Exhibit 4.71
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as
of March 31, 1998, is made by DISCOVERY ZONE LICENSING, INC., a Nevada
corporation ("Obligor"), in favor of FOOTHILL CAPITAL CORPORATION, a California
corporation, ("Foothill").
RECITALS
A. Discovery Zone, Inc., a Delaware corporation ("Borrower")
and Foothill are, contemporaneously herewith, entering into that certain Loan
and Security Agreement, of even date herewith (as amended, restated, modified,
renewed or extended from time to time, the "Loan Agreement"), pursuant to which
Foothill has agreed to make certain financial accommodations to Borrower.
B. Obligor, Discovery Zone (Canada) Limited, a corporation
organized under the laws of Canada, and Discovery Zone (Puerto Rico), Inc., a
corporation organized under the laws of the commonwealth of Puerto Rico (each a
"Guarantor", collectively "Guarantors"), have executed that certain General
Continuing Guaranty, of even date herewith, in favor of Foothill (the
"Guaranty").
C. The Guarantors and Foothill have entered into that certain
Security Agreement, of even date herewith (as amended, restated, modified,
renewed or extended from time to time, the "Security Agreement"), pursuant to
which each Guarantor has granted to Foothill a security interest in (among other
things) all of the general intangibles of such Guarantor.
D. Pursuant to the Security Agreement, and as one of the
conditions precedent to the obligations of Foothill under the Loan Agreement,
Obligor has agreed to execute and deliver this Agreement to Foothill for filing
with the PTO and with any other relevant recording systems in any domestic
jurisdiction, and as further evidence of and to effectuate Foothill's existing
security interests in the trademarks and other general intangibles described
herein.
ASSIGNMENT
NOW, THEREFORE, for valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Obligor hereby agrees in favor of
Foothill as follows:
1. Definitions; Interpretation.
(a) Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"Event of Default" shall have the meaning ascribed thereto in
the Security Agreement.
"Lien" means any pledge, security interest, assignment, charge
or encumbrance, lien (statutory or other), or other preferential arrangement
(including any agreement to give any security interest).
"Obligor" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Proceeds" means whatever is receivable or received from or
upon the sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involuntary, of any Trademark Collateral, including
"proceeds" as defined at UCC Section 9-306, all insurance proceeds and all
proceeds of proceeds. Proceeds shall include (i) any and all accounts, chattel
paper, instruments, general intangibles, cash and other proceeds, payable to or
for the account of Obligor, from time to time in respect of any of the Trademark
Collateral, (ii) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to or for the account of Obligor from time to time with respect
to any of the Trademark Collateral, (iii) any and all claims and payments (in
any form whatsoever) made or due and payable to Obligor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Trademark Collateral by any Person acting
under color of governmental authority, and (iv) any and all other amounts from
time to time paid or payable under or in connection with any of the Trademark
Collateral or for or on account of any damage or injury to or conversion of any
Trademark Collateral by any Person.
"PTO" means the United States Patent and Trademark Office and
any successor thereto.
"Secured Obligations" means all liabilities, obligations, or
undertakings owing by Obligor to Foothill of any kind or description arising out
of or outstanding under, advanced or issued pursuant to, or evidenced by the
Guaranty, any other Loan Document heretofore, herewith, or hereafter executed by
Obligor, or this Agreement, irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due,
voluntary or involuntary, whether now existing or hereafter arising, and
including all interest (including interest that accrues after the filing of a
case under the Bankruptcy Code) and any and all costs, fees (including attorneys
fees), and expenses which Obligor is required to pay pursuant to any of the
foregoing, by law, or otherwise.
"Trademark Collateral" has the meaning set forth in Section 2.
"Trademarks" has the meaning set forth in Section 2.
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"UCC" means the Uniform Commercial Code as in effect from time
to time in the State of New York.
"United States" and "U.S." each mean the United States of
America.
(b) Terms Defined in UCC. Where applicable and except
as otherwise defined herein, terms used in this Agreement shall have the
meanings assigned to them in the UCC.
(c) Interpretation. In this Agreement, except to the
extent the context otherwise requires:
(i) Any reference to a Section or a Schedule
is a reference to a section hereof, or a schedule hereto,
respectively, and to a subsection or a clause is, unless
otherwise stated, a reference to a subsection or a clause of
the Section or subsection in which the reference appears.
(ii) The words "hereof," "herein," "hereto,"
"hereunder" and the like mean and refer to this Agreement as a
whole and not merely to the specific Section, subsection,
paragraph or clause in which the respective word appears.
(iii) The meaning of defined terms shall be
equally applicable to both the singular and plural forms of
the terms defined.
(iv) The words "including," "includes" and
"include" shall be deemed to be followed by the words "without
limitation."
(v) References to agreements and other
contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto.
