VIRTUS INVESTMENT PARTNERS, INC. SECURITY AGREEMENT

Exhibit 10.3

EXECUTION COPY

VIRTUS INVESTMENT PARTNERS, INC.

SECURITY AGREEMENT

among

VIRTUS INVESTMENT PARTNERS, INC.,

EACH OF THE OTHER GRANTORS PARTY HERETO

and

THE BANK OF NEW YORK MELLON,

as Administrative Agent

 

Dated as of September 1, 2009

TABLE OF CONTENTS

 

Virtus Investment Partners, Inc. Security Agreement

TABLE OF CONTENTS

 

SCHEDULES :

 

EXHIBITS :

 

 

(ii)

Virtus Investment Partners, Inc. Security Agreement

SECURITY AGREEMENT, dated as of September      , 2009, among Virtus Investment Partners, Inc., a Delaware corporation (the “ Borrower ”), each of the subsidiaries of the Borrower listed on Schedule I or which becomes a party hereto in accordance with Article 10 (each such subsidiary, individually, a “ Subsidiary Guarantor ” and, collectively, the “ Subsidiary Guarantors ”; the Subsidiary Guarantors and the Borrower are referred to collectively herein as the “ Grantors ”), and THE BANK OF NEW YORK MELLON, as Administrative Agent under the Credit Agreement referred to in the next paragraph (as amended, supplemented or otherwise modified from time to time, the “ Security Agreement ”).

RECITALS

A. Reference is made to the Credit Agreement, dated as of September 1, 2009, among the Borrower, the Lenders party thereto, and The Bank of New York Mellon, as Administrative Agent (as the same may be amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”).

B. The Lenders have agreed to make Revolving Loans to, and the Issuing Bank has agreed to issue Letters of Credit for the account of, the Borrower pursuant to, and upon the terms and subject to the conditions specified in, the Credit Agreement. The Grantors acknowledge that the Revolving Loans, Letters of Credit and other financial accommodations made under the Loan Documents will enhance the aggregate borrowing powers of the Borrower and credit availability to the other Loan Parties and facilitate their loan relationship with the Credit Parties, all to the mutual advantage of the Grantors.

C. Each Grantor acknowledges that it will derive substantial direct and indirect benefit from the making of the Revolving Loans and the issuance of the Letters of Credit. Each Guarantor has, pursuant to the Guarantee Agreement, unconditionally guaranteed the Secured Obligations.

D. This Security Agreement is given by each Grantor in favor of the Administrative Agent for the benefit of the Secured Parties (as hereinafter defined) to secure the payment and performance of all of the Secured Obligations (as hereinafter defined).

E. The execution and delivery by the Grantors of this Security Agreement is a condition precedent to the effectiveness of the Credit Agreement, and the Credit Parties would not have entered into the Credit Agreement if the Grantors had not executed and delivered this Security Agreement.

Accordingly, the Grantors and the Administrative Agent, on behalf of itself and each other Secured Party (and each of their respective successors or assigns), hereby agree as follows:

ARTICLE 1.

DEFINITIONS; GRANT OF SECURITY; CONTINUING PERFECTION AND PRIORITY

Section 1.1 General Definitions . As used in this Security Agreement, the following terms shall have the meanings specified below:

“ Account Debtor ” means each Person who is obligated in respect of any Receivable or any Supporting Obligation or Collateral Support relating thereto.

 

Virtus Investment Partners, Inc. Security Agreement

“ Accounts ” means (i) all “accounts” as defined in Article 9 of the UCC and (ii) all “health-care-insurance receivables”, each as defined in Article 9 of the UCC.

“ Additional Grantor ” has the meaning assigned to such term in Article 10 .

“ Applicable Date ” means (i) in the case of any Grantor (other than an Additional Grantor), the date hereof, and (ii) in the case of any Additional Grantor, the date of the Supplement executed and delivered by such Additional Grantor.

“ Approved Securities Intermediary ” means a Securities Intermediary or commodity intermediary selected or approved by the Administrative Agent and with respect to which a Grantor has delivered to the Administrative Agent an executed Securities Account Control Agreement.

“ Authorization ” means, collectively, any license, approval, permit or other authorization issued by any Governmental Authority.

“ Blocked Account ” means a Deposit Account or Securities Account maintained by any Grantor with a financial institution or Securities Intermediary, as applicable, selected by such Grantor and reasonably acceptable to the Administrative Agent, which account is the subject of an effective Deposit Account Control Agreement or Securities Account Control Agreement.

