EXHIBIT 4.10
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COLLATERAL ASSIGNMENT OF PATENTS, TRADEMARKS AND COPYRIGHTS
(SECURITY AGREEMENT)
between
DISCOVERY ZONE, INC.,
DISCOVERY ZONE LIMITED,
DISCOVERY ZONE (PUERTO RICO), INC.,
DZ PARTY, INC. and DISCOVERY ZONE LICENSING, INC.,
as Assignor
and
STATE STREET BANK AND TRUST COMPANY,
as Assignee
Dated as of July 22, 1997
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COLLATERAL ASSIGNMENT OF PATENTS, TRADEMARKS AND COPYRIGHTS
(SECURITY AGREEMENT)
COLLATERAL ASSIGNMENT OF PATENTS, TRADEMARKS AND COPYRIGHTS (SECURITY
AGREEMENT) dated as of July 22, 1997, between DISCOVERY ZONE, INC., a Delaware
corporation with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ ("Discovery Zone"), DISCOVERY ZONE LIMITED, an entity organized under the
laws of Canada with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ("DZ Limited"), DISCOVERY ZONE (PUERTO RICO), INC., a corporation
organized under the laws of Puerto Rico with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇. Lauderdale, Florida 33301 ("DZ Puerto Rico"), DZ PARTY, INC., a
corporation with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ ("DZ Party"), Discovery Zone Licensing, Inc. ("DZ Licensing" and
collectively with Discovery Zone, DZ Limited, DZ Puerto Rico and DZ Party, the
"Assignor"), and STATE STREET BANK AND TRUST COMPANY, in its capacity as trustee
under the Indenture (as hereinafter defined), with an office at Two
International Place, Boston, MA 02110 (in such capacity, "Assignee").
Capitalized terms used in this Agreement which are defined in the Indenture (as
hereinafter defined) shall have the respective meanings given them in the
Indenture, unless otherwise defined herein.
W I T N E S S E T H:
WHEREAS, Discovery Zone and Assignee have entered into the Indenture
dated the date hereof (together with all supplements and amendments thereto and
all extensions, renewals, restatements and replacements thereof, the
"Indenture," and such Indenture together with all agreements, instruments and
documents now or hereafter entered into or delivered in connection therewith,
collectively, the "Collateral Agreements"), pursuant to which the Notes were
issued to the Holders;
WHEREAS, certain Security Agreements of even date herewith between
each of the Assignors and the Assignee (collectively, the "Security Agreement")
grants to the Assignee, for the benefit of itself and the ratable benefit of the
holders of the Notes, a security interest in certain of the Assignor's assets,
including, without limitation, its patents, patent rights and applications
therefor, trademarks and applications therefor, copyrights and all applications
and registrations therefor, license rights and goodwill;
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Assignor agrees as follows:
1. GRANT OF SECURITY INTEREST. As security for the complete and
timely payment and satisfaction of Assignor's Obligations to Assignee under the
Indenture and the Notes, Assignor hereby grants to the Assignee, a continuing
security interest in and continuing lien on Assignor's entire right, title and
interest in and to all of the now owned or existing and hereafter acquired or
arising:
a. United States and foreign patents and patent applications,
including, without limitation, the inventions and improvements
described and claimed therein, all patentable inventions and those
patents and patent applications listed on SCHEDULE A attached hereto
and made a part hereof, and the reissues, divisions, continuations,
renewals, extensions and continuations in-part of any of the
foregoing, and all income, royalties, damages and payments now and
hereafter due and/or payable under any of the foregoing with respect
to any of the foregoing, including, without limitation, damages and
payments for past, present and future infringements of any of the
foregoing and the right to ▇▇▇ for past, present and future
infringements of any of the foregoing (all of the foregoing United
States and foreign patents and patent applications are sometimes
hereinafter individually and/or collectively referred to as the
"Patents");
b. United States and foreign copyrights, rights and interests
in copyrights, works protectable by copyrights, copyright
registrations, and copyright applications, including, without
limitation, the copyright registrations and applications listed on
SCHEDULE B attached hereto and made a part hereof, and all renewals of
any of the foregoing, all income, royalties, damages and payments now
and hereafter due and/or payable under any of the foregoing,
including, without limitation, damages and payments for past, present
and future infringements of any of the foregoing and the right to ▇▇▇
for past, present and future infringements of any of the foregoing
(all of the foregoing United States and foreign copyrights are
sometimes hereinafter individually and/or collectively referred to as
the "Copyrights");
c. United States and foreign trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos, other business identifiers, prints and
labels on which any of the foregoing have appeared or appear, all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, the trademarks
