Exhibit 4.8
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SUBSIDIARY
PLEDGE AGREEMENT
From
DISCOVERY ZONE LIMITED,
DISCOVERY ZONE (PUERTO RICO), INC.,
DZ PARTY, INC.,
and
DISCOVERY ZONE LICENSING, INC.
as Pledgors
to
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
Dated as of July 22, 1997
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SUBSIDIARY PLEDGE AGREEMENT
This SUBSIDIARY PLEDGE AGREEMENT (together with any amendments,
replacements and supplements hereafter entered into, the "SUBSIDIARY PLEDGE
AGREEMENT"), dated as of July 22, 1997, between 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"), DZ Party,
Inc., a Delaware corporation ("DZPI"), Discovery Zone Licensing, Inc., a Nevada
corporation (together with DZL, DZPR, DZPI and any subsidiaries of the Company
that may become Subsidiary Guarantors after the date hereof and their permitted
respective successors and assigns, the "PLEDGORS" and, each individually, a
"PLEDGOR"), and State Street Bank and Trust Company as Trustee under the
Indenture (as defined below), acting as Collateral Agent hereunder (together
with its successors and assigns, in such capacity, the "COLLATERAL AGENT"), is
made for the ratable benefit of the Holders. As used herein, all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Indenture, dated as of July 22, 1997 (together with all amendments and
supplements thereto, the "INDENTURE"), among Discovery Zone, Inc., a Delaware
corporation (the "COMPANY"), Pledgors and the Collateral Agent, relating to the
Company's 13 1/2% Senior Secured Notes due 2002 (the "INITIAL NOTES") and
13 1/2% Senior Secured Notes due 2002, Series B to be issued in exchange for
the Initial Notes pursuant to the Registration Rights Agreement, the Purchase
Agreement and the Indenture ("EXCHANGE NOTES" and, together with the Initial
Notes, the "NOTES"), as amended from time to time in accordance with the
terms thereof.
W I T N E S S E T H:
WHEREAS, the Company has issued or will issue $85 million aggregate
principal amount of Notes pursuant to the Indenture;
WHEREAS, each Pledgor, is or, 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
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Reorganization)), will be the legal and beneficial owner of the issued and
outstanding shares of Capital Stock set forth under such Pledgor's name on
Schedule A attached hereto;
WHEREAS, pursuant to the Indenture or a supplement thereto, each
Pledgor has guaranteed the payment and performance in full of the Obligations of
the Company and the Pledgors under the Indenture and the Notes (the "SUBSIDIARY
GUARANTEES"); and
WHEREAS, in order to secure the payment and performance of the
Obligations secured by the Subsidiary Guarantees, the parties hereto desire to
set forth their mutual understanding and certain agreements regarding the terms
and conditions of the pledge of the Pledged Collateral (as defined below) made
by the Pledgors to the Collateral Agent for the ratable benefit of the Holders.
NOW, THEREFORE, in consideration of the premises and other benefits to
the Pledgor, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. PLEDGE. As collateral security for the complete
payment and performance in full of all the Obligations of the Company and the
Pledgors under the Indenture, the Notes and the Collateral Agreements (as
contemplated by Article Eight of the Indenture), each Pledgor hereby pledges,
assigns, transfers, sets over and delivers unto the Collateral Agent, and hereby
grants unto the Collateral Agent for the ratable benefit of the Holders and unto
their respective successors and assigns, a continuing first priority security
interest in all of the right, title and interest of each Pledgor in, to and
under any and all of the following described property, rights and interests
(collectively, the "PLEDGED COLLATERAL"):
(a) all of the issued and outstanding shares of Capital Stock
identified on Schedule A attached hereto as being owned by each Pledgor in any
of its subsidiaries (the "PLEDGED SUBSIDIARIES");
(b) all other shares of Capital Stock or other equity securities
issued, or in the future issued by the Pledged Subsidiaries now or hereafter
owned or acquired by each Pledgor in any manner, and the certificates
representing such securities,
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and any present or future options, warrants or other rights to subscribe for or
purchase any property described in Section 1(a) or any notes, bonds, debentures
or other evidences of indebtedness that are at any time convertible,
exchangeable or exercisable into Capital Stock or other equity securities of the
Pledged Subsidiaries or have or at any time could by their terms have voting
rights with respect to any matter affecting the Pledged Subsidiaries and all
securities, certificates and instruments representing or evidencing ownership of
any of the property described in Section 1(a) and this Section 1(b) hereof;
(c) all shares of Capital Stock, other equity securities of any
entity issued to each Pledgor or any other security described in Section 1(b)
if, at the time of issuance, the entity is or as a result of such issuance
becomes a subsidiary under the Indenture (the property described in Section
1(a), Section 1(b) and this Section 1(c) being referred to herein collectively
as the "PLEDGED SECURITIES");
(d) any additional property of the kind or type described in
this Section 1 required to be supplied under the terms of this Subsidiary Pledge
Agreement; and
(e) all proceeds and products of the Pledged Securities,
including without limitation dividends, distributions, cash, instruments and
other property or securities, now or hereafter at any time or from time to time
received or receivable or otherwise distributed or distributable in respect of
or in exchange for any or all of the Pledged Securities;
TO HAVE AND TO HOLD the Pledged Collateral, together with all rights,
titles, interests, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral Agent for its benefit and the benefit of the
Holders and unto their respective successors and assigns.
Section 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PLEDGOR. Each of the Pledgors hereby represents and warrants (as of the date of
execution hereof as to the Pledged Collateral existing on such date and as of
the date of acquisition as to the Pledged Collateral acquired subsequently),
covenants and agrees that:
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(a) As of the Issue Date (assuming that the Confirmation Order
has become a Final Order and the Approved Plan has become Effective), each
Pledgor will be the legal and beneficial owner of the Pledged Collateral, will
hold the Pledged Collateral free and clear of all Liens (except for the security
interest granted hereunder to the Collateral Agent for the ratable benefit of
Holders and except for Liens for taxes not yet payable and except for Permitted
Liens (other than the Permitted Liens with respect to the Eligible Credit
Facility)), and has not made and will not make any other pledge, assignment,
mortgage, hypothecation or transfer of the Pledged Collateral except for
Permitted Liens.