“ Blocked Account Bank ” means a financial institution selected or approved by the Administrative Agent and with respect to which a Grantor has delivered to the Administrative Agent an executed Deposit Account Control Agreement.

“ Borrower ” has the meaning assigned to such term in the preliminary statement of this Security Agreement.

“ Cash Collateral Account ” means any Deposit Account or Securities Account established by the Administrative Agent in which cash and/or Permitted Investments may from time to time be on deposit or held therein pursuant to the Loan Documents.

“ Cash Management Agreement ” means an agreement entered into by a Loan Party with any Lender or an Affiliate thereof pursuant to which such Lender or such Affiliate provides any one or more of the following types or services or facilities to any Loan Party: (a) ACH transactions, (b) other cash management services, including, without limitation, controlled disbursement services, treasury, depository, overdraft, and electronic funds transfer services, (c) foreign exchange facilities, (d) credit card processing services, and (e) credit or debit cards.

“ Chattel Paper ” means all “chattel paper” as defined in Article 9 of the UCC.

 

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“ Claim Proceeds ” means, with respect to any Commercial Tort Claim or any Collateral Support or Supporting Obligation relating thereto, all Proceeds thereof, including all insurance proceeds and other amounts and recoveries resulting or arising from the settlement or other resolution thereof, in each case regardless of whether characterized as a “commercial tort claim” under Article 9 of the UCC or “proceeds” under the UCC.

“ Collateral ” has the meaning assigned to such term in Section 1.3(a) .

“ Collateral Records ” means all books, instruments, certificates, Records, ledger cards, files, correspondence, customer lists, blueprints, technical specifications, manuals and other documents, and all computer software, computer printouts, tapes, disks and related data processing software and similar items, in each case that at any time represent, cover or otherwise evidence, or contain information relating to, any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon.

“ Collateral Support ” means all property (real or personal) assigned, hypothecated or otherwise securing any of the Collateral, and shall include any security agreement or other agreement granting a lien or security interest in such real or personal property.

“ Commercial Tort Claims ” means all “commercial tort claims” as defined in Article 9 of the UCC and all Claim Proceeds; including all claims described on Schedule 3.7 .

“ Concentration Account ” means a Deposit Account of the Grantors with The Bank of New York Mellon or such other bank or financial institution acceptable to the Administrative Agent, which shall be a Blocked Account.

“ Copyright License ” means any written agreement, now or hereafter in effect, granting any right to any third party under any Copyright now or hereafter owned or held by or behalf of any Grantor or which any Grantor otherwise has the right to license, or granting any right to any Grantor under any Copyright now or hereafter owned by any third party, and all rights of any Grantor under any such agreement, including each agreement described on Schedule 3.6 .

“ Copyrights ” means all of the following: (i) all copyright rights in any work subject to the copyright laws of the United States of America or any other country, whether as author, assignee, transferee or otherwise, (ii) all registrations and applications for registration of any such copyright in the United States of America or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office or any similar offices in the United States of America or any other country, including those described on Schedule 3.6 , (iii) all rights and privileges arising under applicable law with respect to the use of such copyrights, (iv) all reissues, renewals, continuations and extensions thereof and amendments thereto, and (v) all income, fees, royalties, damages, claims and payments now or hereafter due and/or payable with respect thereto, including damages and payments for past, present or future infringements thereof.

 

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“ Credit Agreement ” has the meaning assigned to such term in the preliminary statement of this Security Agreement.

“ Deposit Accounts ” means all “deposit accounts” as defined in Article 9 of the UCC, including all such accounts described on Schedule 3.8 .

“ Deposit Account Control Agreement ” means a Deposit Account Control Agreement, in form and substance reasonably satisfactory to the Administrative Agent, executed by any Grantor and the Administrative Agent and acknowledged and agreed to by the relevant financial institution, providing for “control” (within the meaning of the UCC) by the Administrative Agent over a Deposit Account.

“ Documents ” means all “documents” as defined in Article 9 of the UCC.

“ Equipment ” means (i) all “equipment” as defined in Article 9 of the UCC, (ii) all machinery, manufacturing equipment, data processing equipment, computers, office equipment, furnishings, furniture, appliances, fixtures and tools, in each case, regardless of whether characterized as “equipment” under the UCC, and (iii) all accessions or additions to any of the foregoing, all parts thereof, whether or not at any time of determination incorporated or installed therein or attached thereto, and all replacements therefor, wherever located, now or hereafter existing.