and applications listed on SCHEDULE C attached hereto and made a part
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hereof or of any of the foregoing (other than applications to register
a ▇▇▇▇ under Section 1(b) of the ▇▇▇▇▇▇ Act for which a verified
statement of use has not been filed) (all of the foregoing trademarks,
tradenames, service marks, trademark registrations, service ▇▇▇▇
registrations, trademark applications and service ▇▇▇▇ applications
are sometimes hereinafter individually and/or collectively referred to
as the "Trademarks");
d. any license agreement in which the Assignor is or becomes
licensed to use a Patent, Copyright, Trademark or the know-how of any
other Person including, without limitation, the license agreements
listed on SCHEDULES A, B AND C attached hereto and made a part hereof
(all the foregoing are referred to as the "Licenses"); and
e. the goodwill of the Assignor's business connected with the
use of and symbolized by the Trademarks.
All of the foregoing items set forth in clauses (a) through (e) are hereinafter
referred to collectively as the "Collateral" and shall be included as part of
the definition of Collateral in the Security Agreement. The Security Agreement
and the provisions thereof are hereby incorporated herein in their entirety by
this reference thereto.
2. ASSIGNOR'S OBLIGATIONS. Assignor agrees that it will perform and
discharge and remain liable for all its covenants, duties, and obligations
arising in connection with the Collateral and any licenses and agreements
related thereto. Assignee shall have no obligation or liability in connection
with the Collateral or any licenses or agreements relating thereto by reason of
this Assignment or any payment received by Assignee relating to the Collateral
and Assignee shall not be required to perform any covenant, duty or obligation
of Assignor arising in connection with the Collateral or any license or
agreement related thereto or to take any other action regarding the Collateral
or any such licenses or agreements, except and only to the extent that Assignee
has acquired absolute ownership of the Collateral upon an exercise of its
remedies under Section 5 hereof.
3. REPRESENTATIONS AND WARRANTIES. Assignor represents and warrants
to Assignee that 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 in the Plan of Reorganization))
with respect to the Collateral in existence on such date each such
representation and warranty is made: (a) Assignor is the beneficial and record
owner of such
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Collateral, and no adverse claims have been made with respect to its title to or
the validity of such Collateral; (b) the trademarks and service marks covered by
the Licenses and the Trademarks as listed on Schedule C are the only trademarks,
service marks, trademark and service ▇▇▇▇ registrations and applications
therefor and the only trade names and trade styles in which Assignor has any or
all right, title and interest; (c) the patents and patent applications listed on
Schedule A are the only patents and patent applications in which Assignor has
any or all right, title and interest; (d) the copyright registrations and
applications listed on Schedule B are the only copyright registrations and
applications in which Assignor has any or all right, title and interest; (e) no
such Collateral is subject to any existing mortgage, pledge, lien, security
interest, lease, charge, encumbrance, settlement or consent, covenant not to
▇▇▇, non-assertion assurance, release or license (by Assignor as licensor),
except the security interest created hereby and under the other Collateral
Agreements and except for any licenses between or among any Assignors; (f)
Assignor has performed all acts and has paid all renewal, maintenance and other
fees and taxes required to maintain each and every registration and application
of such Collateral in full force and effect; (g) no claims have been made
against Assignor that the use of any of the Collateral violates the asserted
rights of any third party; (h) to the best of Assignor's knowledge, no third
party is infringing upon any such Collateral; and (i) when this Agreement is
filed in and recorded by the United States Patent and Trademark Office (the
"Trademark Office") the United States Copyright Office (the "Copyright Office")
and, other than with respect to Copyrights, UCC-1 Financing Statements in
appropriate form for recordation have been filed in the recording offices where
the Assignor's principal place of business is located and such other locations
required by applicable law, and the Assignee has taken the other actions
contemplated by the Indenture and in this Agreement, this Agreement will create
a legal and valid perfected and continuing lien on and security interest in the
Collateral in favor of Assignee, enforceable against Assignor and all third
parties, subject to no other mortgage, lien, charge, encumbrance, or security or
other interest, except as expressly permitted by the Indenture, the
Intercreditor Agreement and the other Collateral Agreements.