(b) The Pledged Securities have been or, upon the Issue Date
(assuming that the Confirmation Order has become a Final Order and the Approved
Plan has become Effective), will be duly authorized and validly issued and are
fully paid and non-assessable.
(c) Upon delivery of physical certificates evidencing the
Pledged Securities to the Collateral Agent, and the continued possession thereof
by the Collateral Agent, the Collateral Agent will have a continuing perfected
first priority security interest in the Pledged Securities, securing all of the
Obligations.
(d) As of the Issue Date (assuming that the Confirmation Order
has become a Final Order and the Approved Plan has become Effective), each
Pledgor will have the requisite corporate power and authority to pledge the
Pledged Collateral in accordance herewith and will defend its title thereto
against the claims of all persons whomsoever and shall maintain and preserve the
security interest granted hereunder with respect to the Pledged Collateral as
long as this Subsidiary Pledge Agreement shall remain in full force and effect,
subject to the Permitted Liens.
(e) Neither the execution and delivery of this Subsidiary Pledge
Agreement by any Pledgor, the performance by each Pledgor of its obligations
hereunder, nor the transactions herein contemplated will violate any Pledgor's
or any Pledged Subsidiary's Certificate of Incorporation or bylaws, each as
currently in effect as of the Issue Date (assuming that the Confirmation Order
has become a Final Order and the Approved Plan
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has become Effective), violate the terms of any agreement, indenture, mortgage,
deed of trust, equipment lease, instrument or other document to which the
Pledgor or any Pledged Subsidiary is a party, violate any law, order, rule or
regulation applicable to any Pledgor or any Pledged Subsidiary of any court or
any government, regulatory body or administrative agency or other governmental
body having jurisdiction over any Pledgor or any Pledged Subsidiary or their
properties, or result in or require the creation or imposition of any Lien
(other than the Lien contemplated hereby), upon or with respect to any of the
property now owned or hereafter acquired by any Pledgor or any Pledged
Subsidiary, which violation or conflict would have a material adverse effect on
the financial condition, business, assets or liabilities of any Pledgor or any
Pledged Subsidiary, taken as a whole, or on the value of the Pledged Collateral
or on the security interests hereunder.
(f) Other than the occurrence of the Issue Date (assuming that
the Confirmation Order has become a Final Order and the Approved Plan has become
Effective), the Pledged Securities, described in Schedule A attached hereto,
include all of the issued and outstanding shares of Capital Stock of the Pledged
Subsidiaries, and, as of the date of execution hereof, there are no outstanding
options, warrants or other rights to subscribe for or purchase any property
described in Section 1(a) or any notes, bonds, debentures or other evidences of
indebtedness that are at any time convertible into Capital Stock of the Pledged
Subsidiaries or have or at any time could by their terms have voting rights with
respect to any matters affecting the Pledged Subsidiaries.
(g) Other than the occurrence of the Issue Date (assuming that
the Confirmation Order has become a Final Order and the Approved Plan has become
Effective), no consent or approval which has not been obtained prior to the date
hereof of any other person or entity, no authorization, approval or other action
(other than delivery of physical certificates evidencing the Pledged Securities)
by, and no notice to or filing with, any governmental body (other than UCC
filings), regulatory authority or securities exchange, was or is necessary as a
condition to the validity of the pledge hereunder of the Pledged Collateral, and
such pledge is effective to vest in the Collateral Agent the rights of the
Collateral Agent in the Pledged Collateral as set forth herein. Except under
the Indenture and this Pledge
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Agreement, there are no restrictions on the transferability of any of the
Pledged Collateral transferred or delivered by any Pledgor hereunder or, except
for restrictions related to federal and state securities laws governing the sale
of "restricted stock" or "control stock," with respect to the foreclosure,
transfer or disposition thereof by the Collateral Agent.
(h) Each Pledgor shall deliver to the Collateral Agent
concurrently with the execution of this Subsidiary Pledge Agreement or, to the
extent acquired subsequent to the date of execution hereof, immediately upon
such Pledgor's acquisition thereof, all certificates and instruments
representing the Pledged Securities, and each other item of Pledged Collateral
(including all certificates, instruments and notes representing any such Pledged
Collateral). Any and all Pledged Securities so delivered to the Collateral
Agent shall be accompanied by undated duly executed powers in blank and by such
other instruments of transfer or documents as the Collateral Agent may
reasonably request. The Collateral Agent shall hold the certificates
representing the Pledged Securities delivered to it in its own name or in the
name of its nominee, all in form and substance satisfactory to the Collateral
Agent. Each Pledgor hereby acknowledges that the Collateral Agent may, in its
discretion, appoint one or more financial institutions to act as the Collateral
Agent's agent in holding in custodial accounts instruments or other financial
assets in which the Collateral Agent is granted a security interest hereunder,
including, without limitation, certificates of deposit and other instruments
evidencing short term obligations.
(i) The Collateral Agent shall at all times have full and free
access during normal business hours to all of the books, correspondence and
records of each Pledgor relating to the Pledged Collateral (other than
information that is privileged and confidential) and the Collateral Agent and
its representatives may examine the same, make abstracts therefrom and make
photocopies thereof, and each Pledgor agrees to render to the Collateral Agent,
at such Pledgor's costs and expense, such clerical and other assistance as may
be requested by the Collateral Agent with regard thereto.
(j) No Pledgor shall permit any of the Pledged Subsidiaries to
issue any securities of the type required to be pledged hereunder unless such
securities are promptly pledged and
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delivered hereunder to the Collateral Agent in accordance with Section 2(h).