(vi) References to statutes or regulations
are to be construed as including all statutory and regulatory
provisions consolidating, amending or replacing the statute or
regulation referred to.
(vii) Any captions and headings are for
convenience of reference only and shall not affect the
construction of this Agreement.
(viii) Capitalized words not otherwise
defined herein shall have the respective meanings assigned to
them in the Loan Agreement.
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(ix) In the event of a direct conflict
between the terms and provisions of this Agreement and the
Loan Agreement, it is the intention of the parties hereto that
both such documents shall be read together and construed, to
the fullest extent possible, to be in concert with each other.
In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of
the Loan Agreement shall control and govern; provided,
however, that the inclusion herein of additional obligations
on the part of Obligor and supplemental rights and remedies in
favor of Foothill (whether under federal law or applicable New
York law), in each case in respect of the Trademark
Collateral, shall not be deemed a conflict with the Loan
Agreement.
2. Security Interest.
(a) Assignment and Grant of Security Interest.
To secure the Secured Obligations, Obligor hereby grants, assigns,
transfers and conveys to Foothill a continuing security interest in all
of Obligor's right, title and interest in and to the following
property, whether now existing or hereafter acquired or arising and
whether registered or unregistered (collectively, the "Trademark
Collateral"):
(i) all state (including common law),
federal trademarks, service marks and trade names, corporate
names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or
business identifiers, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired,
together with and including all licenses therefor held by
Obligor (unless otherwise prohibited by any license or related
licensing agreement under circumstances where the granting of
the security interest would have the effect under applicable
law of terminating or permitting termination of the license
for breach (unless the licensor has consented to such grant or
waived such termination remedy)), and all registrations and
recordings thereof, and all applications filed or to be filed
in connection therewith, including registrations and
applications in the PTO, any State of the United States and
all extensions or renewals thereof, including without
limitation any of the foregoing identified on Schedule A
hereto (as the same may be amended, modified or supplemented
from time to time), and the right (but not the obligation) to
register claims under any state or federal trademark law or
regulation and to apply for, renew and extend any of the same,
to xxx or bring opposition or cancellation proceedings in the
name of Obligor or in the name of Foothill for past, present
or future infringement or unconsented use thereof, and all
rights arising therefrom throughout the world (collectively,
the "Trademarks");
(ii) all claims, causes of action and rights
to xxx for past, present or future infringement or unconsented
use of any Trademarks and all rights arising therefrom and
pertaining thereto;
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(iii) all general intangibles related to or
arising out of any of the Trademarks and all the goodwill of
Obligor's business symbolized by the Trademarks or associated
therewith; and
(iv) all products and Proceeds of any and
all of the foregoing.
(b) Continuing Security Interest. Obligor agrees
that this Agreement shall create a continuing security interest in the
Trademark Collateral which shall remain in effect until terminated in
accordance with Section 17.
(c) Incorporation into Security Agreement. This
Agreement shall be fully incorporated into the Security Agreement and
all understandings, agreements and provisions contained in the Security
Agreement shall be fully incorporated into this Agreement. Without
limiting the foregoing, the Trademark Collateral described in this
Agreement shall constitute part of the Collateral in the Security
Agreement.
3. Further Assurances; Appointment of Foothill as
Attorney-in-Fact. Obligor at its expense shall execute and deliver, or
cause to be executed and delivered, to Foothill any and all documents
and instruments, in form and substance reasonably satisfactory to
Foothill, and take any and all action, which Foothill may reasonably
request from time to time, to perfect and continue perfected, maintain
the priority of or provide notice of Foothill's security interest in
the Trademark Collateral and to accomplish the purposes of this
Agreement. Foothill shall have the right, in the name of Obligor, or in
the name of Foothill or otherwise, without notice to or assent by
Obligor, and Obligor hereby irrevocably constitutes and appoints
Foothill (and any of Foothill's officers or employees or agents
designated by Foothill) as Obligor's true and lawful attorney-in-fact
with full power and authority, (i) to sign the name of Obligor on all
or any of such documents or instruments and perform all other acts that
Foothill reasonably deems necessary or advisable in order to perfect or
continue perfected, maintain the priority or enforceability of or
provide notice of Foothill's security interest in, the Trademark
Collateral, and (ii) to execute any and all other documents and
instruments, and to perform any and all acts and things for and on
behalf of Obligor, which Foothill reasonably may deem necessary or
advisable to maintain, preserve and protect the Trademark Collateral
and to accomplish the purposes of this Agreement, including (A) after
the occurrence and during the continuance of any Event of Default, to
defend, settle, adjust or institute any action, suit or proceeding with
respect to the Trademark Collateral, (B) to assert or retain any rights
under any license agreement for any of the Trademark Collateral, and
(C) after the occurrence and during the continuance of any Event of
Default, to execute any and all applications, documents, papers and
instruments for Foothill to use the Trademark Collateral, to grant or
issue any exclusive or non-exclusive license with respect to any
Trademark Collateral, and to assign, convey or otherwise transfer title
in or dispose of the Trademark Collateral. The power of attorney set
forth in this Section 3, being coupled
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with an interest, is irrevocable so long as this Agreement shall not
have terminated in accordance with Section 17.
