GUARANTEE AND COLLATERAL AGREEMENT made by VIRTUS INVESTMENT PARTNERS INC. and certain of its Subsidiaries in favor of PHOENIX LIFE INSURANCE COMPANY, as Lender Dated as of December 31, 2008
Exhibit
10.2
EXECUTION
VERSION
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made
by
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VIRTUS
INVESTMENT PARTNERS INC.
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and
certain of its Subsidiaries
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in
favor of
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PHOENIX
LIFE INSURANCE COMPANY,
as
Lender
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Dated
as of December 31, 2008
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TABLE OF
CONTENTS
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SECTION
1.
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DEFINED
TERMS
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3
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1.1
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Definitions
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3
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1.2
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Other
Definitional Provisions
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6
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SECTION
2.
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GUARANTEE
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6
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2.1
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Guarantee
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6
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2.2
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Right
of Contribution
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7
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2.3
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No
Subrogation
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7
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2.4
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Amendments,
etc. with respect to the Borrower Obligations
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7
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2.5
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Guarantee
Absolute and Unconditional
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8
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2.6
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Reinstatement
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8
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2.7
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Payments
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8
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SECTION
3.
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GRANT
OF SECURITY INTEREST
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8
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SECTION
4.
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REPRESENTATIONS
AND WARRANTIES
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9
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4.1
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Title;
No Other Liens
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9
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4.2
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Perfected
First Priority Liens
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10
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4.3
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Jurisdiction
of Organization; Chief Executive Office
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10
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4.4
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Inventory
and Equipment
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10
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4.5
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Investment
Property
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10
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4.6
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Receivables
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10
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4.7
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Intellectual
Property
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11
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4.8
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Commercial
Tort Claims
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11
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SECTION
5.
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COVENANTS
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11
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5.1
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Delivery
of Instruments, Certificated Securities and Chattel Paper
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11
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5.2
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Maintenance
of Insurance
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11
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5.3
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Payment
of Obligations
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12
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5.4
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Maintenance
of Perfected Security Interest; Further Documentation
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12
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5.5
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Changes
in Name, etc
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12
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5.6
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Investment
Property
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13
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5.7
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Receivables
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13
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5.8
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Intellectual
Property
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14
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5.9
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Commercial
Tort Claims.
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15
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SECTION
6.
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REMEDIAL
PROVISIONS
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15
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6.1
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Certain
Matters Relating to Receivables
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15
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6.2
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Communications
with Obligors; Grantors Remain Liable
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15
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6.3
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Pledged
Stock
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16
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6.4
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Proceeds
to be Turned Over To Lender
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16
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6.5
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Application
of Proceeds
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17
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6.6
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Code
and Other Remedies
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17
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6.7
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[Reserved]
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17
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6.8
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Subordination
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18
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6.9
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Deficiency
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18
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i
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SECTION
7.
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THE
LENDER
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18
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7.1
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Lender’s
Appointment as Attorney-in-Fact, etc
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18
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7.2
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Duty
of Lender
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19
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7.3
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Execution
of Financing Statements
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19
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SECTION
8.
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MISCELLANEOUS
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20
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8.1
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Amendments
in Writing
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20
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8.2
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Notices
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20
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8.3
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No
Waiver by Course of Conduct; Cumulative Remedies
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20
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8.4
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Enforcement
Expenses; Indemnification
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20
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8.5
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Successors
and Assigns
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20
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8.6
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Set-Off
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20
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8.7
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Counterparts
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21
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8.8
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Severability
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21
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8.9
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Section
Headings
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21
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8.10
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Integration
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21
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8.11
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GOVERNING
LAW
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21
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8.12
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Submission
To Jurisdiction; Waivers
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21
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8.13
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Acknowledgements
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22
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8.14
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Additional
Grantors
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22
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8.15
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Releases
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22
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8.16
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WAIVER
OF JURY TRIAL
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22
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SCHEDULES
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Schedule
1
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Notice
Addresses
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Schedule
2
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Investment
Property
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Schedule
3
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Perfection
Matters
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Schedule
4
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Jurisdictions
of Organization and Chief Executive Offices
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Schedule
5
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Inventory
and Equipment Locations
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Schedule
6
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Intellectual
Property
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ii
GUARANTEE
AND COLLATERAL AGREEMENT, dated as of December 31, 2008, made by each of the
signatories hereto (together with any other entity that may become a party
hereto as provided herein, the “Guarantors”), in
favor of Phoenix Life Insurance Company (the “Lender”).
W I T N E S S E T H:
WHEREAS,
pursuant to the Loan Agreement, the Lender has agreed to make extensions of
credit to the Borrower upon the terms and subject to the conditions set forth
therein;
WHEREAS,
the Borrower is a member of an affiliated group of companies that includes each
other Grantor;
WHEREAS,
the proceeds of the extensions of credit under the Loan Agreement will be used
in part to enable the Borrower to make valuable transfers to one or more of the
other Grantors in connection with the operation of their respective
businesses;
WHEREAS,
the Borrower and the other Grantors are engaged in related businesses, and each
Grantor will derive substantial direct and indirect benefit from the making of
the extensions of credit under the Loan Agreement; and
WHEREAS,
it is a condition precedent to the obligation of the Lender to make its
extensions of credit to the Borrower under the Loan Agreement that the Grantors
shall have executed and delivered this Agreement to the Lender;
NOW,
THEREFORE, in consideration of the premises and to induce the Lender to enter
into the Loan Agreement and to make its extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Lender as follows:
SECTION
1. DEFINED TERMS
1.1 Definitions. (a) Unless
otherwise defined herein, terms defined in the Loan Agreement and used herein
shall have the meanings given to them in the Loan Agreement, and the following
terms are used herein as defined in the New York UCC: Accounts,
Certificated Security, Chattel Paper, Commercial Tort Claims, Documents,
Equipment, General Intangibles, Instruments, Inventory, Letter-of-Credit Rights
and Supporting Obligations.
(b) The
following terms shall have the following meanings:
“Agreement”: this
Guarantee and Collateral Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
“Borrower
Obligations”: the collective reference to the unpaid principal
of and interest on the Loan and all other obligations and liabilities of the
Borrower (including, without limitation, interest accruing at the then
applicable rate provided in the Loan Agreement after the maturity of the Loan
and interest accruing at the then applicable rate provided in the Loan Agreement
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Borrower, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding) to the Lender, whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Loan Agreement, this Agreement, the
other Loan Documents or any other document made, delivered or given in
connection with any of the foregoing, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to the Lender that are required to be paid by the Borrower pursuant
to the terms of any of the foregoing agreements).
3
“Collateral”: as
defined in Section 3.
“Collateral
Account”: any collateral account established by the Lender as
provided in Section 6.1 or 6.4.
“Copyrights”: (i)
all copyrights arising under the laws of the United States, any other country or
any political subdivision thereof, whether registered or unregistered and
whether published or unpublished (including, without limitation, those listed in
Schedule 6), all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, all registrations,
recordings and applications in the United States Copyright Office, and (ii) the
right to obtain all renewals thereof.