(k) If, while this Subsidiary Pledge Agreement is in effect, any
stock dividend, stock split, reclassification, readjustment, reorganization,
merger, consolidation, exchange offer, tender offer or other change in the
capital structure, including the creation of any subscription or other rights
relating to the Pledged Securities, is declared or made, by any of the Pledged
Subsidiaries or any other issuer of Pledged Collateral, all substituted and
additional securities or interest issued with respect to the Pledged Collateral
and evidenced by certificates shall be endorsed in blank by each Pledgor
promptly upon receipt thereof or otherwise appropriately transferred to the
Collateral Agent in negotiable form, and all certificates or instruments
evidencing such securities shall be delivered to the Collateral Agent to be held
under the terms of this Subsidiary Pledge Agreement in the same manner as, and
as a part of, the Pledged Collateral. All Pledged Securities shall be evidenced
by one or more certificates. Any securities that may be issued upon exercise of
any subscription or other rights relating to the Pledged Securities shall be
endorsed in blank and delivered to the Collateral Agent with any necessary
powers.
(l) Each Pledgor shall pay and discharge all taxes, assessments
and governmental charges or levies against any Pledged Collateral prior to
delinquency thereof and shall keep all Pledged Collateral free of all unpaid
charges whatsoever, unless contested in good faith by appropriate proceedings
properly instituted and diligently conducted and adequate reserves have been set
aside in accordance with GAAP.
(m) Each Pledgor shall promptly notify the Collateral Agent in
writing of any material changes in any fact or circumstance represented or
warranted by the Pledgor with respect to any material portion of the Pledged
Collateral, of any impairment of the Pledged Collateral and of any claim, action
or proceeding affecting title to all or any of the Pledged Collateral.
(n) The chief executive offices and principal places of business
of each Pledgor are located at 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx,
Xxxxxxx 00000 and 00 Xxxx Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxx 00000. No Pledgor
shall relocate
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its principal places of business or chief executive offices to another county or
state or change its name, identity or corporate structure unless such Pledgor
(i) gives at least thirty (30) days' prior written notice to the Collateral
Agent, which notice shall specify such new name, identity, corporate structure
or new location and provide such other information as the Collateral Agent may
reasonably request and (ii) takes all action reasonably satisfactory to the
Collateral Agent to maintain the security interest of the Collateral Agent in
the Collateral.
(o) Upon any Pledgor acquiring or forming any subsidiary, such
Pledgor shall amend Schedule A attached hereto to include such subsidiary and
such subsidiary shall thenceforth be treated hereunder for all purposes as a
Pledged Subsidiary and all shares of Capital Stock or other equity securities of
such subsidiary issued to such Pledgor shall be treated hereunder for all
purposes as Pledged Collateral.
Section 3. ADMINISTRATION OF THE PLEDGED COLLATERAL. The
Collateral Agent shall administer the Pledged Collateral in accordance with the
provisions hereof and of the Indenture.
Section 4. RELEASE AND SUBSTITUTION OF PLEDGED COLLATERAL. The
Pledged Collateral shall not be released from the security interest created
hereunder and no property shall be substituted for any of the Pledged
Collateral, except in accordance with the provisions of Article Ten of the
Indenture and in accordance with the provisions of Section 18 hereof. The
Collateral Agent shall return the physical certificates and related stock powers
evidencing Pledged Collateral in its possession when so permitted by the
Indenture and this Subsidiary Pledge Agreement.
Section 5. VOTING RIGHTS, DIVIDENDS, ETC.
(a) Until an Event of Default (as defined below) shall have
occurred and be continuing:
(i) except as otherwise provided in Sections 5(b) and (c)
and Section 6 of this Subsidiary Pledge Agreement, each Pledgor shall be
entitled to exercise any and all voting or consensual rights and powers,
including subscription rights, accruing to an owner of the Pledged Collateral or
any part thereof for any purpose not inconsistent with the terms of this
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Subsidiary Pledge Agreement or any agreement giving rise to any of the Indenture
Obligations;
(ii) except as otherwise provided in this Subsidiary Pledge
Agreement, each Pledgor shall be entitled to retain and use any and all
dividends, distributions or other payments which are permitted by the Indenture
and paid in cash or property (other than securities which are subject to this
Subsidiary Pledge Agreement) and the Collateral Agent, upon receipt of any of
the foregoing, shall promptly pay or distribute the same to such Pledgor; and
(iii) The Collateral Agent shall execute and deliver to each
Pledgor or cause to be executed and delivered to each Pledgor, all such proxies,
powers of attorney, dividend orders and other instruments as such Pledgor may
reasonably request for the purpose of enabling it to exercise the voting or
consensual rights and powers which such Pledgor is entitled to exercise pursuant
to the foregoing Section 5(a)(i) or to receive the dividends, distributions or
other payments which such Pledgor is authorized to retain pursuant to the
foregoing Section 5(a)(ii).
(b) Upon the occurrence and during the continuation of an Event
of Default, (i) upon notice from the Collateral Agent, all rights of each
Pledgor to exercise the voting or consensual rights and powers which the Pledgor
would otherwise be entitled to exercise pursuant to Section 5(a)(i), and (ii)
all rights of each Pledgor to receive the dividends, distributions and other
payments which the Pledgor would otherwise be authorized to receive and retain
pursuant to Section 5(a)(ii), shall automatically cease, and all such rights
shall thereupon become vested in the Collateral Agent, which shall then have the
sole and exclusive right and authority to exercise, in its sole discretion, all
such voting and consensual rights and powers and to receive and retain as
Pledged Collateral all such dividends, distributions and other payments.
(c) Upon the occurrence and during the continuation of an Event
of Default, the Collateral Agent shall have the sole and exclusive right and
authority to receive and retain as Pledged Collateral all dividends,
distributions and other payments which are paid on the Pledged Collateral (other
than dividends, distributions or other payments permitted by the
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Indenture and paid on the shares of common stock of the company issuing such
shares) in cash or property. Any and all money and other property paid over to
or received by the Collateral Agent pursuant to the provisions of Section 5(b)
or this Section 5(c) shall be retained by the Collateral Agent as additional
Pledged Collateral hereunder and shall be administered and applied in accordance
with the provisions of this Subsidiary Pledge Agreement and the Indenture. All
dividends and interest payments which are received by the Pledgor contrary to
the provisions of Section 5(b) or this Section 5(c) shall be received in trust
for the benefit of the Collateral Agent, shall be segregated from other funds of
each Pledgor and shall be forthwith paid over to the Collateral Agent as Pledged
Collateral in the same form as so received (with any necessary endorsement).
