EXHIBIT 4.9
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SUBSIDIARY SECURITY AGREEMENT
among
DISCOVERY ZONE LIMITED,
DISCOVERY ZONE (PUERTO RICO), INC.,
DISCOVERY ZONE LICENSING, INC.
and
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
Dated as of July 22, 1997
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SUBSIDIARY SECURITY AGREEMENT
THIS SUBSIDIARY SECURITY AGREEMENT, dated as of July 22, 1997 (the
"Subsidiary Security Agreement"), is entered into by and among DISCOVERY ZONE
LIMITED, an entity formed under the laws of Canada ("DZL"), DISCOVERY ZONE
(PUERTO RICO), INC., a corporation formed under the laws of Puerto Rico
("DZPR"), DISCOVERY ZONE LICENSING, INC., a Nevada corporation (together with
DZL, DZPR and other subsidiaries of the Company that may become Subsidiary
Guarantors after the date hereof and their permitted respective successors and
assigns, the "Subsidiary Guarantors"), and STATE STREET BANK AND TRUST COMPANY,
as the Trustee and Collateral Agent under the Indenture (as defined below) and
secured party hereunder for its benefit and the ratable benefit of the holders
of the Notes (as defined below) (together with its successors and assigns, in
such capacity, the "Collateral Agent"). This Subsidiary Security Agreement is
being entered into in connection with, pursuant to and as collateral security
for the debts, liabilities and Obligations arising under or with respect to the
Subsidiary Guarantees (as defined in the Indenture) set forth in Article Eleven
of the Indenture.
W I T N E S S E T H:
WHEREAS, Discovery Zone, Inc., a Delaware corporation (the
"Company"), has issued $85,000,000 aggregate principal amount of 13 1/2%
Senior Secured Notes due 2002 pursuant to the Indenture, dated July 22, 1997,
between the Company, each Subsidiary Guarantor and the Collateral Agent, as
amended or supplemented from time to time in accordance with its terms (the
"Indenture");
WHEREAS, pursuant to the Indenture or a supplement thereto, each
Subsidiary Guarantor has guaranteed the payment and performance of all now
existing and hereafter arising Obligations (defined below) of the Company and
the Subsidiary Guarantors (the "Subsidiary Guarantees"); and
WHEREAS, in order to secure the payment and performance in full of the
Obligations under the Subsidiary Guarantees, the parties hereto desire to set
forth their mutual understanding and certain agreements regarding the terms and
conditions of the supplement to the Indenture made by each Subsidiary Guarantor
to the Trustee for the ratable benefit of the Holders.
NOW, THEREFORE, in consideration of the premises and the covenants set
forth herein and in the Indenture, the parties hereto agree as follows.
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ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, capitalized terms defined in the
Indenture and not otherwise defined herein are used herein as so defined. All
terms defined in the UCC (defined below) and not otherwise defined herein or in
the Indenture shall have the meanings assigned to them in the UCC.
"Accounts" shall mean all present and future rights of each Subsidiary
Guarantor to payment for goods sold or leased or for services rendered, whether
or not evidenced by instruments or chattel paper, and whether or not earned by
performance, including, without limitation, accounts receivable.
"Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such specified Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided, however, that beneficial ownership of 10% or more of the aggregate
voting power of the voting securities of a Person shall be deemed to be control.
Notwithstanding the foregoing definitions, none of ▇▇▇▇▇▇▇▇▇ & Company, Inc. and
its Affiliates shall be considered Affiliates of the Company or any of its
subsidiaries.
"Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock and any and all warrants, options and rights with
respect thereto, including, without limitation, each class of common stock and
preferred stock, partnership interests and other indicia of ownership of such
Person.
"Collateral" shall have the meaning assigned to it in Article II
hereof.
"Equipment" shall mean all of each Subsidiary Guarantor's now owned
and hereafter acquired machinery, equipment, furniture, furnishings, fixtures,
and other tangible personal property (except Inventory), including, without
limitation, data processing hardware and software, motor vehicles, aircraft,
dies, tools, jigs, signage, tubes, slides, ball bins, climbing mountains, air
and water trampolines, obstacle courses, ramps, devices for crawling, jumping,
running, swinging and climbing, and other "soft zone" equipment and toys, games,
arcade games and video and other electronic entertainment
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games, chairs, jungle gyms, kitchen and other food and beverage equipment,
identification devices and office equipment, as well as all of such types of
property leased by each Subsidiary Guarantor and all of each Subsidiary
Guarantor's rights and interests with respect thereto under such leases
(including, without limitation, options to purchase); together with all present
and future additions and accessions thereto, replacements therefor, component
and auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto; wherever any of the
foregoing is located.
"Inventory" shall mean all of each Subsidiary Guarantor's now owned
and hereafter existing or acquired goods, merchandise, inventory and other
personal property other than personal property leased in connection with any
real property lease, all raw materials, work-in-process, finished goods,
returned goods, and materials and supplies of any kind, nature or description
which are or might be used or consumed, wherever located, in such Subsidiary
Guarantor's business or used in connection with the manufacture, packing,
shipping, advertising, maintenance, selling or finishing of such goods,
merchandise, inventory and other personal property, and all documents of title
or other documents representing them.
"Notes" shall mean the 13 1/2% Senior Secured Notes due 2002 of the
Company, and the 13 1/2% Senior Secured Notes due 2002, Series B, or Private
Exchange Notes issued in exchange therefor in accordance with the Indenture, in
the aggregate principal amount of $85,000,000.