“Copyright
Licenses”: any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in Schedule
6), granting any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.
“Deposit
Account”: as defined in the Uniform Commercial Code of any
applicable jurisdiction and, in any event, including, without limitation, any
demand, time, savings, passbook or like account maintained with a depositary
institution.
“Foreign
Subsidiary”: any Subsidiary organized under the laws of any
jurisdiction outside the United States of America.
“Foreign Subsidiary Voting
Stock”: the voting Capital Stock of any Foreign
Subsidiary.
“Guarantor
Obligations”: with respect to any Guarantor, all obligations
and liabilities of such Guarantor which may arise under or in connection with
this Agreement (including, without limitation, Section 2) or any other Loan
Document to which such Guarantor is a party, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to the Lender that are required to be paid by such Guarantor pursuant
to the terms of this Agreement or any other Loan Document).
“Grantors”: the
collective reference to the Borrower and Virtus Partners, Inc.
“Intellectual
Property”: the collective reference to all rights, priorities
and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks and the Trademark Licenses, and all rights to ▇▇▇ at
law or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.
4
“Intercompany
Note”: any promissory note evidencing loans made by any
Grantor to Holdings or any of its Subsidiaries.
“Investment
Property”: the collective reference to (i) all “investment
property” as such term is defined in Section 9-102(a)(49) of the New York UCC
(other than any Foreign Subsidiary Voting Stock excluded from the definition of
“Pledged Stock”) and (ii) whether or not constituting “investment property” as
so defined, all Pledged Notes and all Pledged Stock.
“Issuers”: the
collective reference to each issuer of any Investment Property.
“Loan Agreement”: that
certain Loan Agreement made as of the 31st day of December 2008, by and between
Phoenix Life Insurance Company, a New York domiciled insurance company with a
mailing address of ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and Virtus
Investment Partners, Inc., a Delaware corporation with a mailing address of ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
“New York
UCC”: the Uniform Commercial Code as from time to time in
effect in the State of New York.
“Obligations”: (i)
in the case of the Borrower, the Borrower Obligations, and (ii) in the case of
each Guarantor, its Guarantor Obligations.
“Patents”: (i)
all letters patent of the United States, any other country or any political
subdivision thereof, all reissues and extensions thereof and all goodwill
associated therewith, including, without limitation, any of the foregoing
referred to in Schedule 6, (ii) all
applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof, including,
without limitation, any of the foregoing referred to in Schedule 6, and (iii)
all rights to obtain any reissues or extensions of the foregoing.
“Patent
License”: all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule
6.
“Pledged
Notes”: all promissory notes listed on Schedule 2, all
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor (other than promissory notes issued in
connection with extensions of trade credit by any Grantor in the ordinary course
of business).
“Pledged
Stock”: the shares of Capital Stock listed on Schedule 2, together
with any other shares, stock certificates, options, interests or rights of any
nature whatsoever in respect of the Capital Stock of any Person that may be
issued or granted to, or held by, any Grantor while this Agreement is in effect;
provided that
in no event shall more than 66% of the total outstanding Foreign Subsidiary
Voting Stock of any Foreign Subsidiary be required to be pledged
hereunder.
“Proceeds”: all
“proceeds” as such term is defined in Section 9-102(a)(64) of the New York UCC
and, in any event, shall include, without limitation, all dividends or other
income from the Investment Property, collections thereon or distributions or
payments with respect thereto.
“Receivable”: any
right to payment for goods sold or leased or for services rendered, whether or
not such right is evidenced by an Instrument or Chattel Paper and whether or not
it has been earned by performance (including, without limitation, any
Account).
5
“Securities
Act”: the Securities Act of 1933, as amended.
“Trademarks”: (i)
all trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos and other source
or business identifiers, and all goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to in Schedule 6, and (ii)
the right to obtain all renewals thereof.
“Trademark
License”: any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to use any Trademark, including,
without limitation, any of the foregoing referred to in Schedule
6.
1.2 Other Definitional
Provisions. (a) The
words “hereof,” “herein”, “hereto” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section and Schedule references
are to this Agreement unless otherwise specified.
(b) The
meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.
(c) Where the
context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Grantor, shall refer to such Grantor’s Collateral or the
relevant part thereof.
SECTION
2. GUARANTEE
2.1 Guarantee. (a) Each
of the Guarantors hereby, jointly and severally, unconditionally and
irrevocably, guarantees to the Lender and its successors, indorsees, transferees
and assigns, the prompt and complete payment and performance by the Borrower
when due (whether at the stated maturity, by acceleration or otherwise) of the
Borrower Obligations.
(b) Anything
herein or in any other Loan Document to the contrary notwithstanding, the
maximum liability of each Guarantor hereunder and under the other Loan Documents
shall in no event exceed the amount which can be guaranteed by such Guarantor
under applicable federal and state laws relating to the insolvency of debtors
(after giving effect to the right of contribution established in Section
2.2).
(c) Each
Guarantor agrees that the Borrower Obligations may at any time and from time to
time exceed the amount of the liability of such Guarantor hereunder without
impairing the guarantee contained in this Section 2 or affecting the rights and
remedies of the Lender hereunder.
(d) The
guarantee contained in this Section 2 shall remain in full force and effect
until all the Borrower Obligations and the obligations of each Guarantor under
the guarantee contained in this Section 2 shall have been satisfied by payment
in full.
6
(e) No
payment made by the Borrower, any of the Guarantors, any other guarantor or any
other Person or received or collected by the Lender from the Borrower, any of
the Guarantors, any other guarantor or any other Person by virtue of any action
or proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Borrower Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of any
Guarantor hereunder which shall, notwithstanding any such payment (other than
any payment made by such Guarantor in respect of the Borrower Obligations or any
payment received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the Borrower Obligations are paid in
full.
2.2
Right of
Contribution. Each
Guarantor hereby agrees that to the extent that a Guarantor shall have paid more
than its proportionate share of any payment made hereunder, such Guarantor shall
be entitled to seek and receive contribution from and against any other
Guarantor hereunder which has not paid its proportionate share of such
payment. Each Guarantor’s right of contribution shall be subject to
the terms and conditions of Section 2.3. The provisions of this
Section 2.2 shall in no respect limit the obligations and liabilities of any
Guarantor to the Lender, and each Guarantor shall remain liable to the Lender
for the full amount guaranteed by such Guarantor hereunder.
2.3
No
Subrogation. Notwithstanding
any payment made by any Guarantor hereunder or any set-off or application of
funds of any Guarantor by the Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Lender against the Borrower or any other
Guarantor or any collateral security or guarantee or right of offset held by the
Lender for the payment of the Borrower Obligations, nor shall any Guarantor seek
or be entitled to seek any contribution or reimbursement from the Borrower or
any other Guarantor in respect of payments made by such Guarantor hereunder,
until all amounts owing to the Lender by the Borrower on account of the Borrower
Obligations are paid in full. If any amount shall be paid to any
Guarantor on account of such subrogation rights at any time when all of the
Borrower Obligations shall not have been paid in full, such amount shall be held
by such Guarantor in trust for the Lender, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Lender in the exact form received by such Guarantor (duly indorsed by
such Guarantor to the Lender, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Lender may
determine.