“ Financial Assets ” means all “financial assets” as defined in Article 8 of the UCC.

“ Federal Securities Laws ” has the meaning assigned to such term in Section 5.3 .

“ General Intangibles ” means (i) all “general intangibles” as defined in Article 9 of the UCC and (ii) all choses in action and causes of action, all indemnification claims, all goodwill, all Hedging Agreements, all tax refunds, all licenses, permits, concessions, franchises and authorizations, all Intellectual Property, all Payment Intangibles, all Authorizations and all Software, in each case regardless of whether characterized as a “general intangible” under the UCC; including all rights and interests under all capital contribution, subscription and similar agreements.

“ Goods ” means (i) all “goods” as defined in Article 9 of the UCC and (ii) all Equipment and Inventory and any computer program embedded in goods and any supporting information provided in connection with such program, to the extent (a) such program is associated with such goods in such a manner that it is customarily considered part of such goods or (b) by becoming the owner of such goods, a Person acquires a right to use the program in connection with such goods, in each case regardless of whether characterized as a “good” under the UCC.

“ Grantor ” and “ Grantors ” have the meanings assigned to such terms in the preliminary statement of this Security Agreement.

“ Instruments ” means all “instruments” as defined in Article 9 of the UCC.

 

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“ Insurance ” means all insurance policies covering any or all of the Collateral (regardless of whether the Administrative Agent or any other Secured Party is the loss payee thereof) and all business interruption insurance policies.

“ Intellectual Property ” means all intellectual and similar property of any Grantor of every kind and nature, including inventions, designs, Patents, Copyrights, Trademarks, Licenses, domain names, Trade Secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.

“ Inventory ” means (i) all “inventory” as defined in Article 9 of the UCC and (ii) all goods held for sale or lease or to be furnished under contracts of service or so leased or furnished, all raw materials, work in process, finished goods and materials used or consumed in the manufacture, packing, shipping, advertising, selling, leasing, furnishing or production of such inventory or otherwise used or consumed in any Grantor’s business, all goods which are returned to or repossessed by or on behalf of any Grantor, and all computer programs embedded in any goods, and all accessions thereto and products thereof, in each case, regardless of whether characterized as “inventory” under the UCC.

“ Investment Property ” means “investment property” as defined in Article 9 of the UCC.

“ Investment-Related Property ” means (i) all Pledged Collateral and (ii) all other Investment Property owned or held by or on behalf of any Grantor.

“ Issuer’s Acknowledgment ” means an acknowledgment substantially in the form of Exhibit B .

“ Letter-of-Credit Rights ” means (i) all “letter-of-credit rights” as defined in Article 9 of the UCC and (ii) all rights, title and interests of each Grantor to any letter of credit, in each case regardless of whether characterized as a “letter-of-credit right” under the UCC.

“ License ” means any Copyright License, Patent License, Trademark License, Trade Secret License or other license (other than any Authorization) or sublicense to which any Grantor is a party.

“ Material Commercial Tort Claims ” means, with respect to each Grantor, (i) all Commercial Tort Claims asserted by it, or on its behalf, in writing, and (ii) each Commercial Tort Claim in excess of $50,000 to which it has any right, title or interest and of which it is aware.

“ Patent License ” means any written agreement, now or hereafter in effect, granting to any third party any right to make, use or sell any invention on which a Patent, now or hereafter owned or held by or on behalf of any Grantor or which any Grantor otherwise has the

 

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right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a Patent, now or hereafter owned by any third party, is in existence, and all rights of any Grantor under any such agreement, including each agreement described on Schedule 3.6 .

“ Patents ” means all of the following: (i) all letters patent of the United States of America or any other country, all registrations and recordings thereof and all applications for letters patent of the United States of America or any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office or any similar offices in the United States of America or any other country, including those described on Schedule 3.6 , (ii) all inventions and improvements described and claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein, (iii) all reissues, continuations, divisions, continuations in part, renewals or extensions thereof and amendments thereto, and the inventions disclosed or claimed therein, and (iv) all income, fees, royalties, damages, claims and payments now or hereafter due and/or payable thereunder and with respect thereto.

“ Payment Intangibles ” means all “payment intangibles” as defined in Article 9 of the UCC.

“ Pledged Collateral ” means, collectively, Pledged Debt and Pledged Equity Interests.