"Obligations" shall mean the Company's and each Subsidiary Guarantor's
Obligations under the Indenture, the Notes and the Collateral Agreements.
"Person" or "person" shall mean any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Purchase Agreement" shall mean the Purchase Agreement, dated July 15,
1997, between the Company and ▇▇▇▇▇▇▇▇▇ & Company, Inc., as the initial
purchaser, relating to the purchase and sale of the Notes.
"Records" shall mean all of the present and future books of account of
every kind or nature of each Subsidiary Guarantor, purchase and sale agreements,
invoices, ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing
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are stored (including any rights of each Subsidiary Guarantor with respect to
the foregoing maintained with or by any other person).
"Requisite Holders" shall mean the Holder or Holders of at least a
majority in principal amount of the outstanding Notes, unless otherwise provided
in Article Six of the Indenture.
"Secured Parties" shall mean the collective reference to the
Collateral Agent and each Holder.
"Securities" shall have the meaning assigned to it in Article II
hereof.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York, PROVIDED that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interest in any Collateral or the availability of any remedy
hereunder is governed by the Uniform Commercial Code as in effect on or after
the date hereof in any other jurisdiction, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or non-perfection or
availability of such remedy.
"Voting Stock" shall mean, with respect to any Person one or more
classes of the Capital Stock of such Person having general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers, or trustees of such Person (irrespective of whether or not at the time
Capital Stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
ARTICLE II
GRANT OF SECURITY INTERESTS
2.1 SECURITY INTEREST. As security for the prompt and complete
payment and performance in full of the principal of, premium, if any, and
interest on the Notes when and as the same shall be due and payable, whether on
an Interest Payment Date, at maturity, by acceleration, purchase, repurchase,
redemption or otherwise, and interest on the overdue principal of, premium and
interest, if any, to the extent such premium or interest is permitted by law, on
the Notes and the performance of all other Obligations, each Subsidiary
Guarantor hereby grants to the Collateral Agent, for the benefit of itself and
the Holders, a security interest in and continuing lien on, all of their 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 is defined as the "Collateral"):
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(i) Accounts;
(ii) subject to the final paragraph of this Section 2.1, all present
and future contract rights (including, without limitation, all rights under
service contracts pursuant to which each Subsidiary Guarantor renders its
services to its customers, which rights shall include any and all rights to all
retainers which may arise thereunder), general intangibles (including, but not
limited to, tax and duty refunds, patents, trade secrets, trademarks, service
marks, copyrights, trade names, trade styles, logos, applications and
registrations for the foregoing, goodwill, processes, drawings, blueprints,
customer lists, licenses, whether as licensor or licensee, choses in action and
other claims), chattel paper, documents, instruments, letters of credit,
bankers' acceptances and guaranties;
(iii) all present and future monies, securities, credit balances,
deposit accounts and other property of each Subsidiary Guarantor now or
hereafter held or received by or in transit to a lender or at any other
depository or other institution from or for the account of each Subsidiary
Guarantor, whether for safekeeping, pledge, custody, transmission, collection or
otherwise, and all present and future liens, security interests, rights,
remedies, title and interest in, to and in respect of Accounts and other
Collateral, including, without limitation, (a) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (b) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (c) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Accounts or other Collateral, including, without limitation,
returned, repossessed and reclaimed goods, and (d) deposits by and property of
account debtors of other persons securing the obligations of account debtors;
(iv) Inventory;
(v) Equipment;
(vi) Records; and
(vii) all products and proceeds of the foregoing, in any form,
including without limitation, insurance proceeds and all claims against third
parties for loss or damage to or destruction of any or all of the foregoing.
In no event shall the Collateral Agent's security interest in a
contract or agreement of each Subsidiary Guarantor be deemed to be a present
assignment, transfer conveyance, subletting or other disposition (an
"Assignment") of such contract or agreement to the Collateral Agent within the
meaning of any provision in such contract or agreement prohibiting, or
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requiring any consent or establishing any other conditions for, an assignment
thereof by each Subsidiary Guarantor. The Collateral Agent acknowledges that
any sale, transfer or Assignment of any such contract or agreement upon the
enforcement of the Collateral Agent's security interest therein would be subject
to the terms of such contract or agreement governing Assignment, except as
otherwise provided in Section 9-318 of the UCC. The Collateral Agent's security
interest in each contract or agreement of each Subsidiary Guarantor shall attach
from the date hereof to all of the following, whether now existing or hereafter
arising or acquired: (i) all of each Subsidiary Guarantor's Accounts and
general intangibles for money due or to become due arising under such contract
or agreement; (ii) all proceeds paid or payable to each Subsidiary Guarantor
from any sale, transfer or assignment of such contract or agreement and all
rights to receive such proceeds; and (iii) all other rights and interests of
each Subsidiary Guarantor in, to and under such contract or agreement to the
fullest extent that attachment thereto would not be a violation of such contract
or agreement directly or indirectly entitling a party thereto (other than each
Subsidiary Guarantor or Affiliate thereof) to a legally enforceable right to
terminate such contract or agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Subsidiary Guarantor hereby represents and warrants to the
Collateral Agent, which representations and warranties shall survive execution
and delivery of this Security Agreement, as follows:
3.1 VALIDITY, PERFECTION AND PRIORITY.
Except as permitted under the Indenture, the security interests
in the Collateral granted to the Collateral Agent hereunder will constitute
valid and continuing first priority perfected security interests therein, to the
extent that such security interests may be perfected by the actions described in
Section 10.03 of the Indenture and subsections (i) and (ii) of this Section 3.1,
superior and prior to all Liens and rights or claims of all other Persons,
except Permitted Liens (other than Permitted Liens with respect to the Eligible
Credit Facility) and as otherwise provided in the Indenture, upon (i) the filing
of U.C.C. financing statements and continuation statements naming any Subsidiary
Guarantor as "debtor" and the Collateral Agent as "secured party" or filing or
recordation of other similar financing statements or instruments or charges or
mortgages with respect to any jurisdiction in which the U.C.C. does not govern
secured transactions, and describing the Collateral in the appropriate filing
offices, and (ii) to the extent not subject to Article 9 of the Uniform
Commercial Code in any applicable jurisdiction, the recordation of the security
interests granted
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hereunder in patents, trademarks and copyrights in the applicable patent,
trademark and copyright registries and the registration of all copyrights.
3.2 NO LIENS; OTHER FINANCING STATEMENTS.
(a) Except for the Lien granted to the Collateral Agent
hereunder, and except for Permitted Liens (other than Permitted Liens with
respect to the Eligible Credit Facility), each Subsidiary Guarantor owns and, as
to all Collateral whether now existing or hereafter acquired, will continue to
own, each item of the Collateral free and clear of all Liens, rights and claims,
and each Subsidiary Guarantor shall defend the Collateral against all claims and
demands of all Persons at any time claiming the same or any interest therein
adverse to the Collateral Agent on the Collateral entitled to priority therein
under applicable law.
(b) No financing statement or other evidence of Lien covering or
purporting to cover any of the Collateral is on file and is effective in any
public office other than (i) financing statements filed or to be filed in
connection with the security interests granted to the Collateral Agent
hereunder, (ii) financing statements for which proper, executed termination
statements have been delivered to the Collateral Agent for filing; and (iii)
financing statements filed by pre-petition creditors as set forth in the
Company's Plan of Reorganization but which no longer evidence valid or existing
security interests in the Collateral.
3.3 CHIEF EXECUTIVE OFFICES. The chief executive offices of each
Subsidiary Guarantor are ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The originals of the
Records are located at such chief executive offices of the Company. All Records
are maintained at, and controlled and directed (including, without limitation,
for general accounting purposes) from the chief executive offices or other
offices identified on Schedule 3.3 as such.
3.4 LOCATION OF INVENTORY. All Inventory is kept only at (or shall
be in transit to) the locations listed on Schedule 3.3 hereto. None of such
Inventory is in the possession of an issuer of a negotiable document (as defined
in Section 7-104 of the UCC) therefor or otherwise in the possession of a bailee
or other Person.
3.5 TRADE NAMES; PRIOR NAMES. The only names under which each
Subsidiary Guarantor has conducted business during the last five years are as
set forth on Schedule 3.5 hereto.
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3.6 RECEIVABLES.
(a) Each Account (other than indebtedness due and owing from the
Company) arises from the actual and BONA FIDE sale and delivery of goods by a
Subsidiary Guarantor or rendition of services by a Subsidiary Guarantor in the
ordinary course of its business which transactions are completed in all material
respects with those terms and provisions contained in any document related
thereto, except for prepaid passes to FunCenters (as defined in the Offering
Memorandum) and deposits for birthday parties or other similar functions which
sale and delivery of goods by a Subsidiary Guarantor or rendition of services by
a Subsidiary Guarantor are to be completed in the ordinary course of its
business.
(b) The representations and warranties contained in this Section
shall be deemed to be repeated by each Subsidiary Guarantor as of the time when
each respective Account arises.
3.7 INTELLECTUAL PROPERTY.
(a) Schedule 3.5 sets forth (i) all United States, state and
foreign registration of and applications for patents, trademarks, service marks
and copyrights of each Subsidiary Guarantor and (ii) all patent licenses,
trademark and service mark licenses and copyright licenses material to the
business of the Subsidiary Guarantors; and
(b) each Subsidiary Guarantor owns, or has valid rights to use,
all patents, trademarks, trade secrets, copyrights, and similar intellectual
property rights material to the business of the Subsidiary Guarantors and used
in the conduct of any Subsidiary Guarantor's business.
(c) each account arising from indebtedness due and owing from
the Company is a BONA FIDE intercompany indebtedness arising from an appropriate
business purpose in the ordinary course of a subsidiary's business and in
accordance with GAAP.
3.8 EQUIPMENT. All Equipment is owned free and clear of all Liens,
except Permitted Liens (other than Permitted Liens with respect to the Eligible
Credit Facility), is located only at the location set forth on Schedule 3.3
hereto and is in good working condition subject only to wear and tear in the
ordinary course, all of which is accounted for at the lower of cost or fair
market value in accordance with GAAP on the financial statements of each of the
Subsidiary Guarantors.