2.4 Amendments, etc. with
respect to the Borrower Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Lender may be rescinded by the Lender and any of the
Borrower Obligations continued, and the Borrower Obligations, or the liability
of any other Person upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Lender, and the Loan
Agreement and the other Loan Documents and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Lender may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Lender for the payment of the Borrower Obligations may be sold,
exchanged, waived, surrendered or released. The Lender shall not have
any obligation to protect, secure, perfect or insure any Lien at any time held
by it as security for the Borrower Obligations or for the guarantee contained in
this Section 2 or any property subject thereto.
7
2.5 Guarantee Absolute and
Unconditional. Each
Guarantor waives any and all notice of the creation, renewal, extension or
accrual of any of the Borrower Obligations and notice of or proof of reliance by
the Lender upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the Lender, on the other hand, likewise
shall be conclusively presumed to have been had or consummated in reliance upon
the guarantee contained in this Section 2. Each Guarantor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrower or any of the Guarantors with respect to the
Borrower Obligations. Each Guarantor understands and agrees that the
guarantee contained in this Section 2 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of the Loan Agreement or any other Loan Document, any
of the Borrower Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by the Lender, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by the Borrower or any other Person against the Lender, or (c) any
other circumstance whatsoever (with or without notice to or knowledge of the
Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the Borrower
Obligations, or of such Guarantor under the guarantee contained in this Section
2, in bankruptcy or in any other instance. When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any
Guarantor, the Lender may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as it may have against
the Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations or any right of offset with
respect thereto, and any failure by the Lender to make any such demand, to
pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Borrower, any other Guarantor or any other Person or any such
collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Lender against any Guarantor. For the purposes
hereof “demand” shall include the commencement and continuance of any legal
proceedings.
2.6 Reinstatement. The
guarantee contained in this Section 2 shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Borrower Obligations is rescinded or must otherwise be restored or
returned by the Lender upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of the Borrower or any Guarantor, or upon or as a result of
the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, the Borrower or any Guarantor or any substantial part of
its property, or otherwise, all as though such payments had not been
made.
2.7 Payments. Each
Guarantor hereby guarantees that payments hereunder will be paid to the Lender
without set-off or counterclaim in Dollars at the office designated by the
Lender.
SECTION
3. GRANT OF SECURITY INTEREST
Each
Grantor hereby assigns and transfers to the Lender, and hereby grants to the
Lender, a security interest in, all of the following property now owned or at
any time hereafter acquired by such Grantor or in which such Grantor now has or
at any time in the future may acquire any right, title or interest
(collectively, the “Collateral”), as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of such Grantor’s
Obligations:
(a) all
Accounts;
(b) all
Chattel Paper;
(c) all
Deposit Accounts;
(d) all
Documents (other than title documents with respect to Vehicles);
8
(e) all
Equipment;
(f)
all
Fixtures;
(g)
all
General Intangibles;
(h)
all
Instruments;
(i)
all
Intellectual Property;
(j)
all
Inventory;
(k) all
Investment Property;
(l)
all
Letter-of-Credit Rights;
(m) all other
property not otherwise described above (except for any property specifically
excluded from any clause in this section above, and any property specifically
excluded from any defined term used in any clause of this section
above);
(n) all books
and records pertaining to the Collateral; and
(o) to the
extent not otherwise included, all Proceeds, Supporting Obligations and products
of any and all of the foregoing and all collateral security and guarantees given
by any Person with respect to any of the foregoing;
provided, however,
that notwithstanding any of the other provisions set forth in this Section 3,
this Agreement shall not constitute a grant of a security interest in any
property to the extent that such grant of a security interest is prohibited by
any Requirements of Law of a Governmental Authority, requires a consent not
obtained of any Governmental Authority pursuant to such Requirement of Law or is
prohibited by, or constitutes a breach or default under or results in the
termination of or requires any consent not obtained under, any contract,
license, agreement, instrument or other document evidencing or giving rise to
such property or, in the case of any Investment Property, Pledged Stock or
Pledged Note, any applicable shareholder or similar agreement, except to the
extent that such Requirement of Law or the term in such contract, license,
agreement, instrument or other document or shareholder or similar agreement
providing for such prohibition, breach, default or termination or requiring such
consent is ineffective under applicable law.
SECTION
4. REPRESENTATIONS AND WARRANTIES
To induce
the Lender to enter into the Loan Agreement and to induce the Lender to make its
extensions of credit to the Borrower thereunder, each Grantor hereby represents
and warrants to the Lender that:
4.1
Title; No Other
Liens. Except
for the security interest granted to the Lender pursuant to this Agreement and
the other Liens permitted to exist on the Collateral by the Loan Agreement, such
Grantor owns each item of the Collateral free and clear of any and all Liens or
claims of others. No financing statement or other public notice with
respect to all or any part of the Collateral is on file or of record in any
public office, except such as have been filed in favor of the Lender, pursuant
to this Agreement or as are permitted by the Loan Agreement. For the
avoidance of doubt, it is understood and agreed that any Grantor may, as part of
its business, grant licenses to third parties to use Intellectual Property owned
or developed by a Grantor. For purposes of this Agreement and the
other Loan Documents, such licensing activity shall not constitute a “Lien” on
such Intellectual Property. The Lender understands that any such
licenses may be exclusive to the applicable licensees, and such exclusivity
provisions may limit the ability of the Lender to utilize, sell, lease or
transfer the related Intellectual Property or otherwise realize value from such
Intellectual Property pursuant hereto.
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4.2 Perfected First Priority
Liens. The
security interests granted pursuant to this Agreement (a) upon completion of the
filings and other actions specified on Schedule 3 (which, in the case of
all filings and other documents referred to on said Schedule, have been
delivered to the Lender in completed and duly executed form) will constitute
valid perfected security interests in all of the Collateral in favor of the
Lender as collateral security for such Grantor’s Obligations, enforceable in
accordance with the terms hereof against all creditors of such Grantor and any
Persons purporting to purchase any Collateral from such Grantor and (b) are
prior to all other Liens on the Collateral in existence on the date hereof
except for unrecorded Liens permitted by the Loan Agreement which have priority
over the Liens on the Collateral by operation of law.
4.3 Jurisdiction of
Organization; Chief Executive Office. On
the date hereof, such Grantor’s jurisdiction of organization, identification
number from the jurisdiction of organization (if any), and the location of such
Grantor’s chief executive office or sole place of business or principal
residence, as the case may be, are specified on Schedule 4. Such
Grantor has furnished to the Lender a certified charter, certificate of
incorporation or other organization document and long-form good standing
certificate as of a date which is recent to the date hereof.