“ Pledged Debt ” means all debt owed or owing to any Grantor and not held in a Securities Account or otherwise through a Securities Intermediary, including all such debt described on Schedule 3.4 , all Instruments, Chattel Paper or other documents, if any, representing or evidencing such debt, and all interest, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such debt.

“ Pledged Equity Interests ” means all Equity Interests owned or held by or on behalf of any Grantor and not held in a Securities Account or otherwise through a Securities Intermediary, including all such Equity Interests described on Schedule 3.4 , and all certificates, instruments and other documents, if any, representing or evidencing such Equity Interests and all interests of such Grantor on the books and records of the issuers of such Equity Interests, all of such Grantor’s right, title and interest in, to and under any partnership, limited liability company, shareholder or similar agreements to which it is a party, and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Equity Interests.

“ Power of Attorney ” means a Special Power of Attorney in substantially the form of Exhibit C .

“ Proceeds ” means (i) all “proceeds” as defined in Article 9 of the UCC, (ii) payments or distributions made with respect to any Collateral, (iii) any payment received from

 

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any insurer or other Person or entity as a result of the destruction, loss, theft, damage or other involuntary conversion of whatever nature of any asset or property that constitutes the Collateral, and (iv) whatever is receivable or received when any of the Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary, including any claim of any Grantor against any third party for (and the right to sue and recover for and the rights to damages or profits due or accrued arising out of or in connection with) (a) past, present or future infringement of any Patent now or hereafter owned or held by or on behalf of any Grantor, or licensed under a Patent License, (b) past, present or future infringement or dilution of any Trademark now or hereafter owned or held by or on behalf of any Grantor, or licensed under a Trademark License, or injury to the goodwill associated with or symbolized by any Trademark now or hereafter owned or held by or on behalf of any Grantor, (c) past, present or future infringement of any Copyright now or hereafter owned or held by or on behalf of any Grantor, or licensed under a Copyright License, (d) past, present or future infringement of any Trade Secret now or hereafter owned or held by or on behalf of any Grantor, or licensed under a Trade Secret License, and (e) past, present or future breach of any License, in each case, regardless of whether characterized as “proceeds” under the UCC.

“ Receivables ” means all rights to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, including all such rights constituting or evidenced by any Account, Chattel Paper, Instrument or other document, General Intangible or Investment-Related Property, together with all of the applicable Grantor’s rights, if any, in any goods or other property giving rise to such right to payment, and all Collateral Support and Supporting Obligations relating thereto and all Receivables Records.

“ Receivables Records ” means (i) all originals of all documents, instruments or other writings or electronic records or other Records evidencing any Receivable, (ii) all books, correspondence, credit or other files, Records, ledger sheets or cards, invoices, and other papers relating to any Receivable, including all tapes, cards, computer tapes, computer discs, computer runs, record keeping systems and other papers and documents relating to any Receivable, whether in the possession or under the control of the applicable Grantor or any computer bureau or agent from time to time acting for such Grantor or otherwise, (iii) all evidences of the filing of financing statements and the registration of other instruments in connection therewith, and amendments, supplements or other modifications thereto, notices to other creditors or secured parties, and certificates, acknowledgments, or other writings, including lien search reports, from filing or other registration officers, (iv) all credit information, reports and memoranda relating thereto, and (v) all other written forms of information related in any way to the foregoing or any Receivable.

“ Record ” means a “record” as defined in Article 9 of the UCC.

“ Secured Cash Management Agreement ” means a Cash Management Agreement entered into by a Loan Party with any counterparty that is a Secured Party.

“ Secured Hedging Agreement ” means a Hedging Agreement entered into by the Borrower with any counterparty that is a Secured Party.

 

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“ Secured Obligations ” shall mean (i) the Credit Obligations, and (ii) the due and punctual payment and performance of all obligations of Borrower and the other Loan Parties under each Secured Hedging Agreement and Secured Cash Management Agreement.

“ Secured Parties ” shall mean, collectively, (i) the Administrative Agent, (ii) each Credit Party, (iii) each party (other than any Loan Party) to a Hedging Agreement or Cash Management Agreement, as applicable, if at the date of entering into such Hedging Agreement or Cash Management Agreement, as applicable, such Person was a Lender or an Affiliate of a Lender and such Person executes and delivers to the Administrative Agent a letter agreement, substantially in the form of Exhibit D hereto, pursuant to which such Person (x) appoints the Administrative Agent as its agent under the applicable Loan Documents and (y) agrees to be bound by the provisions of Sections 10.3 , 10.9 and 10.13 of the Credit Agreement and the provisions of the applicable Loan Documents, including, without limitation, the provisions of Article 9 hereof, (iv) the beneficiaries of each indemnification obligation undertaken by or on behalf of any Grantor under any Loan Document, and (v) the successors and assigns of each of the foregoing. Notwithstanding the foregoing, The Bank of New York Mellon and any of its Affiliates party to any such Hedging Agreement while The Bank of New York Mellon (or any such Affiliate) is a Lender shall be deemed to be a Secured Party with respect thereto without the necessity of delivering the letter agreement referred to in this definition.