4. Representations and Warranties. Obligor represents
and warrants to Foothill, in each case to the best of its knowledge,
information, and belief, as follows:
(a) No Other Trademarks. Schedule A sets forth,
as of the Closing Date, a true and correct list of all of the existing
Trademarks that are registered, or for which any application for
registration has been filed with the PTO or any corresponding or
similar trademark office of any other U.S. jurisdiction, and that are
owned or held (whether pursuant to a license or otherwise) and used by
Obligor.
(b) Trademarks Subsisting. Each of the
Trademarks listed in Schedule A is subsisting and has not been adjudged
invalid or unenforceable, in whole or in part, and, to the best of
Obligor's knowledge, each of the Trademarks is valid and enforceable.
(c) Ownership of Trademark Collateral; No
Violation. (i) Obligor has rights in and good and defensible title to
the existing Trademark Collateral (excluding "The Cage" and "The Art
Factory", as to which Obligor may or may not have defensible title),
(ii) with respect to the Trademark Collateral shown on Schedule A
hereto as owned by it, Obligor is the sole and exclusive owner thereof,
free and clear of any Liens and rights of others (other than the
security interest created hereunder and other than Permitted Liens),
including licenses, registered user agreements and covenants by Obligor
not to xxx third persons, and (iii) with respect to any Trademarks for
which Obligor is either a licensor or a licensee pursuant to a license
or licensee agreement regarding such Trademark, each such license or
licensing agreement is in full force and effect, Obligor is not in
default of any of its obligations thereunder and, other than the
parties to such licenses or licensing agreements, no other Person has
any rights in or to any of the Trademark Collateral. To the best of
Obligor's knowledge, the past, present and contemplated future use of
the Trademark Collateral by Obligor has not, does not and will not
infringe upon or violate any right, privilege or license agreement of
or with any other Person.
(d) No Infringement. To the best of Obligor's
knowledge, no material infringement or unauthorized use presently is
being made of any of the Trademark Collateral by any Person.
(e) Powers. Obligor has the unqualified right,
power and authority to pledge and to grant to Foothill a security
interest in all of the Trademark Collateral pursuant to this Agreement,
and to execute, deliver and perform its obligations in accordance with
the terms of this Agreement, without the consent or approval of any
other Person except as already obtained.
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5. Covenants. So long as any of the Secured
Obligations remain unsatisfied, Obligor agrees that it will comply with
all of the covenants, terms and provisions of this Agreement, the
Security Agreement and the other Loan Documents, and Obligor will
promptly give Foothill written notice of the occurrence of any event
that could have a material adverse effect on any of the Trademarks or
the Trademark Collateral, including any petition under the Bankruptcy
Code filed by or against any licensor of any of the Trademarks for
which Obligor is a licensee.
6. Future Rights. For so long as any of the Secured
Obligations shall remain outstanding, or, if earlier, until Foothill
shall have released or terminated, in whole but not in part, its
interest in the Trademark Collateral, if and when Obligor shall obtain
rights to any new Trademarks, or any reissue, renewal or extension of
any Trademarks, the provisions of Section 2 shall automatically apply
thereto and Obligor shall give to Foothill prompt notice thereof.
Obligor shall do all things reasonably deemed necessary or advisable by
Foothill to ensure the validity, perfection, priority and
enforceability of the security interests of Foothill in such future
acquired Trademark Collateral. Obligor hereby authorizes Foothill to
modify, amend or supplement the Schedules hereto and to re-execute this
Agreement from time to time on Obligor's behalf and as its
attorney-in-fact to include any future Trademarks which are or become
Trademark Collateral and to cause such re-executed Agreement or such
modified, amended or supplemented Schedules to be filed with the PTO.
7. Foothill's Duties. Notwithstanding any provision
contained in this Agreement, Foothill shall have no duty to exercise
any of the rights, privileges or powers afforded to it and shall not be
responsible to Obligor or any other Person for any failure to do so or
delay in doing so. Except for the accounting for moneys actually
received by Foothill hereunder or in connection herewith, Foothill
shall have no duty or liability to exercise or preserve any rights,
privileges or powers pertaining to the Trademark Collateral.