4.4 Inventory and
Equipment. On
the date hereof, the Inventory and the Equipment (other than mobile goods) are
kept at the locations listed on Schedule 5.
4.5 Investment
Property. (a) The
shares of Pledged Stock pledged by such Grantor hereunder constitute all the
issued and outstanding shares of all classes of the Capital Stock of each Issuer
owned by such Grantor or, in the case of Foreign Subsidiary Voting Stock, if
less, 66% of the outstanding Foreign Subsidiary Voting Stock of each relevant
Issuer.
(b) All the
shares of the Pledged Stock have been duly and validly issued and are fully paid
and nonassessable.
(c) Each of
the Pledged Notes constitutes the legal, valid and binding obligation of the
obligor with respect thereto, enforceable in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing.
(d) Such
Grantor is the record and beneficial owner of, and has good and marketable title
to, the Investment Property pledged by it hereunder, free of any and all Liens
or options in favor of, or claims of, any other Person, except the security
interest created by this Agreement.
4.6 Receivables. (a) No
amount payable to such Grantor under or in connection with any Receivable is
evidenced by any Instrument or Chattel Paper which has not been delivered to the
Lender.
(b) None of
the obligors on any Receivables is a Governmental Authority.
(c) The
amounts represented by such Grantor to the Lender from time to time as owing to
such Grantor in respect of the Receivables will at such times be
accurate.
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4.7
Intellectual
Property. (a) Schedule
6 lists all Intellectual Property owned by such Grantor in its own name on the
date hereof.
(b) On the
date hereof, all material Intellectual Property is valid, subsisting, unexpired
and enforceable, has not been abandoned and does not infringe the intellectual
property rights of any other Person.
(c) Except as
set forth in Schedule
6, on the date hereof, none of the Intellectual Property is the subject
of any licensing or franchise agreement pursuant to which such Grantor is the
licensor or franchisor.
(d) No
holding, decision or judgment has been rendered by any Governmental Authority
which would limit, cancel or question the validity of, or such Grantor’s rights
in, any Intellectual Property in any respect that could reasonably be expected
to have a Material Adverse Effect.
(e) No action
or proceeding is pending, or, to the knowledge of such Grantor, threatened, on
the date hereof (i) seeking to limit, cancel or question the validity of any
Intellectual Property or such Grantor’s ownership interest therein, or (ii)
which, if adversely determined, would have a material adverse effect on the
value of any Intellectual Property.
4.8 Commercial Tort
Claims
(a) On the
date hereof, except to the extent listed in Section 3.1 above, no Grantor has
rights in any Commercial Tort Claim with potential value in excess of
$100,000.
(b) Upon the
filing of a financing statement covering any Commercial Tort Claim referred to
in Section 5.11 hereof against such Grantor in the jurisdiction specified in
Schedule 3 hereto, the security interest granted in such Commercial Tort Claim
will constitute a valid perfected security interest in favor of the Lender as
collateral security for such Grantor’s Obligations, enforceable in accordance
with the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase such Collateral from Grantor, which security interest
shall be prior to all other Liens on such Collateral except for unrecorded liens
permitted by the Loan Agreement which have priority over the Liens on such
Collateral by operation of law.
SECTION
5. COVENANTS
Each
Grantor covenants and agrees with the Lender that, from and after the date of
this Agreement until the Obligations shall have been paid in full:
5.1 Delivery of Instruments,
Certificated Securities and Chattel Paper. If
any amount payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument, Certificated Security or Chattel Paper, such
Instrument, Certificated Security or Chattel Paper shall be immediately
delivered to the Lender, duly indorsed in a manner satisfactory to the Lender,
to be held as Collateral pursuant to this Agreement.
5.2 Maintenance of
Insurance. (a) Such
Grantor will maintain, with financially sound and reputable companies, insurance
policies (i) insuring the Inventory and Equipment against loss by fire,
explosion, theft and such other casualties as may be reasonably satisfactory to
the Lender and (ii) insuring such Grantor, the Lender against liability for
personal injury and property damage relating to such Inventory and Equipment,
such policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to the Lender.
11
(b) All such
insurance shall (i) provide that no cancellation, material reduction in amount
or material change in coverage thereof shall be effective until at least 30 days
after receipt by the Lender of written notice thereof, (ii) name the Lender as
insured party or loss payee, (iii) if reasonably requested by the Lender,
include a breach of warranty clause and (iv) be reasonably satisfactory in all
other respects to the Lender.
(c) The
Borrower shall deliver to the Lender a report of a reputable insurance broker
with respect to such insurance substantially concurrently with each delivery of
the Borrower’s audited annual financial statements and such supplemental reports
with respect thereto as the Lender may from time to time reasonably
request.
5.3 Payment of
Obligations. Such
Grantor will pay and discharge or otherwise satisfy at or before maturity or
before they become delinquent, as the case may be, all taxes, assessments and
governmental charges or levies imposed upon the Collateral or in respect of
income or profits therefrom, as well as all claims of any kind (including,
without limitation, claims for labor, materials and supplies) against or with
respect to the Collateral, except that no such charge need be paid if the amount
or validity thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect thereto have been
provided on the books of such Grantor and such proceedings could not reasonably
be expected to result in the sale, forfeiture or loss of any material portion of
the Collateral or any interest therein.
5.4 Maintenance of Perfected
Security Interest; Further Documentation. (a) Such
Grantor shall maintain the security interest created by this Agreement as a
perfected security interest having at least the priority described in Section
4.2 and shall defend such security interest against the claims and demands of
all Persons whomsoever, subject to the rights of such Grantor under the Loan
Documents to dispose of the Collateral.
(b) Such
Grantor will furnish to the Lender from time to time statements and schedules
further identifying and describing the assets and property of such Grantor and
such other reports in connection therewith as the Lender may reasonably request,
all in reasonable detail.
(c) At any
time and from time to time, upon the written request of the Lender, and at the
sole expense of such Grantor, such Grantor will promptly and duly execute and
deliver, and have recorded, such further instruments and documents and take such
further actions as the Lender may reasonably request for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, (i) filing any
financing or continuation statements under the Uniform Commercial Code (or other
similar laws) in effect in any jurisdiction with respect to the security
interests created hereby and (ii) in the case of Investment Property, Deposit
Accounts, Letter-of-Credit Rights and any other relevant Collateral, taking any
actions necessary to enable the Lender to obtain “control” (within the meaning
of the applicable Uniform Commercial Code) with respect thereto.
5.5 Changes in Name,
etc. Such
Grantor will not, except upon 15 days’ prior written notice to the Lender and
delivery to the Lender of all additional executed financing statements and other
documents reasonably requested by the Lender to maintain the validity,
perfection and priority of the security interests provided for herein, (i)
change its jurisdiction of organization or the location of its chief executive
office or sole place of business or principal residence from that referred to in
Section 4.3 or (ii) change its name.