Section 6. DEFAULT; REMEDIES.
(a) Defined. For purposes of this Subsidiary Pledge Agreement,
as provided in the preamble of this Subsidiary Pledge Agreement, the terms
"Default" and "Event of Default" shall have the respective meanings provided in
the Indenture.
(b) Exercise of Remedies Under the Subsidiary Pledge Agreement.
If an Event of Default shall have occurred and be continuing, the Collateral
Agent shall commence the taking of such actions (or refrain from taking actions)
toward collection or enforcement of this Subsidiary Pledge Agreement and the
Pledged Collateral (or any portion thereof), including, without limitation,
action toward foreclosure upon any Pledged Collateral, as it deems appropriate
in accordance with and subject to the applicable terms of the Indenture or
within three (3) Business Days after instructions from the Requisite Holders (as
defined in Section 6(f) below), to the extent allowed by law (and subject to the
applicable terms of the Indenture and pursuant to the terms hereof). If any
Event of Default that was the basis for the commencement of such action shall
have been cured or waived, and, in the case where there has been an
acceleration, rescission of such acceleration shall have occurred, in each case
in accordance with the terms of the Indenture, any direction to the Collateral
Agent to take any action in connection with the aforementioned notice shall be
deemed rescinded upon notification by that percentage of Holders necessary to
effect such waiver with respect to such Event of Default as provided for in the
Indenture. The Collateral Agent
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shall have no obligation to take any collection or enforcement action except
upon satisfaction of the conditions set forth in Section 7.01 and Section 7.02
of the Indenture.
(c) Remedies Generally. If an Event of Default shall have
occurred and be continuing, the Collateral Agent itself or by its agents or
attorneys may exercise any or all of its rights and remedies hereunder or under
the Indenture, or any other instrument or agreement securing, evidencing or
relating to the Obligations, the Notes or under applicable laws (including all
of the rights and remedies of a secured creditor under the Uniform Commercial
Code then in effect in the State of New York, the "UCC"), retain possession of
the Pledged Collateral or sell, assign, transfer, or dispose of, endorse and
deliver the whole or, from time to time, any part of the Pledged Collateral at
public or private sale or sales, at any exchanges, brokers board or at any of
the Collateral Agent's offices or elsewhere, for cash, upon credit or for other
property, for immediate or future delivery, and, to the extent permitted by
applicable law, for such price or prices and on such other terms as the
Collateral Agent may deem commercially reasonable. Upon consummation of any
such sale, the Collateral Agent shall have the right to assign, transfer,
endorse and deliver to the purchaser or purchasers thereof the Pledged
Collateral so sold. Each such purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of the
Pledgors, and each Pledgor hereby waives (to the full extent permitted by law)
all rights of redemption, stay or appraisal which any Pledgor now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. The Collateral Agent shall give the Pledgors ten (10) days'
written notice (which each Pledgor agrees shall be deemed to be reasonable
notification within the meaning of Section 9-504(3) of the UCC) in accordance
with Section 19 of the Collateral Agent's intention to make any such public or
private sale. Any such sale shall be held at such time or times and at such
place or places as the Collateral Agent may fix. At any such sale, the Pledged
Collateral, or portion thereof to be sold, may be sold as an entirety or in
separate portions, as the Collateral Agent may, in its sole discretion,
determine. The Collateral Agent shall not be obligated to make any sale of the
Pledged Collateral if it shall determine not to do so, regardless of the fact
that notice of sale of the Pledged Collateral may have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale
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or cause the same to be adjourned from time to time by announcement at the time
and place fixed for sale, and such sale may, without further notice, be made at
the time and place to which the same was so adjourned. In case sale of all or
any part of the Pledged Collateral is made on credit for future delivery, the
Pledged Collateral so sold may be retained by the Collateral Agent until the
sale price is paid by the purchaser or purchasers thereof, but the Collateral
Agent shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Pledged Collateral so sold and, in case of
any such failure, such Pledged Collateral may be sold again upon like notice.
As an alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by suit or suits at law or in equity to exercise
its remedies regarding the Pledged Collateral and sell the Pledged Collateral or
any portion thereof pursuant to judgment or decree of a court or courts having
competent jurisdiction. If under mandatory requirements of applicable law, the
Collateral Agent shall be required to make disposition of the Pledged Collateral
within a period of time that does not permit the giving of notice to the Pledgor
as hereinbefore provided, the Collateral Agent need give the Pledgor only such
notice of disposition as shall be reasonably practicable in view of such
mandatory requirements of law.
(d) Remedies; Obtaining the Pledged Collateral Upon Default.
Each Pledgor agrees that if any Event of Default shall have occurred and be
continuing, then and in every such case, and in addition to the rights and
remedies available to a secured party under any applicable provision of the UCC,
or any other applicable law, the Collateral Agent may:
(i) personally, or by agents or attorneys, immediately
take possession of the Pledged Collateral or any part thereof from the Pledgors
or any other person who then has possession of any part thereof, with or without
notice or process of law, in accordance with applicable law, and for that
purpose may enter upon the Pledgors' premises where any of the Pledged
Collateral is located and remove the same;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation constituting Pledged Collateral to make any
payment or render any performance required by the terms of such agreement,
instrument or obligation directly to the Collateral Agent or its designee;
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(iii) sell or otherwise liquidate, or direct the Pledgors to
sell or otherwise liquidate, any or all investments made in whole or in part
with the Pledged Collateral or any part thereof, and take possession of the
proceeds of any such sale or liquidation; and
(iv) take possession of the Pledged Collateral or any part
thereof by directing the Pledgors in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral Agent, in
which event the Pledgors shall at their own expense:
(A) forthwith cause the same to be moved to the place
or places so designated by the Collateral Agent and there delivered to the
Collateral Agent;
(B) store and keep any Pledged Collateral so delivered
to the Collateral Agent at such place or places pending further action by the
Collateral Agent as provided in this Section 6(d); and
(C) while any such Pledged Collateral shall be so
stored and kept, provide such guard, security and maintenance services as shall
be necessary to protect the same and to preserve and maintain such Pledged
Collateral in good condition; it being understood that the Pledgors' obligation
so to deliver the Pledged Collateral is of the essence of this Subsidiary Pledge
Agreement and that, accordingly, upon application to a court of equity having
jurisdiction, the Collateral Agent shall be entitled to a decree requiring
specific performance by the Pledgors of such obligation.