“ Securities Account ” means a “securities account” as defined in Article 8 of the UCC, including all such accounts described on Schedule 3.4 .

“ Securities Account Control Agreement ” means a Securities Account Control Agreement, in form and substance reasonably satisfactory to the Administrative Agent, executed by any Grantor and the Administrative Agent and acknowledged and agreed to by the relevant Approved Securities Intermediary, providing for “control” (within the meaning of the UCC) by the Administrative Agent over a Securities Account.

“ Securities Intermediary ” has the meaning specified in Article 8 of the UCC.

“ Security Interest ” has the meaning assigned to such term in Section 1.3(a) .

“ Software ” means all “software” as defined in Article 9 of the UCC.

“ Subsidiary Guarantor ” and “ Subsidiary Guarantors ” have the meanings assigned to such terms in the preliminary statement of this Security Agreement.

“ Supplement ” means a supplement hereto, substantially in the form of Exhibit A .

“ Supporting Obligations ” means (i) all “supporting obligations” as defined in Article 9 of the UCC and (ii) all Guarantees and other secondary obligations supporting any of the Collateral, in each case regardless of whether characterized as a “supporting obligation” under the UCC.

“ Trade Secret Licenses ” means any written agreement, now or hereafter in effect, granting to any third party any right to use any Trade Secrets now or hereafter owned or held by

 

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or on behalf of any Grantor or which such Grantor otherwise has the right to license, or granting to any Grantor any right to use any Trade Secrets now or hereafter owned by any third party, and all rights of any Grantor under any such agreement, including each agreement described on Schedule 3.6 .

“ Trade Secrets ” means all trade secrets and all other confidential or proprietary information and know-how now or hereafter owned or used in, or contemplated at any time for use in, the business of any Grantor (all of the foregoing being collectively called a “ Trade Secret ”), whether or not such Trade Secret has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating or referring in any way to such Trade Secret, the right to sue for any past, present and future infringement of any Trade Secret, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and proceeds of suit.

“ Trademark License ” means any written agreement, now or hereafter in effect, granting to any third party any right to use any Trademark now or hereafter owned or held by or on behalf of any Grantor or which such Grantor otherwise has the right to license, or granting to any Grantor any right to use any Trademark now or hereafter owned by any third party, and all rights of any Grantor under any such agreement, including each agreement described on Schedule 3.6 .

“ Trademarks ” means all of the following: (i) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, uniform resource locations (URL’s), domain names, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, (ii) all registrations and recordings thereof and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office or any similar offices in the United States of America or any other country, including those described on Schedule 3.6 , and (iii) all reissues, continuations, extensions and renewals thereof and amendments thereto, (iv) all goodwill associated therewith or symbolized by any of the foregoing, (v) all income, fees, royalties, damages and payments now and hereafter due and/or payable thereunder and with respect thereto and (vi) all other assets, rights and interests that uniquely reflect or embody such goodwill.

“ UCC ” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York; provided , however , that, at any time, if by reason of mandatory provisions of law, any or all of the perfection or priority of the Administrative Agent’s and the Secured Parties’ security interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions relating to such provisions.

“ Voting Stock ” means, with respect to any person, any class or classes of Equity Interests pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of such person. A

 

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Section 1.2 Other Definitions; Interpretation

(a) Other Definitions . Capitalized terms used herein and not otherwise defined herein, and the term “subsidiary” shall have the meanings assigned to such terms in the Credit Agreement.

(b) Rules of Interpretation . The rules of interpretation specified in Sections 1.2 , 1.3 and 1.4 of the Credit Agreement shall be applicable to this Security Agreement. All references herein to (i) a Schedule to this Security Agreement shall refer to such Schedule hereto or to a Supplement, as applicable, and (ii) provisions of the UCC shall include all successor provisions under any subsequent version or amendment to any Article of the UCC.