3.9 BASIC REPRESENTATIONS AND WARRANTIES. As of the Issue Date
(assuming that the Confirmation Order (as defined in the Plan of Reorganization)
has become a Final Order (as defined in the Plan of Reorganization) and the
Approved Plan (as defined in the Plan of Reorganization) has become Effective
(as defined
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in the Plan of Reorganization), each Subsidiary Guarantor (a) will be duly
organized and validly existing in good standing under the laws of the
jurisdiction of its formation or other jurisdiction in which it is qualified to
do business; (b) will have the power and authority to execute, deliver and carry
out the terms and provisions of this Security Agreement and consummate the
transactions contemplated hereby; (c) will have taken all necessary action to
authorize the execution, delivery and performance of this Security Agreement and
the consummation of the transactions contemplated hereby; and (d) will have duly
executed and delivered this Security Agreement. As of the Issue Date (assuming
that the Confirmation Order has become a Final Order and the Approved Plan has
become Effective), this Security Agreement will constitute each Subsidiary
Guarantor's legal, valid and binding obligation, enforceable against each
Subsidiary Guarantor in accordance with its terms.
ARTICLE IV
COVENANTS
Each Subsidiary Guarantor covenants and agrees with the Collateral
Agent that from and after the date of this Security Agreement:
4.1 FURTHER ASSURANCES. Each Subsidiary Guarantor will from time to
time at its own expense, promptly execute, deliver, file and record all further
instruments, endorsements and other documents, and take such further action as
the Collateral Agent may deem necessary or desirable in obtaining the full
benefits of this Security Agreement and of the rights, remedies and powers
herein granted, including, without limitation, the following:
(i) the filing of any financing statements, in form acceptable
to the Collateral Agent under the Uniform Commercial Code in effect in any
jurisdiction with respect to the liens and security interests granted
hereby (and each Subsidiary Guarantor hereby (x) authorizes the Collateral
Agent to file any such financing statement without its respective signature
to the extent permitted by applicable law and (y) agrees that a photocopy
or other reproduction of this Security Agreement shall be sufficient as a
financing statement and may be filed in lieu of the original to the extent
permitted by applicable law); and
(ii) furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Collateral
Agent may request, all in reasonable detail and in form satisfactory to the
Collateral Agent.
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4.2 CHANGE OF NAME, IDENTITY, CORPORATE STRUCTURE, CHIEF EXECUTIVE
OFFICES, OR LOCATION OF INVENTORY AND EQUIPMENT. No Subsidiary Guarantor will
change its name, identity, corporate structure or the location of its chief
executive offices (as specified in Section 3.3) or location of its Inventory or
Equipment without (i) giving the Collateral Agent at least thirty (30) days'
prior written notice clearly describing such new name, identity, corporate
structure or new location and providing such other information in connection
therewith as the Collateral Agent may reasonably request, and (ii) taking all
action reasonably satisfactory to the Collateral Agent as the Collateral Agent
may reasonably request to maintain the security interest of the Collateral Agent
in the Collateral intended to be granted hereby at all times fully perfected
with the same or better priority than exists on the date hereof and in full
force and effect. All Accounts and Records of each Subsidiary Guarantor will
continue to be maintained at, and controlled and directed (including, without
limitation, for general accounting purposes) from, such chief executive office
or a location identified as a location at which Accounts or Records are
maintained, controlled and directed on Schedule 3.3, or such new locations as
such Subsidiary Guarantor may establish in accordance with this Section 4.2.
4.3 MAINTAIN RECORDS. Each Subsidiary Guarantor will keep and
maintain at its own cost and expense satisfactory and complete records of the
Collateral, including, but not limited to, the originals of all documentation
with respect to all Accounts and records of all payments received and all
credits granted on the Accounts, and all other dealings therewith.
4.4 RIGHT OF INSPECTION. The Collateral Agent shall at all times
have full and free access during normal business hours and upon reasonable
notice to all the books, correspondence and records of each Subsidiary
Guarantor, and the Collateral Agent and its representatives may examine the
same, take extracts therefrom and make photocopies thereof, and each Subsidiary
Guarantor agrees to render the Collateral Agent at the cost and expense of the
Subsidiary Guarantors, such clerical and other assistance as may be reasonably
requested with regard thereto.
4.5 PAYMENT OF OBLIGATIONS. Each Subsidiary Guarantor will pay
promptly when due all taxes, assessments and governmental charges or levies
imposed upon the Collateral, as well as all claims of any kind (including,
without limitation, claims for labor, materials, supplies and services) against
or with respect to the Collateral, except that no such tax, assessment, charge
or levy need be paid if (i) the validity thereof is being contested in good
faith by appropriate proceedings properly instituted and diligently conducted
for which adequate reserves, to the extent required under GAAP, have been taken,
(ii) such proceedings do not involve, in the sole opinion of the Collateral
Agent, any material danger for the sale, forfeiture or loss of any of the
Collateral or any interest therein and (iii) such charge is adequately reserved
against on
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the books of the applicable Subsidiary Guarantor in accordance with GAAP.
4.6 NEGATIVE PLEDGE. No Subsidiary Guarantor will create, incur or
permit to exist, and each will defend the Collateral against, and will take such
other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Security Interest and Liens created hereby and
Permitted Liens (other than Permitted Liens with respect to the Eligible Credit
Facility).
4.7 LIMITATIONS ON DISPOSITIONS OF COLLATERAL. No Subsidiary
Guarantor will sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so except as permitted in the
Indenture.