(e) Preventing Impairment of the Pledged Collateral. Regardless
of whether or not there shall have occurred any Default or Event of Default, the
Collateral Agent may institute and maintain or cause in the name of the Pledgors
or of the Collateral Agent, or any of them, to be instituted and maintained,
such suits and proceedings as the Collateral Agent may be advised by counsel
shall be necessary or expedient to prevent any impairment of the security
interest in or perfection of the Pledged Collateral in contravention of the
terms of the Indenture. Each Pledgor agrees not to knowingly take or permit to
be taken any action which would impair the Pledged Collateral or the Collateral
Agent's rights in the Pledged Collateral.
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(f) Requisite Holders. For purposes of this Section 6,
"Requisite Holders" means the Holder or Holders of a majority in principal
amount of the outstanding Notes or as otherwise provided in Article Six of the
Indenture.
Section 7. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Each
Pledgor hereby constitutes and appoints the Collateral Agent its
attorney-in-fact for the purpose of carrying out the provisions, but subject to
the terms and conditions, of this Subsidiary Pledge Agreement and taking any
action and executing any instrument, including, without limitation, any
financing statement or continuation statement, and taking any other action to
maintain the validity, perfection, priority and enforcement of the security
interest intended to be created hereunder, that the Collateral Agent may
reasonably deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by it, or to present or file any claim or
notice, or to take any action with respect to the Pledged Collateral or any part
thereof or the monies due or to become due in respect thereof or any property
covered thereby, and no action taken or omitted shall give rise to any defense,
counterclaim or right of action against the Collateral Agent, unless the
Collateral Agents actions are taken or omitted to be taken with gross negligence
or bad faith or constitute willful misconduct.
Section 8. PURCHASE OF PLEDGED COLLATERAL BY COLLATERAL AGENT OR
HOLDERS. At any sale of the Pledged Collateral, whether pursuant to power of
sale or otherwise hereunder, the Collateral Agent or any Holder may, to the
extent permitted by applicable law, bid for and purchase, free from any right of
redemption, stay or appraisal (all such rights being hereby waived and released
by each Pledgor to the extent permitted by law), the Pledged Collateral or any
part thereof or an interest therein and upon compliance with the terms of such
sale, may hold, retain, exploit, resell or otherwise dispose of such property
without further accountability to the Pledgors for the proceeds of such sale
(except in the event that there is a surplus of such proceeds in excess of the
Company's and the Pledgor's Obligations under the Indenture, the Notes and the
-14-
Collateral Agreements, in which case, the Collateral Agent shall account to the
Pledgor for such surplus). Each Pledgor will execute and deliver or cause to be
executed and delivered, such instruments, endorsements, assignments, waivers,
certificates and other documents and take such further action as the Collateral
Agent shall request in connection with any such sale.
Section 9. DISPOSITION OF PROCEEDS. The proceeds of any sale of
the whole or any part of the Pledged Collateral, together with any other monies
held by the Collateral Agent under the provisions of this Subsidiary Pledge
Agreement, shall be applied by the Collateral Agent in accordance with the
provisions of the Indenture.
Section 10. WAIVER OF CLAIMS. Except as otherwise provided in this
Subsidiary Pledge Agreement, EACH PLEDGOR HEREBY WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, NOTICE OF JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL
AGENT'S TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
PLEDGED COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICES AND
HEARINGS FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT THE
PLEDGOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED
STATES OR OF ANY STATE, and, to the full extent permitted by applicable law, the
Pledgor hereby further waives:
(a) all damages occasioned by such taking of possession or
disposition except any damages which are the direct result of the Collateral
Agent's negligence, bad faith or willful misconduct;
(b) all other requirements as to the time, place and terms of
sale or other requirements, with respect to the enforcement of the Collateral
Agent's rights and powers hereunder; and
(c) except as provided in Section 6(c) hereof, all rights of
redemption, appraisement, valuation, stay, marshalling of assets, extension or
moratorium, existing at law or in equity, by statute or otherwise, now or
hereafter in force, in order to prevent or delay the enforcement of this
Subsidiary Pledge Agreement or the sale or other disposition of the Pledged
Collateral or any portion thereof, and each Pledgor, for itself
-15-
and all who may claim under it, insofar as it now or hereafter lawfully may,
hereby waives all such rights.
Any sale of, or the exercise of any options to purchase, or any other
realization upon, any Pledged Collateral shall operate to divest all right,
title, interest, claim and demand, at law or in equity, of each Pledgor therein
and thereto, and shall be a perpetual bar both at law and in equity against each
Pledgor and against any and all persons claiming or attempting to claim the
Pledged Collateral so sold, optioned or realized upon, or any part thereof,
through and under the Pledgor.
Section 11. REMEDIES CUMULATIVE; NO WAIVER. Each right, power and
remedy of the Collateral Agent provided for herein or in the Indenture or in
another agreement pursuant to which a Lien is created in favor of the Collateral
Agent for the benefit of any Holder, or now or hereafter existing at law or in
equity, by statute or otherwise, shall be cumulative and concurrent and shall be
in addition to every other right, power or remedy of the Collateral Agent or any
Holder provided for herein or in the Indenture, the Notes or in another
agreement pursuant to which a Lien is created in favor of the Collateral Agent
for the benefit of any Holder or now or hereafter existing at law or in equity,
by statute or otherwise. No failure on the part of the Collateral Agent or any
Holder to exercise, and no delay in exercising, any right, power or remedy
hereunder or under the Indenture, the Notes or under another agreement pursuant
to which a Lien is created in favor of the Collateral Agent for the benefit of
any Holder or now or hereafter existing at law or in equity, by statute or
otherwise, shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. No notice
to or demand on the Pledgors hereunder shall, of itself, entitle the Pledgors to
any other or further notice or demand in the same, similar or other
circumstances.