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5.6 Investment
Property. (a) If
such Grantor shall become entitled to receive or shall receive any certificate
(including, without limitation, any certificate representing a dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights in respect of the Capital Stock of any Issuer, whether in addition to,
in substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Lender, hold the same in trust for the Lender and
deliver the same forthwith to the Lender in the exact form received, duly
indorsed by such Grantor to the Lender, if required, together with an undated
stock power covering such certificate duly executed in blank by such Grantor and
with, if the Lender so requests, signature guaranteed, to be held by the Lender,
subject to the terms hereof, as additional collateral security for the
Obligations. Any sums paid upon or in respect of the Investment
Property upon the liquidation or dissolution of any Issuer shall be paid over to
the Lender to be held by it hereunder as additional collateral security for the
Obligations, and in case any distribution of capital shall be made on or in
respect of the Investment Property or any property shall be distributed upon or
with respect to the Investment Property pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the reorganization
thereof, the property so distributed shall, unless otherwise subject to a
perfected security interest in favor of the Lender, be delivered to the Lender
to be held by it hereunder as additional collateral security for the
Obligations. If any sums of money or property so paid or distributed
in respect of the Investment Property shall be received by such Grantor, such
Grantor shall, until such money or property is paid or delivered to the Lender,
hold such money or property in trust for the Lender, segregated from other funds
of such Grantor, as additional collateral security for the
Obligations.
(b) Without
the prior written consent of the Lender, such Grantor will not (i) vote to
enable, or take any other action to permit, any Issuer to issue any Capital
Stock of any nature or to issue any other securities convertible into or
granting the right to purchase or exchange for any Capital Stock of any nature
of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of,
or grant any option with respect to, the Investment Property or Proceeds thereof
(except pursuant to a transaction expressly permitted by the Loan Agreement),
provided, however, the restrictions on transfer of Investment Property or the
Proceeds thereof set forth in this Section 5.6(b)(ii) shall not be applicable to
any mutual fund shares owned by such Grantor, (iii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Investment Property or Proceeds thereof, or any interest therein,
except for the security interests created by this Agreement or (iv) enter into
any agreement or undertaking restricting the right or ability of such Grantor or
the Lender to sell, assign or transfer any of the Investment Property or
Proceeds thereof.
(c) In the
case of each Grantor which is an Issuer, such Issuer agrees that (i) it will be
bound by the terms of this Agreement relating to the Investment Property issued
by it and will comply with such terms insofar as such terms are applicable to
it, (ii) it will notify the Lender promptly in writing of the occurrence of any
of the events described in Section 5.6(a) with respect to the Investment
Property issued by it and (iii) the terms of Sections 6.3(c) and 6.7 shall apply
to it, mutatis
mutandis, with
respect to all actions that may be required of it pursuant to Section 6.3(c) or
6.7 with respect to the Investment Property issued by it.
5.7 Receivables. (a) Other
than in the ordinary course of business consistent with its past practice, such
Grantor will not (i) grant any extension of the time of payment of any
Receivable, (ii) compromise or settle any Receivable for less than the full
amount thereof, (iii) release, wholly or partially, any Person liable for the
payment of any Receivable, (iv) allow any credit or discount whatsoever on any
Receivable or (v) amend, supplement or modify any Receivable in any manner that
could adversely affect the value thereof.
(b) Such
Grantor will deliver to the Lender a copy of each material demand, notice or
document received by it that questions or calls into doubt the validity or
enforceability of more than 5% of the aggregate amount of the then outstanding
Receivables.
13
5.8 Intellectual
Property. (a) Such
Grantor (either itself or through licensees) will (i) continue to use each
material Trademark on each and every trademark class of goods applicable to its
current line as reflected in its current catalogs, brochures and price lists in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of products
and services offered under such Trademark, (iii) use such Trademark with the
appropriate notice of registration and all other notices and legends required by
applicable Requirements of Law, (iv) not adopt or use any ▇▇▇▇ which is
confusingly similar or a colorable imitation of such Trademark unless the Lender
shall obtain a perfected security interest in such ▇▇▇▇ pursuant to this
Agreement, and (v) not (and not permit any licensee or sublicensee thereof to)
do any act or knowingly omit to do any act whereby such Trademark may become
invalidated or impaired in any way.
(b) Such
Grantor (either itself or through licensees) will not do any act, or omit to do
any act, whereby any material Patent may become forfeited, abandoned or
dedicated to the public.
(c) Such
Grantor (either itself or through licensees) (i) will employ each material
Copyright and (ii) will not (and will not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby any material
portion of the Copyrights may become invalidated or otherwise
impaired. Such Grantor will not (either itself or through licensees)
do any act whereby any material portion of the Copyrights may fall into the
public domain.
(d) Such
Grantor (either itself or through licensees) will not do any act that knowingly
uses any material Intellectual Property to infringe the intellectual property
rights of any other Person.
(e) Such
Grantor will notify the Lender immediately if it knows, or has reason to know,
that any application or registration relating to any material Intellectual
Property may become forfeited, abandoned or dedicated to the public, or of any
adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court or tribunal in any country) regarding such Grantor’s
ownership of, or the validity of, any material Intellectual Property or such
Grantor’s right to register the same or to own and maintain the
same.
(f) Whenever
such Grantor, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Intellectual
Property with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency in any other country or any
political subdivision thereof, such Grantor shall report such filing to the
Lender within five Business Days after the last day of the fiscal quarter in
which such filing occurs. Upon request of the Lender, such Grantor
shall execute and deliver, and have recorded, any and all agreements,
instruments, documents, and papers as the Lender may request to evidence the
Lender’s and the Lender’s security interest in any Copyright, Patent or
Trademark and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby.
(g) Such
Grantor will take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, to maintain and pursue
each application (and to obtain the relevant registration) and to maintain each
registration of the material Intellectual Property, including, without
limitation, filing of applications for renewal, affidavits of use and affidavits
of incontestability.
(h) In the
event that any material Intellectual Property is infringed, misappropriated or
diluted by a third party, such Grantor shall (i) take such actions as such
Grantor shall reasonably deem appropriate under the circumstances to protect
such Intellectual Property and (ii) if such Intellectual Property is of material
economic value, promptly notify the Lender after it learns thereof and ▇▇▇ for
infringement, misappropriation or dilution, to seek injunctive relief where
appropriate and to recover any and all damages for such infringement,
misappropriation or dilution.
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5.9 Commercial Tort
Claims. If such
Grantor shall obtain an interest in any Commercial Tort Claim with a potential
value in excess of $100,000, such Grantor shall within 30 days of obtaining such
interest sign and deliver documentation acceptable to the Lender granting a
security interest under the terms and provisions of this Agreement in and to
such Commercial Tort Claim.