8. Remedies. From and after the occurrence and during
the continuation of an Event of Default, Foothill shall have all rights
and remedies available to it under the Security Agreement and
applicable law (which rights and remedies are cumulative) with respect
to the security interests in any of the Trademark Collateral or any
other Collateral. Obligor agrees that such rights and remedies include
the right of Foothill as a secured party to sell or otherwise dispose
of its Collateral after default, pursuant to UCC Section 9-504. Obligor
agrees that Foothill shall at all times have such royalty-free
licenses, to the extent permitted by law, for any Trademark Collateral
that is reasonably necessary to permit the exercise of any of
Foothill's rights or remedies upon or after the occurrence of (and
during the continuance of) an Event of Default with respect to (among
other things) any tangible asset of Obligor in which Foothill has a
security interest, including Foothill's rights to sell inventory,
tooling or packaging which is acquired by Obligor (or its successor,
assignee or trustee in bankruptcy). In addition to and without
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limiting any of the foregoing, upon the occurrence and during the
continuance of an Event of Default, Foothill shall have the right but
shall in no way be obligated to bring suit, or to take such other
action as Foothill deems necessary or advisable, in the name of Obligor
or Foothill, to enforce or protect any of the Trademark Collateral, in
which event Obligor shall, at the request of Foothill, do any and all
lawful acts and execute any and all documents required by Foothill in
aid of such enforcement. To the extent that Foothill shall elect not to
bring suit to enforce such Trademark Collateral, Obligor, in the
exercise of its reasonable business judgment, agrees to use all
reasonable measures and its diligent efforts, whether by action, suit,
proceeding or otherwise, to prevent the infringement, misappropriation
or violation thereof by others and for that purpose agrees diligently
to maintain any action, suit or proceeding against any Person necessary
to prevent such infringement, misappropriation or violation.
9. Binding Effect. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by Obligor and
Foothill and their respective successors and assigns.
10. Notices. All notices and other communications
hereunder shall be in writing and shall be mailed, sent or delivered in
accordance with the Guaranty.
11. Governing Law. This Agreement shall be governed
by, and construed and enforced in accordance with, the federal laws of
the United States of America and the laws of the State of New York.
12. Entire Agreement; Amendment. This Agreement,
together with the Schedules hereto, contains the entire agreement of
the parties with respect to the subject matter hereof and supersedes
all prior drafts and communications relating to such subject matter.
Neither this Agreement nor any provision hereof may be modified,
amended or waived except by the written agreement of the parties as
provided in the Guaranty. Notwithstanding the foregoing, Foothill may
re-execute this Agreement or modify, amend or supplement the Schedules
hereto as provided in Section 6 hereof.
13. Severability. If one or more provisions contained
in this Agreement shall be invalid, illegal or unenforceable in any
respect in any jurisdiction or with respect to any party, such
invalidity, illegality or unenforceability in such jurisdiction or with
respect to such party shall, to the fullest extent permitted by
applicable law, not invalidate or render illegal or unenforceable any
such provision in any other jurisdiction or with respect to any other
party, or any other provisions of this Agreement.
14. Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and
the same agreement.
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15. Security Agreement. Obligor acknowledges that the
rights and remedies of Foothill with respect to the security interest
in the Trademark Collateral granted hereby are more fully set forth in
the Security Agreement and all such rights and remedies are cumulative.
16. No Inconsistent Requirements. Obligor
acknowledges that this Agreement and the other Loan Documents may
contain covenants and other terms and provisions variously stated
regarding the same or similar matters, and Obligor agrees that all such
covenants, terms and provisions are cumulative and all shall be
performed and satisfied in accordance with their respective terms. To
the extent of any conflict between the provisions of this Agreement and
the Loan Agreement, however, the provisions of the Loan Agreement shall
govern.
17. Termination. Upon the payment in full of the
Secured Obligations, including the cash collateralization, expiration,
or cancellation of all Secured Obligations, if any, consisting of
letters of credit, and the full and final termination of any commitment
to extend any financial accommodations under the Loan Agreement, this
Agreement shall terminate, and Foothill shall execute and deliver such
documents and instruments and take such further action reasonably
requested by Obligor, at Obligor's expense, as shall be necessary to
evidence termination of the security interest granted by Obligor to
Foothill hereunder, including cancellation of this Agreement by written
notice from Foothill to the PTO.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
DISCOVERY ZONE LICENSING, INC.,
a Nevada corporation
By: /s/ Xxxxxx Xxxxxx
------------------------------------------------
Title: Senior Vice President-Chief Financial Officer
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/ Xxxxx Xxxxx
------------------------------------------------
Title: AVP
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On March 31, 1998, before me, Xxxx Xxxxx Xxxxxx, Notary
Public, personally appeared Xxxxxx X. Xxxxxx, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Xxxx Xxxxx Xxxxxx
----------------------------
Signature
[SEAL]
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On March 31, 1998, before me, Xxxx Xxxxx Prodan, Notary
Public, personally appeared Xxxxx X. Xxxxx, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s)
whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Xxxx Xxxxx Prodan
-------------------------
Signature
[SEAL]