Section 12. ADDITIONAL PLEDGED COLLATERAL. Without notice or
consent of the Pledgors and without impairment of the security interests and
rights created by this Subsidiary Pledge Agreement, the Collateral Agent may
accept from any Person or Persons additional collateral or other security for
the Obligations of the Company or the Pledgors' under the Indenture
-16-
or the Notes. Neither the creation of the security interests created hereunder
nor the acceptance of any such additional collateral or security shall prevent
the Collateral Agent from resorting to such additional collateral or security or
to the Pledged Collateral, in any order, without affecting the Collateral
Agent's rights hereunder.
Section 13. FURTHER ASSURANCES. Each Pledgor agrees that it shall,
at its own expense, promptly file or record such notices, financing statements,
continuation statements or other documents and take all further action as may be
necessary to perfect, maintain and protect the perfection of the security
interests of the Collateral Agent hereunder or to enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to the
Pledged Collateral, and as the Collateral Agent may reasonably request, such
instruments to be in form and substance satisfactory to the Collateral Agent,
and that it shall, at its own expense, do such further acts and things and
execute and deliver to the Collateral Agent such additional conveyances,
assignments, endorsements, agreements and instruments as the Collateral Agent
may at any time request in connection with the administration and enforcement of
this Subsidiary Pledge Agreement or relative to the Pledged Collateral or any
part thereof or in order to assure and confirm unto the Collateral Agent its
rights, powers and remedies hereunder.
Section 14. INDEMNIFICATION AND EXPENSES.
(a) Each Pledgor agrees, jointly and severally, to indemnify,
reimburse and hold the Collateral Agent from and against any and all claims,
losses and liabilities arising or resulting from or relating to this Subsidiary
Pledge Agreement (including, without limitation, enforcement of this Subsidiary
Pledge Agreement), except claims, losses or liabilities resulting from the
Collateral Agent's gross negligence, bad faith or willful misconduct, as
determined by a final judgment of a court of competent jurisdiction. The
indemnification of the Collateral Agent set forth in the immediately preceding
sentence is cumulative and not exclusive of any indemnity of the Collateral
Agent set forth in the Indenture or provided for under the TIA.
(b) Each Pledgor will pay upon demand to the Collateral Agent
the amount of any and all out-of-pocket expenses, including the reasonable fees
and charges of its
-17-
counsel and of any experts and agents, that the Collateral Agent may incur in
connection with the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Pledged Collateral, the
exercise or enforcement of any of the rights of the Collateral Agent or the
Holders hereunder or the failure by any Pledgor to perform or observe any of the
provisions hereof, and all amounts so incurred by the Collateral Agent shall be
entitled to the benefits of Section 7.07 of the Indenture.
Section 15. REGISTRATION RIGHTS, ETC.
(a) If the Collateral Agent determines that the registration of
any of the securities included in the Pledged Collateral under, or other
compliance with, the Securities Act or any similar Federal or state law is
desirable, upon or at any time after an Event of Default and acceleration of the
Notes in accordance with Section 6.02 of the Indenture, each Pledgor will use
its best efforts to cause such registration or compliance to be effectively
made, at no expense to the Collateral Agent or to the Holders, and to continue
any such registration effective for such time as may be necessary in the opinion
of the Collateral Agent. The Pledgors will reimburse the Collateral Agent upon
demand for any expenses incurred by the Collateral Agent (including reasonable
attorneys' fees) incurred in connection therewith, which obligation to pay such
expenses shall be secured hereunder.
(b) If any Pledgor is unable to effect a public sale of any or
all of the Pledged Collateral or if the Collateral Agent determines that it is
desirable to sell the Pledged Collateral in one or more private sales, the
Collateral Agent may limit such sales to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such securities for
their own account for investment and not with a view to distribution or resale.
Each Pledgor acknowledges and agrees that any such private sale may result in
prices and other terms less favorable to the seller than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. The Collateral Agent shall be under no obligation to delay a sale of
any of the Pledged Collateral for the period of time necessary to permit the
issuer of such securities to register such securities for public sale under the
-18-
Securities Act or under applicable state securities laws even if such issuer
would agree to do so.
(c) Each Pledgor further agrees to do or use all reasonable
efforts to cause to be done, to the extent such Pledgor may legally do so, all
such other acts and things as may be necessary to make such sale or sales of all
or any part of the Pledged Collateral valid and binding and in compliance with
any and all applicable laws, rules and regulations and orders and decrees of any
and all courts having jurisdiction over such sales, all at the Pledgor's
expense. Each Pledgor further agrees that a breach of any of the covenants
contained in this Subsidiary Pledge Agreement will cause irreparable injury to
the Collateral Agent, as secured party, for which the Collateral Agent would
have no adequate remedy at law in respect of such breach and, as a consequence,
agrees that each and every covenant contained in this Section 15 shall be
specifically enforceable against each Pledgor and, to the full extent permitted
by applicable law, each Pledgor waives and agrees not to assert as a defense
against an action for specific performance of such covenant that Pledgor's
failure to perform such covenants will not cause irreparable injury to the
Collateral Agent or the Holders or that the Collateral Agent on behalf of the
Holders has an adequate remedy at law in respect of such breach.
Section 16. PLEDGORS' INDENTURE OBLIGATIONS ABSOLUTE. The
liability of the Pledgors under this Subsidiary Pledge 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 the Company's or the Pledgors' Obligations
under the Indenture or the Notes, or in any other term of the Indenture, the
Notes or any Collateral Agreement, 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 or any Collateral Agreement, or any assignment or transfer thereof; any
lack of validity or enforceability, in whole or in part, of the Indenture, the
Notes or any Collateral Agreement; any furnishing of any additional security for
such 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 or any Collateral Agreement; any
bankruptcy,
-19-
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like proceeding relating to the Pledgors or any Person other than the
Pledgors, or any action taken with respect to this Subsidiary Pledge Agreement
by any trustee or receiver, or by any court, in any such proceeding, whether or
not the Pledgor 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 the
Pledgors has granted a security interest.
