OF
DALLAS, AND, PROVIDED, FURTHER, NOTHING IN THIS SECURITY AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF AGENT. EACH GRANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH GRANTOR
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH IN SECTION 14.02 OF THE
INDENTURE (SUCH NOTICE TO THE PARENT
12
BEING DELIVERED TO THE PARENT IN CARE OF THE COMPANY AT THE COMPANY'S ADDRESS
SET FORTH IN SECTION 14.02 OF THE INDENTURE) AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS
AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
(j) WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES
ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, LENDERS, AND
GRANTORS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF
THE OTHER SECURITY DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.
(k) SECTION TITLES. The Section titles contained in this Security
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
(l) NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Security Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Security
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Security Agreement.
(m) ADVICE OF COUNSEL. Each of the parties represents to each other
party hereto that it has discussed this Security Agreement and, specifically,
the provisions of Section 17(i) and Section 17(j), with its counsel.
(n) BENEFIT OF HOLDERS. All Liens granted or contemplated hereby shall
be for the benefit of Agent, the Trustee and Holders, and all proceeds or
payments realized from Collateral in accordance herewith shall be applied to the
Obligations in accordance with the terms of the Indenture.
(o) INCORPORATION BY REFERENCE. All of the rights, protections and
privileges granted to the Trustee under the Indenture are incorporated by
reference herein and shall inure to the benefit of the Agent herein.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Security Agreement to be executed and delivered by its duly authorized officer
as of the date first set forth above.
UMT HOLDINGS, L.P.,
as a Grantor
By: UMT Services, Inc., General Partner
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxx, President
UMTH LENDING COMPANY, L.P.
UMTH LAND DEVELOPMENT, L.P.
UMTH LOAN SERVICING, L.P.
UMTH FUNDING SERVICES, L.P.
UMTH GENERAL SERVICES, L.P.
UMTH LENDING COMPANY - FL, L.P.
READY AMERICA FUNDING, L.P.
REO PROPERTY COMPANY., L.P., each as a Grantor
By: UMT Services, Inc., General Partner
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxx, President
PROSPECT SERVICES CORP., as a Grantor
By: /s/ Xxxx Xxxxx
---------------------------------------
Name: Xxxx Xxxxx
-------------------------------------
Title: President
------------------------------------
WILMINGTON TRUST COMPANY,
as Agent
By: /s/ Xxxxxxx X. Xxxxx, Xx.
---------------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
-------------------------------------
Title: Senior Financial Services Officer
------------------------------------
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SCHEDULE A
LOCATION OF CHIEF EXECUTIVE XXXXXX
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
15