4.8 PERFORMANCE BY THE COLLATERAL AGENT OF THE OBLIGATIONS OF ANY
SUBSIDIARY GUARANTOR; REIMBURSEMENT. If any Subsidiary Guarantor fails to
perform or comply with any of its agreements contained herein, the Collateral
Agent may, without consent by such Subsidiary Guarantor, but upon written notice
to such Subsidiary Guarantor reasonably given, perform or comply or cause
performance or compliance therewith, and the expenses of the Collateral Agent
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum borne by the Notes, shall be payable by
each Subsidiary Guarantor to the Collateral Agent on demand and such
reimbursement obligation shall be secured hereby; provided, however, that such
interest shall only be so due and payable if such expenses have not been so paid
on demand and in any event within ten (10) days of such notice; and, provided
further, that such interest shall be tolled in the event any such expenses are
contested in good faith as in error and the resolution of any such contest is
diligently pursued by the Subsidiary Guarantors.
4.9 NO IMPAIRMENT. Except as expressly permitted herein or in the
Indenture (including the creation of Permitted Liens (other than Permitted Liens
with respect to the Eligible Credit Facility)), no Subsidiary Guarantor will
take or knowingly permit to be taken any action which could impair the
Collateral Agent's rights in the Collateral. Each Subsidiary Guarantor shall
promptly notify the Collateral Agent of any changes in any fact or circumstance
represented or warranted by such Subsidiary Guarantor or that could reasonably
be expected to have a material adverse effect with respect to any material
portion of the Collateral, of any impairment of the Collateral and of any claim,
action or proceeding affecting title to all or any of the Pledged Collateral.
4.10 INSURANCE. Each Subsidiary Guarantor will maintain, with
financially sound and reputable insurers acceptable to the Collateral Agent and
licensed to do business in each state in which any of the Collateral covered by
any policy is located, insurance in compliance with Section 4.05(b) of the
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Indenture. All policies of insurance shall (i) name the Collateral Agent as
additional insured (with respect to liability insurance policies) or loss payee
with a lender's loss payable endorsement, in each case as its interests may
appear, (ii) include waivers by the insurer of all claims for insurance premiums
against the Collateral Agent, (iii) provide that any losses shall be payable to
the Collateral Agent notwithstanding (A) any act, failure to act or negligence
of or violation of warranties, declarations or conditions contained in such
policy by any Subsidiary Guarantor, (B) any foreclosure or other proceedings or
notice of sale relating to any Collateral insured thereunder, or (C) any change
in the title to or ownership of any Collateral insured thereunder, and (iv)
provide that no cancellation, termination or lapse in coverage thereof shall be
effective until at least 30 days after receipt by the Collateral Agent of
written notice thereof.
4.11 EQUIPMENT. Each Subsidiary Guarantor shall maintain its
Equipment in good and working condition free of all Liens, except Permitted
Liens (other than Permitted Liens with respect to the Eligible Credit Facility),
and shall not remove or relocate any Equipment except as provided herein except
that any motor vehicles or aircraft intended to be mobile may be so used to the
extent that all necessary and appropriate actions have been taken and filings
made to perfect a first priority security interest therein in favor of the
Collateral Agent for its benefit and the ratable benefit of the Holders.
ARTICLE V
POWER OF ATTORNEY
Each Subsidiary Guarantor hereby irrevocably constitutes and appoints
the Collateral Agent 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 each Subsidiary Guarantor and in
the name of each Subsidiary Guarantor, from time to time in the Collateral
Agent's discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action, and to execute in any
appropriate manner any and all documents and instruments which may be necessary
or desirable to accomplish the purposes of this Security Agreement.
Each Subsidiary Guarantor hereby ratifies all that said attorneys
shall lawfully do or cause to be done by virtue hereof. This power of attorney
is a power coupled with an interest and shall be irrevocable.
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ARTICLE VI
REMEDIES; RIGHTS UPON DEFAULT
6.1 RIGHTS AND REMEDIES GENERALLY.
(a) If an Event of Default shall occur and be continuing, then
and in every such case, the Collateral Agent shall have all the rights of a
secured party under the UCC, shall have all rights now or hereafter existing
under all other applicable laws, and, subject to any mandatory requirements of
applicable law then in effect, shall have all the rights set forth in this
Security Agreement and all the rights set forth with respect to the Collateral
or this Security Agreement in any other agreement between the parties.
(b) If an Event of Default occurs and is continuing, the
Collateral Agent may, and within three Business Days after written instructions
from the Requisite Holders shall, commence the taking of such actions toward
collection or enforcement of this Security Agreement and the Collateral (or any
portion thereof), including, without limitation, action toward foreclosure upon
any Collateral, as the Collateral Agent deems in its discretion to be
appropriate or as otherwise instructed in writing by the Requisite Holders.
6.2 ASSEMBLY OF COLLATERAL. If an Event of Default shall occur and
be continuing, immediately upon written notice to each Subsidiary Guarantor,
each such Subsidiary Guarantor shall, at its own expense, and to the extent
commercially practicable, assemble the Collateral (or from time to time any
portion thereof) and make it available to the Collateral Agent at any place or
places designated by the Collateral Agent which is reasonably convenient to both
parties.
6.3 DISPOSITION OF COLLATERAL. The Collateral Agent will determine
the circumstances and manner in which the Collateral will be disposed of,
including, but not limited to, the determination of whether to foreclose on the
Collateral following an Event of Default. The Collateral Agent will give each
Subsidiary Guarantor reasonable written notice of the time and place of any
public sale of the Collateral or any part thereof or of the time after which any
private sale or any other intended disposition thereof is to be made. Each
Subsidiary Guarantor agrees that the requirements of reasonable notice to it
shall be met if such notice is delivered to its address specified in and in
accordance with Section 7.3 of this Security Agreement (or such other address
that a Subsidiary Guarantor may provide to the Collateral Agent in writing) at
least ten (10) days before the time of any public sale or after which any
private sale may be made.