SECTION
6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to
Receivables. (a) The
Lender shall have the right to make test verifications of the Receivables in any
manner and through any medium that it reasonably considers advisable, and each
Grantor shall furnish all such assistance and information as the Lender may
require in connection with such test verifications. At any time and
from time to time, upon the Lender’s request and at the expense of the relevant
Grantor, such Grantor shall cause independent public accountants or others
satisfactory to the Lender to furnish to the Lender reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Receivables.
(b) The
Lender hereby authorizes each Grantor to collect such Grantor’s Receivables,
subject to the Lender direction and control, and the Lender may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Lender at any
time after the occurrence and during the continuance of an Event of Default, any
payments of Receivables, when collected by any Grantor, (i) shall be forthwith
(and, in any event, within two Business Days) deposited by such Grantor in the
exact form received, duly indorsed by such Grantor to the Lender if required, in
a Collateral Account maintained under the sole dominion and control of the
Lender, subject to withdrawal by the Lender only as provided in Section 6.5, and
(ii) until so turned over, shall be held by such Grantor in trust for the
Lender, segregated from other funds of such Grantor. Each such
deposit of Proceeds of Receivables shall be accompanied by a report identifying
in reasonable detail the nature and source of the payments included in the
deposit.
(c) At the
Lender’s request, each Grantor shall deliver to the Lender all original and
other documents evidencing, and relating to, the agreements and transactions
which gave rise to the Receivables, including, without limitation, all original
orders, invoices and shipping receipts.
6.2 Communications with
Obligors; Grantors Remain Liable. (a) The
Lender in its own name or in the name of others may at any time after the
occurrence and during the continuance of an Event of Default communicate with
obligors under the Receivables to verify with them to the Lender’s satisfaction
the existence, amount and terms of any Receivables.
(b) Upon the
request of the Lender at any time after the occurrence and during the
continuance of an Event of Default, each Grantor shall notify obligors on the
Receivables that the Receivables have been assigned to the Lender and that
payments in respect thereof shall be made directly to the Lender.
(c) Anything
herein to the contrary notwithstanding, each Grantor shall remain liable under
each of the Receivables to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise thereto. The Lender shall
not have any obligation or liability under any Receivable (or any agreement
giving rise thereto) by reason of or arising out of this Agreement or the
receipt by the Lender of any payment relating thereto, nor shall the Lender be
obligated in any manner to perform any of the obligations of any Grantor under
or pursuant to any Receivable (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any party
thereunder, 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 it or to which it may be entitled at any time or times.
15
6.3 Pledged
Stock. (a) Unless
an Event of Default shall have occurred and be continuing and the Lender shall
have given notice to the relevant Grantor of the Lender’s intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice, to
the extent permitted in the Loan Agreement, and to exercise all voting and
corporate or other organizational rights with respect to the Investment
Property; provided, however, that no vote
shall be cast or corporate or other organizational right exercised or other
action taken which, in the Lender’s reasonable judgment, would impair the
Collateral or which would be inconsistent with or result in any violation of any
provision of the Loan Agreement, this Agreement or any other Loan
Document.
(b) If an
Event of Default shall occur and be continuing and the Lender shall give notice
of its intent to exercise such rights to the relevant Grantor or Grantors,
(i) the Lender shall have the right to receive any and all cash dividends,
payments or other Proceeds paid in respect of the Investment Property and make
application thereof to the Obligations in such order as the Lender may
determine, and (ii) any or all of the Investment Property shall be registered in
the name of the Lender or its nominee, and the Lender or its nominee may
thereafter exercise (x) all voting, corporate and other rights pertaining to
such Investment Property at any meeting of shareholders of the relevant Issuer
or Issuers or otherwise and (y) any and all rights of conversion, exchange
and subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or other
organizational structure of any Issuer, or upon the exercise by any Grantor or
the Lender of any right, privilege or option pertaining to such Investment
Property, and in connection therewith, the right to deposit and deliver any and
all of the Investment Property with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Lender may determine), all without liability except to account for property
actually received by it, but the Lender shall have no duty to any Grantor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(c) Each
Grantor hereby authorizes and instructs each Issuer of any Investment Property
pledged by such Grantor hereunder to (i) comply with any instruction received by
it from the Lender in writing that (x) states that an Event of Default has
occurred and is continuing and (y) is otherwise in accordance with the terms of
this Agreement, without any other or further instructions from such Grantor, and
each Grantor agrees that each Issuer shall be fully protected in so complying,
and (ii) unless otherwise expressly permitted hereby, pay any dividends or other
payments with respect to the Investment Property directly to the
Lender.
6.4 Proceeds to be Turned Over
To Lender. In
addition to the rights of the Lender and the Lender specified in Section 6.1
with respect to payments of Receivables, if an Event of Default shall occur and
be continuing, all Proceeds received by any Grantor consisting of cash, checks
and other near-cash items shall be held by such Grantor in trust for the Lender,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Lender in the exact form received by such
Grantor (duly indorsed by such Grantor to the Lender, if
required). All Proceeds received by the Lender hereunder shall be
held by the Lender in a Collateral Account maintained under its sole dominion
and control. All Proceeds while held by the Lender in a Collateral
Account (or by such Grantor in trust for the Lender) shall continue to be held
as collateral security for all the Obligations and shall not constitute payment
thereof until applied as provided in Section 6.5.
16
6.5 Application of
Proceeds. At
such intervals as may be agreed upon by the Borrower and the Lender, or, if an
Event of Default shall have occurred and be continuing, at any time at the
Lender’s election, the Lender may apply all or any part of Proceeds constituting
Collateral, whether or not held in any Collateral Account, and any proceeds of
the guarantee set forth in Section 2, in payment of the Obligations in the
following order:
First, to pay
incurred and unpaid fees and expenses of the Lender under the Loan
Documents;
Second, to the
Lender, for application by it towards payment of amounts then due and owing and
remaining unpaid in respect of the Obligations;
Third, any balance
remaining after the Obligations shall have been paid in full shall be paid over
to the Borrower or to whomsoever may be lawfully entitled to receive the
same.
6.6 Code and Other
Remedies. If
an Event of Default shall occur and be continuing, the Lender may exercise, in
addition to all other rights and remedies granted to them in this Agreement and
in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the
foregoing, the Lender, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker’s board or office of the Lender or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Lender 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 the whole or any part of the Collateral so sold, free of any right
or equity of redemption in any Grantor, which right or equity is hereby waived
and released. Each Grantor further agrees, at the Lender’s request,
to assemble the Collateral and make it available to the Lender at places which
the Lender shall reasonably select, whether at such Grantor’s premises or
elsewhere. The Lender shall apply the net proceeds of any action
taken by it pursuant to this Section 6.6, after deducting all reasonable costs
and expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Lender hereunder, including, without limitation,
reasonable attorneys’ fees and disbursements, to the payment in whole or in part
of the Obligations, in such order as the Lender may elect, and only after such
application and after the payment by the Lender of any other amount required by
any provision of law, including, without limitation, Section 9-615(a)(3) of the
New York UCC, need the Lender account for the surplus, if any, to any
Grantor. To the extent permitted by applicable law, each Grantor
waives all claims, damages and demands it may acquire against the Lender arising
out of the exercise by them of any rights hereunder. If any notice of
a proposed sale or other disposition of Collateral shall be required by law,
such notice shall be deemed reasonable and proper if given at least 10 days
before such sale or other disposition.