Section 17. WAIVER. To the extent permitted by applicable law,
each Pledgor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to the this Subsidiary Pledge Agreement and any
requirement that the Collateral Agent protect, secure, perfect or insure any
security interest or any property subject thereto or exhaust any right or take
any action against the Pledgors or any other person or entity; provided,
however, that the Collateral Agent shall in any event take such care in the
handling of any Pledged Securities in its possession as it takes with respect to
its own property of a similar nature in its possession.
Section 18. TERMINATION. Upon complete payment and performance in
full and satisfaction of all of the Company's and Pledgors' Obligations under
the Indenture, the Notes and the Collateral Agreements (as contemplated by
Article Eight of the Indenture), this Subsidiary Pledge Agreement shall
terminate, subject to the applicable terms of the Indenture, and the Collateral
Agent shall assign and redeliver to the Pledgors all of the Pledged Collateral
hereunder that has not been sold, disposed of, retained or applied by the
Collateral Agent in accordance with the terms hereof and the Indenture. Such
reassignment and redelivery shall be without warranty by, or recourse to, the
Collateral Agent, and shall be at the expense of the Pledgors. At such time,
this Subsidiary Pledge Agreement shall no longer constitute a Lien upon or a
grant of any security interest in any of the Pledged Collateral, and the
Collateral Agent shall, at the Pledgors' expense deliver to the Pledgors written
acknowledgment thereof and of cancellation of this Subsidiary Pledge Agreement
in a form reasonably requested by the Pledgors; provided, however, that this
Subsidiary Pledge Agreement shall continue to be effective or be reinstated, as
the
-20-
case may be, if at any time any payment of any of the Company's and the
Pledgors' Obligations under the Indenture, the Notes or the Collateral
Agreements is rescinded or must otherwise be returned upon the insolvency,
bankruptcy or reorganization of the Pledgors, all as though such payment had not
been made; and provided, further, however, this Subsidiary Pledge Agreement
shall no longer constitute a Lien upon or a grant of any security interest in
any of the Pledged Collateral that has been released in accordance with the
provisions of Section 10.05 of the Indenture.
Section 19. 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, 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.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
WITH A COPY TO:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
-21-
IF TO DISCOVERY ZONE (PUERTO RICO), INC.:
Discovery Zone, Inc.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
WITH A COPY TO:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
IF TO DZ PARTY, INC.:
Discovery Zone, Inc.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
WITH A COPY TO:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
IF TO DISCOVERY ZONE LICENSING, INC.:
Discovery Zone Licensing, Inc.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
-22-
WITH A COPY TO:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
IF TO THE COLLATERAL AGENT:
State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Corporate Trust Department
Facsimile: (000) 000-0000
WITH A COPY TO:
Peabody & Xxxxxx
00 Xxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Section 20. BINDING AGREEMENT; ASSIGNMENT. This Subsidiary Pledge
Agreement shall be binding upon and inure to the benefit of the Collateral
Agent, the Pledgors and their respective successors and permitted assigns.
Neither this Subsidiary Pledge Agreement nor any interest herein or in the
Pledged Collateral, or any part thereof, may be assigned by the Pledgors without
the prior written consent of the Collateral Agent, except as expressly permitted
herein or in the Indenture. This Subsidiary Pledge Agreement shall be deemed to
be automatically assigned by the Collateral Agent to any person who succeeds to
the Collateral Agent in accordance with Section 7.08 or Section 7.09 of the
Indenture, and its assignee shall have all rights and powers of, and act as, the
Collateral Agent hereunder.
Section 21. GOVERNING LAW. This Subsidiary Pledge Agreement shall
be construed in accordance with, and this Subsidiary Pledge Agreement and the
transactions described herein
-23-
shall be governed by, the laws of the State of New York as to all issues,
including (without limitation) issues of validity, interpretation, effect,
performance and remedies.
Section 22. AMENDMENTS. This Subsidiary Pledge Agreement may not
be amended or modified, except in accordance with Article Nine of the Indenture.
Section 23. SEVERABILITY. In the event that any provisions
contained in this Subsidiary Pledge Agreement shall for any reason be held to be
illegal or invalid under the laws of any jurisdiction, such illegality or
invalidity shall in no way impair the effectiveness of any other provision
hereof, or of such provision under the laws of any other jurisdiction; provided,
that in the construction and enforcement of such provision under the laws of the
jurisdiction in which such holding of illegality or invalidity exists, and to
the extent only of such illegality or invalidity, this Subsidiary Pledge
Agreement shall be construed and enforced as though such illegal or invalid
provision had not been contained herein.
Section 24. HEADINGS. Section headings used herein are inserted
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Subsidiary Pledge Agreement.
Section 25. COUNTERPARTS. This Subsidiary Pledge Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be an original, and all of which shall together constitute but
one and the same instrument. A complete set of counterparts shall be lodged
with the Collateral Agent.
Section 26. COOPERATION OF PLEDGED SUBSIDIARIES. Each Pledgor
shall cause the Pledged Subsidiaries to take all actions necessary to facilitate
the Pledgor's compliance with the terms hereof. If any entity issues shares of
Capital Stock or other equity securities to a Pledgor and such entity becomes a
subsidiary of the Pledgor, the Pledgor shall cause such Subsidiary to enter into
a supplement hereto, substantially in the form of this Subsidiary Pledge
Agreement, pursuant to which such Pledged Subsidiary shall pledge, assign,
transfer, set over and deliver unto the Collateral Agent, and grant unto the
Collateral Agent for the ratable benefit of the Holders and their
-24-
respective successors and assigns, a continuing security interest in all of the
right, title and interest of the Pledged Subsidiary in, to and under any and all
of such Capital Stock or other equity securities as collateral security for the
indefeasible payment and performance in full of the Company's and the Pledgors'
Obligations under the Indenture, the Notes and the Collateral Agreements. Such
Capital Stock or equity security shall thereafter be included as "Pledged
Securities" hereunder, such Pledged Subsidiary shall thereafter be included as a
"Pledgor" hereunder, and such entity shall thereafter be included as one of the
"Pledged Subsidiaries" hereunder.