(c) Resolution of Drafting Ambiguities . Each Grantor acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of this Security Agreement, that it and its counsel reviewed and participated in the preparation and negotiation thereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof or thereof.

Section 1.3 Grant of Security

(a) As security for the payment or performance, as applicable, in full of the Secured Obligations, each Grantor hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to the Administrative Agent (and its successors and assigns), for the ratable benefit of the Secured Parties, and hereby grants to the Administrative Agent (and its successors and assigns), for the ratable benefit of the Secured Parties, a security interest (the “ Security Interest ”) in, all personal property and fixtures of such Grantor, including all of such Grantor’s right, title and interest in, to and under the following, in each case whether now owned or existing or hereafter acquired or arising and wherever located (all of which being hereinafter collectively referred to as the “ Collateral ”):

(i) all Accounts,

(ii) all Cash Collateral Accounts, Securities Accounts and all Deposit Accounts,

(iii) all Chattel Paper,

(iv) all Commercial Tort Claims listed on Schedule 3.7 ,

(v) all Documents,

(vi) all Equipment,

(vii) all General Intangibles,

(viii) all Goods,

 

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(ix) all Instruments,

(x) all Insurance,

(xi) all Intellectual Property,

(xii) all Inventory,

(xiii) all Investment-Related Property, including all Pledged Collateral and all Blocked Accounts,

(xiv) all Letter-of-Credit Rights,

(xv) all Proceeds of Authorizations and, subject to the provisions of Section 1.3(c) , all Authorizations and the goodwill associated with all Authorizations,

(xvi) all Receivables and Receivables Records,

(xvii) all other goods and other personal property of such Grantor, whether tangible or intangible, including all “money” as defined in Article 9 of the UCC,

(xviii) to the extent not otherwise included in clauses (i) through (xvii) of this Section, all Collateral Records, Collateral Support and Supporting Obligations in respect of any of the foregoing,

(xix) to the extent not otherwise included in clauses (i) through (xviii) of this Section, all other property in which a security interest may be granted under the UCC or which may be delivered to and held by the Administrative Agent pursuant to the terms hereof (including the account referred to in Section 3.4(c)(ii) and all funds and other property from time to time therein or credited thereto), and

(xx) to the extent not otherwise included in clauses (i) through (xix) of this Section, all Proceeds, products, substitutions, accessions, rents and profits of or in respect of any of the foregoing.

(b) Revisions to UCC . For the avoidance of doubt, it is expressly understood and agreed that, to the extent the UCC is revised after the date hereof such that the definition of any of the foregoing terms included in the description or definition of the Collateral is changed, the parties hereto desire that any property which is included in such changed definitions, but which would not otherwise be included in the Security Interest on the date hereof, nevertheless be included in the Security Interest upon the effective date of such revision. Notwithstanding the immediately preceding sentence, the Security Interest is intended to apply immediately on the Agreement Date to all of the Collateral to the fullest extent permitted by applicable law, regardless of whether any particular item of the Collateral was then subject to the UCC.

(c) Certain Limited Exclusions . Notwithstanding anything in this Section 1.3 to the contrary, in no event shall the Collateral include, and no Grantor shall be deemed to have

 

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granted a Security Interest in, (i) any right under any Authorization, lease, license or other contract or agreement constituting a General Intangible, but only to the extent that the granting of a security interest therein or an assignment thereof would violate any applicable law or any enforceable provision of lease, license or other contract or agreement, as applicable, provided that to the extent such security interest at any time hereafter shall no longer be prohibited by law, and/or immediately upon such provision no longer being enforceable, as the case may be, the Collateral shall automatically and without any further action include, and the Grantors shall be deemed to have granted automatically and without any further action a Security Interest in, such right as if such law had never existed or such provision had never been enforceable, as the case may be, (ii) any Margin Stock, and (iii) any Equity Interests of a Foreign Subsidiary which is a controlled foreign corporation (as defined in Section 957(a) of the Code), provided that this exclusion shall not apply to (x) Voting Stock of any Foreign Subsidiary which is a controlled foreign corporation representing 65% (or such lesser percentage as is owned by the Grantors) of the total voting power of all outstanding Voting Stock of such Foreign Subsidiary and (y) 100% (or such lesser percentage as is owned by the Grantors) of the Equity Interests not constituting Voting Stock of any such Foreign Subsidiary, except that any such Equity Interests constituting “stock entitled to vote” within the meaning of Treas. Reg. Section 1.956-2(c)(2) shall be treated as Voting Stock for purposes of this Section 1.3(c) .