6.7 [Reserved].
17
6.8 Subordination. Each
Grantor hereby agrees that, upon the occurrence and during the continuance of an
Event of Default, unless otherwise agreed by the Lender, all Indebtedness owing
by it to any Subsidiary of the Borrower shall be fully subordinated to the
indefeasible payment in full in cash of such Grantor’s Obligations.
6.9 Deficiency. Each
Grantor shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay its Obligations and
the fees and disbursements of any attorneys employed by the Lender to collect
such deficiency.
SECTION
7. THE LENDER
7.1 Lender’s Appointment as
Attorney-in-Fact, etc. (a) Each
Grantor hereby irrevocably constitutes and appoints the Lender and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Grantor and in the name of such Grantor or in its 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 which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby gives the
Lender the power and right, on behalf of such Grantor, without notice to or
assent by such Grantor, to do any or all of the following:
(i)
in the
name of such Grantor or its own name, or otherwise, take possession of and
indorse and collect any checks, drafts, notes, acceptances or other instruments
for the payment of moneys due under any Receivable or with respect to any other
Collateral and file any claim or take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Lender for the
purpose of collecting any and all such moneys due under any Receivable or with
respect to any other Collateral whenever payable;
(ii) in the
case of any Intellectual Property, execute and deliver, and have recorded, any
and all agreements, instruments, documents and papers as the Lender may request
to evidence the Lender’s security interest in such Intellectual Property and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby;
(iii) pay or
discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or any insurance called for by the terms of this
Agreement and pay all or any part of the premiums therefor and the costs
thereof;
(iv) execute,
in connection with any sale provided for in Section 6.6 or 6.7, any
indorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral; and
(v) (1) direct
any party liable for any payment under any of the Collateral to make payment of
any and all moneys due or to become due thereunder directly to the Lender or as
the Lender shall direct; (2) ask or demand for, collect,
and receive payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out of any
Collateral; (3) sign and indorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in connection
with any of the Collateral; (4) commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to enforce any
other right in respect of any Collateral; (5) defend any suit, action or
proceeding brought against such Grantor with respect to any Collateral; (6)
settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the Lender may deem
appropriate; (7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions, and
in such manner, as the Lender shall in its sole discretion determine; and (8)
generally, sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
Lender were the absolute owner thereof for all purposes, and do, at the Lender’s
option and such Grantor’s expense, at any time, or from time to time, all acts
and things which the Lender deems necessary to protect, preserve or realize upon
the Collateral and the Lender’s security interests therein and to effect the
intent of this Agreement, all as fully and effectively as such Grantor might
do.
18
Anything
in this Section 7.1(a) to the contrary notwithstanding, the Lender
agrees that it will not exercise any rights under the power of attorney provided
for in this Section 7.1(a) unless an Event of Default shall have occurred and be
continuing.
(b) If any
Grantor fails to perform or comply with any of its agreements contained herein,
the Lender, at its option, but without any obligation so to do, may perform or
comply, or otherwise cause performance or compliance, with such
agreement.
(c) The
expenses of the Lender incurred in connection with actions undertaken as
provided in this Section 7.1, together with interest thereon at a rate per annum
equal to the Interest Rate, from the date of payment by the Lender to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Lender on demand.
(d) Each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable
until this Agreement is terminated and the security interests created hereby are
released.
7.2 Duty of Lender. The
Lender’s sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the New
York UCC or otherwise, shall be to deal with it in the same manner as the Lender
deals with similar property for its own account. Neither the Lender
nor any of its officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Lender hereunder are solely to
protect the Lender’s interests in the Collateral and shall not impose any duty
upon the Lender to exercise any such powers. The Lender shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful
misconduct.
7.3 Execution of Financing
Statements. Pursuant
to any applicable law, each Grantor authorizes the Lender to file or record
financing statements and other filing or recording documents or instruments with
respect to the Collateral without the signature of such Grantor in such form and
in such offices as the Lender determines appropriate to perfect the security
interests of the Lender under this Agreement. Each Grantor authorizes
the Lender to use the collateral description “all personal property” in any such
financing statements. Each Grantor hereby ratifies and authorizes the
filing by the Lender of any financing statement with respect to the Collateral
made prior to the date hereof.
19
SECTION
8. MISCELLANEOUS
8.1 Amendments in
Writing. None
of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except in accordance with Section 9.7 of the
Loan Agreement.
8.2 Notices. All
notices, requests and demands to or upon the Lender or any Grantor hereunder
shall be effected in the manner provided for in Section 9.11 of the Loan
Agreement; provided that any such notice, request or demand to or upon any
Guarantor shall be addressed to such Guarantor at its notice address set forth
on Schedule 1.
8.3 No Waiver by Course of
Conduct; Cumulative Remedies. The
Lender shall not by any act (except by a written instrument pursuant to Section
8.1), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the
part of the Lender, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the
Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Lender would otherwise have
on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
8.4 Enforcement Expenses;
Indemnification. (a) Each
Guarantor agrees to pay or reimburse the Lender for all its costs and expenses
incurred in collecting against such Guarantor under the guarantee contained in
Section 2 or otherwise enforcing or preserving any rights under this Agreement
and the other Loan Documents to which such Guarantor is a party, including,
without limitation, the fees and disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to the Lender.
(b) Each
Guarantor agrees to pay, and to save the Lender harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all
stamp, excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Agreement.
(c) Each
Guarantor agrees to pay, and to save the Lender harmless from, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement to the extent the Borrower would be required to do so pursuant to
Section 9.1 of the Loan Agreement.
(d) The
agreements in this Section 8.4 shall survive repayment of the Obligations and
all other amounts payable under the Loan Agreement and the other Loan
Documents.
8.5 Successors and
Assigns. This
Agreement shall be binding upon the successors and assigns of each Grantor and
shall inure to the benefit of the Lender and their successors and assigns;
provided that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Lender.
8.6 Set-Off. In
addition to any rights and remedies of the Lender provided by law, theLender
shall have the right, without notice to any Grantor, any such notice being
expressly waived by each Grantor to the extent permitted by applicable law, upon
any Obligations becoming due and payable by any Grantor (whether at the stated
maturity, by acceleration or otherwise), to apply to the payment of such
Obligations, by setoff or otherwise, any and all deposits (general or special,
time or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Lender, any affiliate thereof or any of their respective branches
or agencies to or for the credit or the account of such Grantor. The
Lender agrees promptly to notify the relevant Grantor after any such application
made by the Lender, provided that the
failure to give such notice shall not affect the validity of such
application.