4. COVENANTS. Assignor will maintain and renew all items of
Collateral necessary for the conduct of its business and all registrations of
the Collateral necessary for the conduct of its business and will defend the
Collateral against the claims of all persons. Assignor will maintain the same
standards of quality for the goods and services in connection with which the
Trademarks and the trademarks covered by the Licenses are used as Assignor or
such other persons maintained for such goods and services prior to entering into
this Agreement. Assignee shall have the right to enter upon Assignor's premises
at all reasonable times to monitor such quality standards. Assignor shall
promptly notify Assignee if it knows or has reason to know
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that any of the Collateral may become subject to any adverse determination or
development (including the institution of proceedings) in any action or
proceeding in the Trademark Office, the Copyright Office, or any court. In the
event that any of the Collateral is infringed or diluted by a third party,
promptly after the Assignor becomes aware of such infringement or dilution,
Assignor shall take all reasonable actions to stop such infringement or dilution
and protect its exclusive rights in such Collateral including, but not limited
to, the initiation of a suit for injunctive relief and to recover damages.
Without limiting the generality of the foregoing, Assignor shall not permit the
expiration, termination or abandonment of any Trademark, Patent, Copyright or
License used in or necessary for the conduct of its business without the prior
written consent of Assignee. If, before the Obligations have been satisfied in
full, Assignor shall obtain rights to or be licensed to use any new Trademark,
Copyright or Patent not identified on Schedules A, B or C hereto, the provisions
of Section 1 hereof shall automatically apply thereto and Assignor shall give
Assignee prompt notice thereof in writing.
5. REMEDIES UPON DEFAULT. Whenever any Event of Default shall occur
and be continuing, Assignee shall have all the rights and remedies granted to it
in such event by the Indenture, which rights and remedies are specifically
incorporated herein by reference and made a part hereof. Assignee in such event
may collect directly any payments due to Assignor in respect of the Collateral
and, subject to any limitations imposed under any license agreements
constituting part of the Collateral, may sell, license, lease, assign, or
otherwise dispose of the Collateral in the manner set forth in the Indenture.
Assignor agrees that, in the event of any disposition of the Collateral upon any
such Event of Default which is continuing, it will duly execute, acknowledge,
and deliver all documents necessary or advisable to record title to the
Collateral in any transferee or transferees thereof, including, without
limitation, valid, recordable assignments of the Collateral. In the event an
Event of Default occurs and is continuing, Assignor hereby irrevocably appoints
Assignee as its attorney-in-fact, with power of substitution, to execute,
deliver, and record any such documents on Assignor's behalf. Notwithstanding
any provision hereof to the contrary, during the continuance of an Event of
Default, Assignor may sell merchandise or services bearing the Trademarks,
Copyrights and trademarks or copyrights covered by the Licenses and utilize the
Patents and patents covered by the Licenses in the ordinary course of their
respective business and in a manner consistent with its past practices, until it
receives written notice from Assignee of an intended sale or disposition of the
Collateral. The preceding sentence shall not limit any right or remedy granted
to Assignee with respect to Assignor's inventory and other property under the
Indenture and the Collateral Agreements or any other agreement now or
hereinafter in effect.