ARTICLE 2.

SECURITY FOR OBLIGATIONS; NO ASSUMPTION OF LIABILITY

Section 2.1 Security for Secured Obligations . This Security Agreement secures, and the Collateral is collateral security for, the prompt and complete payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of Title 11 of the United States Code, or any similar provision of any other bankruptcy, insolvency, receivership or other similar law), of all Secured Obligations.

Section 2.2 No Assumption of Liability . Notwithstanding anything to the contrary herein, the Security Interest is granted as security only and shall not subject the Administrative Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Collateral.

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES AND COVENANTS

Section 3.1 Generally

(a) Representations and Warranties . Each of the Grantors, jointly with the other Grantors and severally, represents and warrants to the Administrative Agent and the other Secured Parties that:

(i) As of the Applicable Date, (A) such Grantor’s chief executive office or its principal place of business is, and for the preceding four months has been, located at the office indicated on Schedule 3.1(a)(i) , (B) such Grantor’s jurisdiction of organization is the jurisdiction indicated on Schedule 3.1(a)(i) , and (C) such Grantor’s Federal Employer Identification Number and company organizational number is as set forth on Schedule 3.1(a)(i) .

 

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(ii) As of the Applicable Date, (A) such Grantor’s exact legal name as such name appears in its certificate of incorporation or other organizational document, is as set forth on Schedule 3.1(a)(ii) and (B) such Grantor has not done in the preceding five years, and does not do, business under any other name (including any trade-name or fictitious business name), except for those names set forth on Schedule 3.1(a)(ii) .

(iii) Except as set forth on Schedule 3.1(a)(iii) , such Grantor has not within the five years preceding the Applicable Date become bound (whether as a result of merger or otherwise) as debtor under a security agreement entered into by another Person, which has not theretofore been terminated.

(iv) Such Grantor has good and valid rights in or title to, the Collateral with respect to which it has purported to grant the Security Interest, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such Collateral for its intended purposes, and except for Liens expressly permitted pursuant to the Loan Documents.

(v) Except as set forth on Schedule 3.1(a)(v) , all Collateral owned or rights in Collateral held by it or on its behalf is owned or held by it or on its behalf free and clear of any Lien, except for Liens expressly permitted by the Loan Documents. Except as set forth on Schedule 3.1(a)(v) , it has not filed or consented to the filing of (A) any financing statement or analogous document under the UCC or any other applicable laws covering any such Collateral, (B) any assignment in which it assigns any such Collateral or any security agreement or similar instrument covering any such Collateral with the United States Patent and Trademark Office or the United States Copyright Office, or any similar offices in the United States of America or any other country, or (C) any assignment in which it assigns any such Collateral or any security agreement or similar instrument covering any such Collateral with any foreign governmental, municipal or other office, in each case which financing statement, analogous document, assignment or other instrument, as applicable, is still in effect, except for Liens expressly permitted by the Loan Documents.

(vi) The Security Interest in the Collateral owned or rights in Collateral held by it or on its behalf (A) is effective to vest in the Administrative Agent, on behalf of the Secured Parties, the rights of the Administrative Agent in such Collateral as set forth herein and (B) does not violate Regulation T, U or X as of the Applicable Date.

(vii) As of the Applicable Date, all material Authorizations are as listed on Schedule 3.1(a)(vii) .

 

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(viii) Except as set forth on Schedule 3.1(a)(viii) , all leases, licenses and other contracts and agreements as to which no security interest is granted by virtue of Section 1.3(c) are not material to the business of the Borrower or any of the Subsidiaries, taken as a whole.

(b) Covenants and Agreements . Each Grantor hereby covenants and agrees as follows:

(i) It shall maintain, at its own cost and expense, such complete and accurate Records with respect to the Collateral owned or held by it or on its behalf as is consistent with its current practices and in accordance with such prudent and standard practices used in industries that are the same as or similar to those in which it is engaged, but in any event to include complete accounting Records indicating all payments and proceeds received with respect to any part of such Collateral, and, at such time or times as the Administrative Agent may reasonably request, promptly to prepare and deliver to the Administrative Agent a duly certified schedule or schedules in form and detail satisfactory to the Administrative Agent showing the identity and amount of any and all such Collateral.