20
8.7 Counterparts. This
Agreement may be executed by one or more of the parties to this Agreement on any
number of separate counterparts (including by telecopy), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
8.8 Severability. Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
8.9 Section
Headings. The
Section headings used in this Agreement are for convenience of reference only
and are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.
8.10
Integration. This
Agreement and the other Loan Documents represent the agreement of the Grantors
and the Lender with respect to the subject matter hereof and thereof, and there
are no promises, undertakings, representations or warranties by the Lender
relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.
8.11
GOVERNING
LAW. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
8.12
Submission To Jurisdiction;
Waivers. Each
Grantor hereby irrevocably and unconditionally:
(a) submits
for itself and its property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of
New York, and appellate courts from any thereof;
(b) consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to such Grantor at its address referred
to in Section 8.2 or at such other address of which the Lender shall have been
notified pursuant thereto;
21
(d) agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to ▇▇▇ in any other
jurisdiction; and
(e) waives,
to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section any
special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. Each
Grantor hereby acknowledges that:
(a) it has
been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;
(b) the
Lender has no fiduciary relationship with or duty to any Grantor arising out of
or in connection with this Agreement or any of the other Loan Documents, and the
relationship between the Grantors, on the one hand, and the Lender, on the other
hand, in connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint
venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Lender or among the
Grantors and the Lender.
8.14 Additional
Grantors. Each
Subsidiary of the Borrower that is required to become a party to this Agreement
pursuant to Section 4.7 of the Loan Agreement shall become a Grantor for all
purposes of this Agreement upon execution and delivery by such Subsidiary of an
Assumption Agreement in the form of Annex 1 hereto.
8.15 Releases. (a) At
such time as the Loans and the other Obligations shall have been paid in full,
the Collateral shall be released from the Liens created hereby, and this
Agreement and all obligations (other than those expressly stated to survive such
termination) of the Lender and each Grantor hereunder shall terminate, all
without delivery of any instrument or performance of any act by any party, and
all rights to the Collateral shall revert to the Grantors. At the
request and sole expense of any Grantor following any such termination, the
Lender shall deliver to such Grantor any Collateral held by the Lender
hereunder, and execute and deliver to such Grantor such documents as such
Grantor shall reasonably request to evidence such termination.
(b) If any of
the Collateral shall be sold, transferred or otherwise disposed of by any
Grantor in a transaction permitted by the Loan Agreement, then the Lender, at
the request and sole expense of such Grantor, shall execute and deliver to such
Grantor all releases or other documents reasonably necessary or desirable for
the release of the Liens created hereby on such Collateral. At the
request and sole expense of the Borrower, a Subsidiary Guarantor shall be
released from its obligations hereunder in the event that all the Capital Stock
of such Subsidiary Guarantor shall be sold, transferred or otherwise disposed of
in a transaction permitted by the Loan Agreement.
8.16 WAIVER OF
JURY TRIAL. EACH
GRANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.
22
IN
WITNESS WHEREOF, each of the undersigned has caused this Guarantee and
Collateral Agreement to be duly executed and delivered as of the date first
above written.
|
Virtus
Investment Partners, Inc., as Borrower
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||
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
|
|
|
Title:
|
Chief
Financial Officer and Treasurer
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|
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DPCM
Holdings, Inc., as Grantor
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
Title:
|
Vice
President and Treasurer
|
|
|
Duff
& ▇▇▇▇▇▇ Investment Management Co., as Grantor
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
Title:
|
Vice
President and Treasurer
|
|
|
▇▇▇▇▇▇▇▇
Asset Management, as Grantor
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
Title:
|
Vice
President and Treasurer
|
|
|
Euclid
Advisors LLC, as Grantor
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
Title:
|
Vice
President and Treasurer
|
|
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Investment Management, LLC, as Grantor
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
Title:
|
Vice
President and Treasurer
|
|
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Pasadena
Capital Corporation, as Grantor
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
Title:
|
Chief
Financial Officer
|
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SCM
Advisors LLC, as Grantor
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
Title:
|
Chief
Financial Officer
|
|
|
Virtus
Alternative Investment Advisors, Inc., as Grantor
|
||
|
By:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
Title:
|
Vice
President and Treasurer
|
|
|
Virtus
Investment Advisers, Inc., as Grantor
|
||
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
|
|
|
Title:
|
Chief
Financial Officer
|
|
|
Virtus
Partners, Inc., as Grantor
|
||
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
|
|
|
Title:
|
Chief
Financial Officer
|
|
|
▇▇▇▇▇
Advisors, LLC, as Grantor
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||
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
|
|
|
Title:
|
Chief
Financial Officer
|
|
23
Annex 1
to
ASSUMPTION
AGREEMENT, dated as of December 31, 2008, made by ______________________________
(the “Additional
Grantor”), in favor of the Lender. All capitalized terms not
defined herein shall have the meaning ascribed to them in such Loan
Agreement.
W I T N E S S E T H :
WHEREAS,
the Borrower and the Lender have entered into a Loan Agreement, dated as of
December 31, 2008 (as amended, supplemented or otherwise modified from time to
time, the “Loan
Agreement”);
WHEREAS,
in connection with the Loan Agreement, the Borrower and certain of its
Affiliates (other than the Additional Grantor) have entered into the Guarantee
and Collateral Agreement, dated as of December 31, 2008 (as amended,
supplemented or otherwise modified from time to time, the “Guarantee and Collateral
Agreement”) in favor of the Lender;
WHEREAS,
the Loan Agreement requires the Additional Grantor to become a party to the
Guarantee and Collateral Agreement; and
WHEREAS,
the Additional Grantor has agreed to execute and deliver this Assumption
Agreement in order to become a party to the Guarantee and Collateral
Agreement;
NOW,
THEREFORE, IT IS AGREED:
1. Guarantee and Collateral
Agreement. By executing and delivering this Assumption
Agreement, the Additional Grantor, as provided in Section 8.14 of the Guarantee
and Collateral Agreement, hereby becomes a party to the Guarantee and Collateral
Agreement as a Grantor thereunder with the same force and effect as if
originally named therein as a Grantor and, without limiting the generality of
the foregoing, hereby expressly assumes all obligations and liabilities of a
Grantor thereunder. The information set forth in Annex 1-A hereto is
hereby added to the information set forth in the Schedules to the Guarantee and
Collateral Agreement. The Additional Grantor hereby represents and
warrants that each of the representations and warranties contained in Section 4
of the Guarantee and Collateral Agreement is true and correct on and as the date
hereof (after giving effect to this Assumption Agreement) as if made on and as
of such date.
2. Governing
Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
1
IN
WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be duly
executed and delivered as of the date first above written.
|
[ADDITIONAL
GRANTOR]
|
|||
|
By:
|
|||
| Name: | |||
| Title: | |||
2
Annex 1-A
to
Assumption
Agreement
Supplement to Schedule
1
Supplement to Schedule
2
Supplement to Schedule
3
Supplement to Schedule
4
Supplement to Schedule
5
Supplement to Schedule
6
i