Section 27. CONFIDENTIALITY. The parties agree that they and their
employees have maintained and will maintain, in confidence, all data, summaries,
reports or information of all kinds, whether oral or written, provided pursuant
to this Subsidiary Pledge Agreement or acquired or delivered in any manner from
the other party's personnel or files (the "CONFIDENTIAL INFORMATION"), and that
they have not and will not reveal the same to any persons not employed by the
other party except: at the written direction of such party; to the extent
necessary to comply with applicable law, reporting requirements imposed by the
Securities and Exchange Commission, or the valid order of a court of competent
jurisdiction, in which event the disclosing party shall so notify the other
party as promptly as practicable (and, if possible, prior to making any
disclosure) and shall seek confidential treatment of such information, or in
connection with any arbitration proceeding; as part of its normal reporting or
review procedure to its parent company, its auditors and its attorneys, and such
parent company, auditors and attorneys agree to be bound by the provisions of
this Section; in order to enforce any of its rights pursuant to, or in any other
dispute with respect to, this Agreement; if, at the time of disclosure to the
recipient, the Confidential Information is in the public domain; if, after
disclosure to the recipient, the Confidential Information becomes part of the
public domain by written publication through no fault of the recipient; or to
any one or more Holders and their representatives and agents.
Section 28. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights
and powers granted to the Collateral Agent hereunder are being granted in order
to preserve and protect the security interest of the Collateral Agent and the
Holders in and to the Pledged Collateral granted hereby and shall not be
interpreted
-25-
to, and shall not impose any duties on the Collateral Agent in connection
therewith other than those expressly provided herein or imposed under applicable
law and no implied covenants, functions, responsibilities, duties, obligations,
or liabilities shall be read into this Pledge Agreement or otherwise exist
against the Collateral Agent. Except as provided by applicable law or by the
Indenture, the Collateral Agent shall be deemed to have exercised reasonable
care in the custody and preservation of the Pledged Collateral in its possession
if the Pledged Collateral is accorded treatment substantially equal to that
which the Collateral Agent accords similar property held by the Collateral Agent
for similar accounts, it being understood that the Collateral Agent in its
capacity as such shall not have any responsibility for (a) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities or other
matters relative to any Pledged Collateral, whether or not the Collateral Agent
has or is deemed to have knowledge of such matters, (b) taking any necessary
steps to preserve rights against any parties with respect to any Pledged
Collateral or (c) investing or reinvesting any of the Pledged Collateral,
provided, however, that nothing contained in this Pledge Agreement shall relieve
the Collateral Agent of any responsibilities as a securities intermediary under
applicable law.
Section 29. AUTHORITY OF THE COLLATERAL AGENT.
(a) The Collateral Agent shall have and be entitled to exercise
all powers hereunder that are specifically granted to the Collateral Agent by
the terms hereof, together with such powers as are reasonably incident thereto.
The Collateral Agent may perform any of its duties hereunder or in connection
with the Pledged Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Except as otherwise expressly provided in this
Pledge Agreement or the Indenture, neither the Collateral Agent nor any
director, officer, employee, attorney or agent of the Collateral Agent shall be
liable to the Pledgor for any action taken or omitted to be taken by the
Collateral Agent, in its capacity as Collateral Agent, hereunder, except for its
own bad faith, gross negligence or willful misconduct, and the Collateral Agent
shall not be responsible for the validity, effectiveness or sufficiency hereof
or of any document or security furnished pursuant hereto. The Collateral Agent
and its directors, officers, employees,
-26-
attorneys and agents shall be entitled to rely on any communication, instrument
or document believed by it or them to be genuine and correct and to have been
signed or sent by the proper person or persons. The Collateral Agent shall have
no duty to cause any financing statement or continuation statement to be filed
in respect of the Pledged Collateral.
(b) The Pledgor acknowledges that the rights and
responsibilities of the Collateral Agent under this Pledge Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, right, request, judgment or
other right or remedy provided for herein or resulting or arising out of this
Pledge Agreement shall, as between the Collateral Agent and the Holders, be
governed by the Indenture and by such other agreements with respect thereto as
may exist from time to time among them, but, as between the Collateral Agent and
the Pledgor, the Collateral Agent shall be conclusively presumed to be acting as
agent for the Holders with full and valid authority so to act or refrain from
acting, and the Pledgor shall not be obligated or entitled to make any inquiry
respecting such authority.
-27-
IN WITNESS WHEREOF, the Pledgors and the Collateral Agent have caused
this Subsidiary Pledge Agreement to be duly executed and delivered by its
officer thereunto duly authorized as of the date first above written.
DISCOVERY ZONE LIMITED
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title:
DISCOVERY ZONE (PUERTO RICO), INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title:
STATE STREET BANK AND TRUST
COMPANY, as Collateral Agent
By: /s/ Xxxx Xxx Xxxxxx
---------------------------
Name: Xxxx Xxx Xxxxxx
Title:
DISCOVERY ZONE LICENSING, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title:
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 22nd day of July, 1997 before me personally came Xxxxxx X.
Xxxxxx, to me known, who being by me duly sworn, did depose and say that he is
the President of DISCOVERY ZONE LIMITED, the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
/s/ Xxxxx X. Xxxxxxxx
----------------------------------------
Notary Public
[SEAL]
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 22nd day of July, 1997 before me personally came Xxxxxx X.
Xxxxxx, to me known, who being by me duly sworn, did depose and say that he
is the President of DISCOVERY ZONE (PUERTO RICO), INC., the corporation
described in and which executed the foregoing instrument; and that he signed
his name thereto by order of the Board of Directors of said corporation.
/s/ Xxxxx X. Xxxxxxxx
----------------------------------------
Notary Public
[SEAL]
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 28th day of July, 1997 before me personally came Xxxxxx
Xxxxxx, to me known, who being by me duly sworn, did depose and say that he
is the Vice President of DISCOVERY ZONE LICENSING, the corporation described
in and which executed the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of said corporation.
/s/ Xxxx X. Xxxxxxxx
----------------------------------------
Notary Public
[SEAL]
Schedule A
Subsidiary Shares of Capital Stock Pledged
---------- -------------------------------