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6. POWER OF ATTORNEY. Concurrently with the execution and delivery
hereof, Assignor shall execute and deliver to the Assignee, in the form of
Exhibit 1 hereto, five (5) originals of a Special Power of Attorney for the
implementation of the assignment, sale, license, lease or other disposition of
the Trademarks, Copyrights, Patents and Licenses pursuant to Section 5.
Assignor hereby releases Assignee from any claims, causes of action and demands
at any time arising out of or with respect to any actions taken or omitted to be
taken by Assignee in accordance with Section 5 under the powers of attorney
granted therein, other than actions taken or omitted to be taken through the bad
faith, willful misconduct or gross negligence of Assignee, as determined by a
final, non-appealable order of a court of competent jurisdiction.
7. CUMULATIVE REMEDIES. The rights and remedies provided herein are
cumulative and not exclusive of any other rights or remedies provided by law.
The security interest granted hereby is granted in conjunction with the security
interest granted to Assignee under the Indenture and Security Agreement. The
rights and remedies of Assignee with respect to the security interest granted
hereby are in addition to those set forth in the Indenture and other Collateral
Agreements and those which are now or hereafter available to Assignee as a
matter of law or equity. The exercise by Assignee of any one or more of the
rights, powers or remedies provided for in this Agreement, Indenture and the
Security Agreement or now or hereafter existing at law or in equity shall not
preclude the simultaneous or later exercise by any person, including Assignee,
of any or all other rights, powers or remedies. The rights and remedies
provided herein are intended to be in addition to and not in substitution of the
rights and remedies provided by the Indenture and the Collateral Agreements.
8. AMENDMENTS AND WAIVERS. This Agreement may not be modified,
supplemented, or amended, or any of its provisions waived at the request of
Assignor, without the prior written consent of Assignee. Assignor hereby
authorizes Assignee to modify this Agreement by amending the Schedules hereto to
include any future Trademark, Patent or Copyright, additional licenses or other
additional Collateral in the future arising.
9. WAIVER OF RIGHTS. No course of dealing between the parties to
this Agreement or any failure or delay on the part of any such party in
exercising any rights or remedies hereunder shall operate as a waiver of any
rights and remedies of such party or any other party, and no single or partial
exercise of any rights or remedies by one party hereunder shall operate as a
waiver or preclude the exercise of any other rights and remedies of such party
or any other party. No waiver by Assignee of any breach or default by Assignor
shall be deemed a waiver of any other previous breach or default or of any
breach or default occurring thereafter.
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10. ASSIGNMENT. Each of Discovery Zone, DZ Limited, DZ Puerto Rico
and DZ Party hereby covenants and agrees to assign all of its right, title and
interest in and to the Collateral to DZ Licensing on or prior to July 29, 1997
pursuant to an Assignment of Intellectual Property, substantially in the form
attached hereto as Exhibit 2 (the "DZ Licensing Assignment"). The provisions of
this Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto; provided however, that except for
the DZ Licensing Assignment no interest herein or in or to the Collateral may be
assigned by Assignor without the prior written consent of Assignee; and,
provided further, that the Assignee may assign the rights and benefits hereof to
any party acquiring any interest in the Obligations of any part thereof.
11. FURTHER ACTS. Assignor shall have the duty to prosecute
diligently any application for the Patents, Trademarks and Copyrights necessary
for the conduct of its business pending as of the date of this Agreement or
thereafter, until the Obligations shall have been paid in full, and to make
applications on material unregistered but registrable trademarks and copyrights
and unpatented or unregistered but patentable or registrable invention;
necessary for the conduct of its business in any location where Assignor does
business and to preserve and maintain all rights in the Collateral necessary for
the conduct of its business. Any expenses incurred in connection with such
applications shall be borne by Assignor. Assignor shall not abandon any right
to file a trademark, service ▇▇▇▇ application or registration for any trademark,
service ▇▇▇▇, copyright, copyright application or patent application or
registration used in or necessary for the conduct of its business, or abandon
any such pending applications or registrations necessary for the conduct of its
business, without the consent of Assignee.