6.4 PROCEEDS. If an Event of Default shall occur and be continuing,
(i) all proceeds and distributions on the
-13-
Collateral received by any Subsidiary Guarantor shall be held in trust for the
Collateral Agent, segregated from other funds of the Subsidiary Guarantors in a
separate deposit account containing only such proceeds and distributions, and
shall forthwith upon receipt thereof be turned over to the Collateral Agent in
the same form received (appropriately endorsed or assigned to the order of the
Collateral Agent or in such other manner as shall be satisfactory to the
Collateral Agent) and (ii) any and all such proceeds and distributions received
by the Collateral Agent (whether from any Subsidiary Guarantor or otherwise), or
any part thereof, may, in the sole discretion of the Collateral Agent, be held
by the Collateral Agent in a separate account as Collateral hereunder and/or
then or at any time or from time to time thereafter, be applied by the
Collateral Agent against the Obligations (whether matured or unmatured) and
related expenses, including attorney's fees as provided in Section 6.7 below.
6.5 RECOURSE. Each Subsidiary Guarantor shall, jointly and
severally, pay or remain liable for any deficiency if the proceeds of any sale
or other disposition of the Collateral are insufficient to satisfy the
Obligations. Each Subsidiary Guarantor shall also be, jointly and severally,
liable for all expenses of the Collateral Agent incurred in connection with
collecting such deficiency, including, without limitation, the fees and
disbursements of any attorneys employed by the Collateral Agent to collect such
deficiency.
6.6 EXPENSES; ATTORNEYS FEES. Each Subsidiary Guarantor shall,
jointly and severally, pay or reimburse the Collateral Agent for all its
expenses in connection with the exercise of its rights hereunder, including,
without limitation, (i) all reasonable attorneys' fees and legal expenses
incurred by the Collateral Agent and (ii) all filing fees and related expenses
contemplated by Section 4.1 hereof. Expenses of retaking, holding, preparing
for sale, selling or the like shall include the reasonable attorneys' fees and
legal expenses of the Collateral Agent. All such expenses shall be secured
hereby.
6.7 LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL.
(a) The Collateral Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the UCC or otherwise, shall be to deal with
it in the same manner as the Collateral Agent deals with similar property for
its own account;
(b) The Collateral Agent shall have no obligation to take any
steps to preserve rights against prior parties to any Collateral; and
(c) Neither the Collateral Agent nor any of its directors,
officers, employees or agents shall be liable for
-14-
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so or shall be under any obligations to sell or otherwise
dispose of any Collateral upon the request of any Subsidiary Guarantor or
otherwise, except with respect to actions taken or omitted with gross
negligence, willful misconduct or in bad faith.
6.8 COOPERATION OF OTHER SUBSIDIARIES. Each Subsidiary Guarantor
shall cause any subsidiary that becomes a subsidiary after the date hereof to
enter into a supplement to the subsidiary Security Agreement, pursuant to which
such Subsidiary shall grant to the Collateral Agent for itself and the ratable
benefit of the Holders and their respective successors and assigns, a continuing
security interest in all of the Collateral then owned by such subsidiary or
thereafter acquired or arising as security for the prompt and complete payment
and performance in full of all the Obligations.
ARTICLE VII
MISCELLANEOUS
7.1 INDEMNITY. Each Subsidiary Guarantor agrees, jointly and
severally, to indemnify, reimburse and hold the Collateral Agent and its
officers, directors, employees, representatives and agents ("Indemnitees")
harmless from any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, suits, costs or expenses or disbursements (including
reasonable attorneys' fees and expenses) for whatsoever kind or nature
("Losses") which may be imposed on, asserted against or incurred by any of the
Indemnitees in any way relating to or arising out of this Security Agreement or
the transactions contemplated hereby, except to the extent that such Losses are
caused by the gross negligence, willful misconduct or bad faith of such
Indemnitees as determined by a final judgment of a court of competent
jurisdiction. The obligations of each Subsidiary Guarantor under this Section
shall be secured hereby, shall survive payment and performance or discharge of
the Obligations and the termination of this Security Agreement and shall be
joint and several with each of the other Subsidiary Guarantors.
7.2 GOVERNING LAW. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS).
7.3 NOTICES. Except as otherwise expressly provided herein, all
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy, telex, or cable
communication), and shall be deemed to have been duly given or made when
delivered by hand,
-15-
or five days after being deposited in the United States mail, postage prepaid,
or, in the case of telex notice, when sent, answer-back received, or in the case
of telecopy notice, when sent, or in the case of a nationally recognized
overnight courier service, one business day after delivery to such courier
service, addressed, in the case of each party hereto to the following address,
or to such other address as may be designated by any party in a written notice
to the other party hereto:
IF TO DISCOVERY ZONE LIMITED:
-----------------------------
Discovery Zone, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
---------------
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO DISCOVERY ZONE (PUERTO RICO), INC.:
-----------------------------------------
Discovery Zone, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
---------------
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO DISCOVERY ZONE LICENSING, INC.:
-------------------------------------
Discovery Zone, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
-16-
WITH A COPY TO:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO THE COLLATERAL AGENT:
State Street Bank and Trust Company
Two International Place
Boston, MA 02110
Attention: Corporate Trust Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
7.4 SUCCESSORS AND ASSIGNS. This Security Agreement shall be binding
upon and inure to the benefit of each Subsidiary Guarantor, the Collateral
Agent, all future holders of the Obligations and their respective successors and
assigns, except that the Company may not assign or transfer any of its rights or
obligations under this Security Agreement without the prior written consent of
the Collateral Agent.