(ii) It shall, at its own cost and expense, take any and all actions necessary to defend title to the Collateral owned or rights in Collateral held by it or on its behalf against all Persons and to defend the Security Interest in such Collateral and the priority thereof against any Lien or other interest not expressly permitted by the Loan Documents, and in furtherance thereof, it shall not take, or permit to be taken, any action not otherwise expressly permitted by the Loan Documents that could impair the Security Interest or the priority thereof or any Secured Party’s rights in or to such Collateral.

(iii) During normal business hours and upon reasonable advance written notice, the Administrative Agent and such Persons as the Administrative Agent may designate shall, as often as reasonably requested, have the right, at the cost and expense of such Grantor, to inspect all of its Records (and to make extracts and copies from such Records), to discuss its affairs with its officers and independent accountants and to verify under reasonable procedures the validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Collateral owned or rights in Collateral held by or on behalf of such Grantor, including, in the case of Receivables, Pledged Debt, General Intangibles, Commercial Tort Claims or Collateral in the possession of any third person, by contacting Account Debtors, contract parties or other obligors thereon or any third person possessing such Collateral for the purpose of making such a verification. The Administrative Agent shall have the absolute right to share on a confidential basis any information it gains from such inspection or verification with any Secured Party.

(iv) At its option, the Administrative Agent may discharge past due taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Collateral owned or held by or on behalf of such Grantor, and not permitted by the Loan Documents, and may pay for the maintenance and preservation of such Collateral to the extent such Grantor fails to do so as required by the Loan Documents, and such Grantor agrees, jointly with the other Grantors and severally, to reimburse the Administrative

 

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Agent on demand for any payment made or any expense incurred by the Administrative Agent pursuant to the foregoing authorization; provided, however, that nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Administrative Agent or any other Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.

(v) It shall remain liable for the failure to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Collateral owned or held by it or on its behalf, all in accordance with the terms and conditions thereof, and it agrees, jointly with the other Grantors and severally, to indemnify and hold harmless the Administrative Agent and the other Secured Parties from and against any and all liability for such performance.

(vi) It shall not make, or permit to be made, an assignment, pledge or hypothecation of the Collateral owned or held by it or on its behalf, or grant any other Lien in respect of such Collateral, except as expressly permitted by the Loan Documents. Except for Liens or transfers expressly permitted by the Loan Documents, it shall not make or permit to be made any transfer of such Collateral, and it shall remain at all times in possession of such Collateral and the direct owner, beneficially and of record, of the Pledged Equity Interests included in such Collateral, except that (A) Inventory may be sold in the ordinary course of business, (B) ) mutual fund shares included in the Pledged Equity Interests may be sold, exchanged or transferred by the Grantors in the ordinary course of business and (C) unless and until the Administrative Agent shall notify it that an Event of Default shall have occurred and be continuing and that, during the continuance thereof, it shall not sell, convey, lease, assign, transfer or otherwise dispose of any such Collateral (which notice may be given by telephone if promptly confirmed in writing), it may use and dispose of such Collateral in any lawful manner not inconsistent with the provisions of this Security Agreement or any other Loan Document.

(vii) It shall, at its own cost and expense, maintain or cause to be maintained insurance covering physical loss or damage to the Collateral owned or held by it or on its behalf against all risks and liability arising from the use or intended use, or otherwise attributable or relating to, such Collateral, in each case in accordance with Section 6.10 of the Credit Agreement. It shall cause each such insurance policy (other than any policy related to workers’ compensation) to (A) name the Administrative Agent as an “additional insured” and “loss payee” if such policy is a property policy, (B) provide that the Administrative Agent and each Lender shall be notified in writing of any proposed cancellation or material change in risk, of such policy, initiated by such Grantor’s insurer at least 30 days (or at least 10 days with respect to a failure to pay any premium due) prior to any proposed cancellation or material change in risk, (C) contain a waiver of subrogation in favor of the Administrative Agent, (D) provide that the insurance shall be primary and without right of contribution from any other insurance which may be available to the Administrative Agent and the other Secured Parties, (E) provide that the Administrative Agent and other Secured Parties have no responsibility for premiums, warranties or representations to underwriters. On the Agreement Date (as provided in Section 5.1 of the Credit Agreement) and at least 30 days prior to expiry of each such insurance

 

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Virtus Investment Partners, Inc. Security Agreement

policy, such Grantor shall deliver or cause to be delivered to the Administrative Agent an insurance broker’s opinion letter from such Grantor’s independent insurance agent confirming that the insurance premiums with respect to the policies of insurance required to be maintained pursuant to this subsection have been paid, that such policies are in force and that such policies meet the requirements set forth in this sub