12. ENFORCEMENT. Upon Assignor's failure to do so after Assignee's
demand, or upon an Event of Default, Assignee shall have the right but shall in
no way be obligated to bring suit in its own name to enforce the Trademarks,
Patents, Copyrights, Licenses or the trademarks, patents or copyrights covered
by the Licenses, and any license under any of the foregoing, in which event
Assignor shall at the request of Assignee do any and all lawful acts and execute
any and all proper documents that may be reasonably requested by Assignee in aid
of such enforcement including, but not limited to, joining as a plaintiff in any
such enforcement action, and Assignor shall promptly, upon demand, reimburse and
indemnify Assignee or its agents for all costs and expenses incurred by Assignee
in the exercise of its rights under this Section 12.
13. RELEASE AND RE-ASSIGNMENT. At such time as all of the
Obligations under the Indenture and the Notes have been satisfied, and the
Collateral Agreements have been terminated, other than upon enforcement of
Assignee's remedies under the Collateral Agreements after an Event of Default,
Assignee will,
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subject to and in accordance with the applicable terms of the Indenture, execute
and deliver to Assignor all deeds, assignments and other instruments as may be
necessary or proper to release Assignee's lien in the Collateral and reassign to
Assignor any and all rights of Assignee therein which were granted to Assignee
hereunder, subject to any dispositions thereof which may have been made by
Assignee pursuant hereto. No express or implied license with respect to the
Collateral is granted to Assignee under this Agreement and Assignee shall have
no rights in Collateral, except as provided in Section 5 as explicitly granted
therein and as otherwise explicitly granted hereunder in connection with the
security interest granted hereunder.
14. SEVERABILITY. If any clause or provision of this Agreement shall
be held invalid or unenforceable, in whole or in part, in any jurisdiction, such
invalidity or unenforceability shall attach only to such clause or provision, or
part thereof, in such jurisdiction, and shall not in any manner affect any other
clause or provision in any other jurisdiction.
15. NOTICES. All notices, requests and demands to or upon Assignor
or Assignee under this Agreement shall be given in the manner prescribed by the
Indenture.
16. GOVERNING LAW. This Agreement shall be governed by and
construed, applied, and enforced in accordance with the federal laws of the
United States of America applicable to trademarks, patents and copyrights and
the laws of the State of New York, except that no doctrine of choice of law
shall be used to apply the laws of any other state or jurisdiction.
17. FINANCING AGREEMENT. This Agreement is one of the Collateral
Agreements.
18. COUNTERPARTS. This Agreement may be signed in one or more
counterparts, and by each party in separate counterparts, which, when taken
together, shall constitute one and the same document.
19. INDENTURE PROTECTIONS. Notwithstanding any term hereof to the
contrary, the terms of this Agreement applicable to or governing the Assignee
shall in all respects be subject to the terms, benefits and protections afforded
to the Assignee under Article Seven of the Indenture.
{THIS SPACE INTENTIONALLY LEFT BLANK}
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IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first above written.
DISCOVERY ZONE, INC.,
Assignor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
DISCOVERY ZONE LIMITED,
Assignor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
DISCOVERY ZONE (PUERTO RICO), INC.,
Assignor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
DZ PARTY, INC.,
Assignor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
DISCOVERY ZONE LICENSING, INC.,
Assignor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
STATE STREET BANK AND TRUST COMPANY, solely in its
capacity as Trustee and Collateral Agent under the
Indenture,
Assignee
By: /s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Title: Vice President