7.5 WAIVERS AND AMENDMENTS. None of the terms or provisions of this
Security Agreement may be waived, amended, supplemented or otherwise modified
except in accordance with the terms of Article Nine of the Indenture. In the
case of any waiver, each Subsidiary Guarantor and the Collateral Agent shall be
restored to their former position and rights hereunder and under the outstanding
Obligations, and any Default or Event of Default waived shall be deemed to be
cured and not continuing, but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.
7.6 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part
of the Collateral Agent in exercising any right, power or privilege hereunder
and no course of dealing among the Subsidiary Guarantors and the Collateral
Agent shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other
-17-
right or remedy which the Collateral Agent would otherwise have on any future
occasion. The rights and remedies herein expressly provided are cumulative and
may be exercised singly or concurrently and as often and in such order as the
Collateral Agent deems expedient and are not exclusive of any rights or remedies
which the Collateral Agent would otherwise have whether by security agreement or
now or hereafter existing under applicable law. No notice to or demand on each
Subsidiary Guarantor in any case shall entitle any Subsidiary Guarantor to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Collateral Agent to any other or future
action in any circumstances without notice or demand.
7.7 TERMINATION; RELEASE. When the Obligations have been completely
paid and performed in full in accordance with Article Eight of the Indenture,
this Security Agreement shall terminate, and the Collateral Agent, at the
request and sole expense of each Subsidiary Guarantor, and subject to and in
accordance with the applicable terms of the Indenture, will execute and deliver
to such Subsidiary Guarantor the proper instruments (including UCC termination
statements) acknowledging the termination of this Security Agreement, and will
duly assign, transfer and deliver to such Subsidiary Guarantor, without
recourse, representation or warranty of any kind whatsoever, such of the
Collateral and Securities as may be in possession of the Collateral Agent and
that has not theretofore been disposed of, applied or released, all in
accordance with the terms and conditions of the Indenture and other Collateral
Documents. In addition, so long as no Default or Event of Default exists (with
respect to a Released Interest other than in connection with the immediately
preceding sentence), the Collateral Agent, at the request and sole expense of
any Subsidiary Guarantor, will execute and deliver to such Subsidiary Guarantor
the proper instruments to effect the release of the Released Interests in
compliance with Section 10.05 of the Indenture.
7.8 HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Security Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Security Agreement.
7.9 SEVERABILITY. In case any provision in or obligation under this
Security Agreement or the Obligations shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
7.10 COUNTERPARTS. This Security Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of
-18-
the parties hereto may execute this Security Agreement by signing any such
counterpart.
7.11 TRUSTEE CAPACITY. In acting as Collateral Agent hereunder, the
Collateral Agent shall benefit from and be entitled to all of the protections
and benefits of the terms set forth in Article Seven of the Indenture.
7.12 JOINT AND SEVERAL LIABILITY. Each of the Subsidiary Guarantors,
on the date hereof or hereafter becoming a party hereto, shall be jointly and
severally liable for the Obligations under the Subsidiary Guarantees and under
this Security Agreement.
7.13 SUBSIDIARY GUARANTORS' INDENTURE OBLIGATIONS ABSOLUTE. The
liability of each Subsidiary Guarantor under this Subsidiary Security Agreement
shall remain in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise affected by: any
change in the time, place or manner of payment of all or any of such Subsidiary
Guarantor's Obligations under the Indenture or the Notes, or in any other term
of the Indenture, the Notes, the Subsidiary Pledge Agreement or any Subsidiary
Guarantee, any waiver, indulgence, renewal, extension, amendment or modification
of or addition, consent or supplement to or deletion from or any other action or
inaction under or in respect of the Indenture, the Notes, the Subsidiary Pledge
Agreement or any Subsidiary Guarantee, or any assignment or transfer thereof;
any lack of validity or enforceability, in whole or in part, of the Indenture,
the Notes, the Subsidiary Pledge Agreement or any Subsidiary Guarantee; any
furnishing of any additional security for the Indenture Obligations or any
acceptance thereof or any release or nonperfection of any security interest in
property; any limitation on any party's liability or obligations under the
Indenture, the Notes, the Subsidiary Pledge Agreement or any Subsidiary
Guarantee; any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to any Subsidiary
Guarantor or any Person other than any Subsidiary Guarantor or any action taken
with respect to this Subsidiary Security Agreement by any trustee or receiver,
or by any court, in any such proceeding, whether or not such Subsidiary
Guarantor shall have notice or knowledge of any of the foregoing; or any
exchange, release or amendment or waiver of or consent to departure from any
other agreement pursuant to which a Lien is created in favor of the Collateral
Agent for the benefit of the Holder, pursuant to which a person other than a
Subsidiary Guarantor has granted a security interest.
-19-
IN WITNESS WHEREOF, the parties hereto have caused this Subsidiary
Security Agreement to be duly executed and delivered as of the date first above
written.
DISCOVERY ZONE LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer and President
DISCOVERY ZONE (PUERTO RICO), INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer and President
STATE STREET BANK AND TRUST COMPANY
as Collateral Agent
By: /s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Title:
DISCOVERY ZONE LICENSING, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
SCHEDULE 3.1
UCC FILINGS
A. DISCOVERY ZONE LICENSING, INC.
State Facilities Located Filing Office
Within the Jurisdiction
of the Filing Office
------------- ------------------------- -----------------------------------
Florida Corporate Office Bureau of Uniform Commercial Code
Department of State
P.O. Box 793
Tallahassee, FL 32314
Nevada State of Incorporation Secretary of State
UCC Division, Capitol Complex
Secretary of State's Office
Carson City, NV 89710
B. DISCOVERY ZONE (PUERTO RICO), INC.
Filing locations to be provided by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Guillemard, local counsel
to Initial Purchaser.
C. DISCOVERY ZONE LIMITED
Filing locations provided by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, local counsel to Initial
Purchaser.
Ontario
Alberta
Manitoba
SCHEDULE 3.3
LOCATION OF COLLATERAL
========================= ==================================== ========================================
LOCATION LANDLORD ADDRESS
CORPORATION NUMBER AND ADDRESS INFORMATION (IF APPLICABLE)
------------------------- ------------------------------------ ----------------------------------------
Discovery Zone ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇. Blockbuster Entertainment
Licensing, Inc. Fort Lauderdale, FL 33301 Att: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------- ------------------------------------ ----------------------------------------
Discovery Zone Limited 435 410-7 Power Contres Limited
Power Center c/o First Professional Mgmt., Inc.
▇▇▇ ▇ ▇▇. ▇▇▇▇ ▇▇, ▇▇▇ ▇ & ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ N. York, Ontario M2J5B2
------------------------- ------------------------------------ ----------------------------------------
Discovery Zone Limited 950 Great Pacific Industries, Inc.
360 ▇▇▇▇▇▇▇▇ Common ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ V3A4P8
------------------------- ------------------------------------ ----------------------------------------
Discovery Zone Limited 951 Saskatchewan Co-op Credit Society Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇ c/o Credit Union Central of Saskatchewan
Edmonton, Alberta T6J6RS ▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇.▇. Box 3030
Regina, Saskatchewan S4P3G8
------------------------- ------------------------------------ ----------------------------------------
Discovery Zone Limited 952 Almahurst Holdings Limited
Superstore Mall c/o Effort Trust Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ L8N1H5
------------------------- ------------------------------------ ----------------------------------------
Discovery Zone Limited 953 65434 Manitoba Limited
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ R3K1G5
------------------------- ------------------------------------ ----------------------------------------
Discovery Zone 901 HT Ventures, S.E.
(Puerto Rico), Inc. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------- ------------------------------------ ----------------------------------------
========================= ==================================== ========================================
LOCATION LANDLORD ADDRESS
CORPORATION NUMBER AND ADDRESS INFORMATION (IF APPLICABLE)
------------------------- ------------------------------------ ----------------------------------------
Discovery Zone 904 F.W. Caguas Joint Venture
(Puerto Rico), Inc. Plaza Center II P.O. Box 361163
▇▇▇▇▇ ▇▇▇▇▇ Ave & Hwy. 30 San ▇▇▇▇, PR 009K-1163
Caguas, PR 00725
------------------------- ------------------------------------ ----------------------------------------
Discovery Zone 905 Big Beaver of Rio Piedras Development
(Puerto Rico), Inc. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ c/o KMart Corp.
San ▇▇▇▇, PR 00927 ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇.
Troy, MI 48084
and
▇▇▇▇▇▇-▇▇▇▇▇▇▇ Assoc,
66 Long Wharf
Boston, Massachusetts 02110
========================= ==================================== ========================================
SCHEDULE 3.5
A. TRADEMARKS HELD BY EITHER:
(1) DISCOVERY ZONE, INC.;
(2) DISCOVERY ZONE LIMITED;
(3) DISCOVERY ZONE (PUERTO RICO), INC.; OR
(4) DISCOVERY ZONE LICENSING, INC.
See Schedule 3.5(A) to the Security Agreement, dated as of July 22, 1997,
between Discovery Zone, Inc and State Street Bank and Trust Company, as
Collateral Agent.
B. PATENTS HELD BY EITHER:
(1) DISCOVERY ZONE, INC.;
(2) DISCOVERY ZONE LIMITED;
(3) DISCOVERY ZONE (PUERTO RICO), INC.; OR
(4) DISCOVERY ZONE LICENSING, INC.
See Schedule 3.5(B) to the Security Agreement, dated as of July 22, 1997,
between Discovery Zone, Inc and State Street Bank and Trust Company, as
Collateral Agent.
C. COPYRIGHTS HELD BY EITHER:
(1) DISCOVERY ZONE, INC.;
(2) DISCOVERY ZONE LIMITED;
(3) DISCOVERY ZONE (PUERTO RICO), INC.; OR
(4) DISCOVERY ZONE LICENSING, INC.
See Schedule 3.5(C) to the Security Agreement, dated as of July 22, 1997,
between Discovery Zone, Inc and State Street Bank and Trust Company, as
Collateral Agent.
D. MATERIAL LICENSES
None.
